The equity benchmark indices Sensex and Nifty declined for the third day on Monday to drop nearly 1 percent amid heavy selling in Kotak Mahindra Bank, continued foreign fund outflows and weak trends in Asian markets.
Sensex tanked 572.07 points or 0.70 percent to settle at 80,891.02. During the day, it slumped 686.65 points or 0.84 percent to 80,776.44. The Nifty declined 156.10 points or 0.63 percent to 24,680.90.
Kotak Mahindra Bank, Bharat Electronics, Bharti Airtel, Titan and Apollo Hospitals Enterprise were among the major laggards, declining up to 7 percent intraday.
Key factors behind Monday’s market fall:
1. Kotak Mahindra Bank drags: Shares of Kotak Mahindra Bank declined nearly 7 percent after the lender reported a consolidated net profit of Rs 4,472 crore for the June quarter. The bank flagged stress in its retail commercial vehicle portfolio due to unfavourable macroeconomic conditions. The profit in the same quarter last year was Rs 7,448 crore, which had included a one-time gain of over Rs 3,000 crore from a stake sale in its general insurance arm. The bank was the top loser in the Nifty Bank index, which was down up to 0.4 percent with eight of its constituents trading in the red.
2. FII selling pressure: Foreign Institutional Investors (FIIs) offloaded equities worth Rs 1,979.96 crore on Friday. The sustained FII selling adds pressure on domestic equities.
According to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, FII selling of Rs 13,552 crore in the cash market last week has added to the weakness in the market.
3. Weak Asian market cues: Asian markets were largely negative with South Korea’s Kospi, Japan’s Nikkei 225 and China’s Shanghai Composite Index trading in the red, weighing on investor sentiment back home.
4. Brent crude gains: Global oil benchmark Brent crude rose 0.29 percent to USD 68.64 per barrel. Higher crude prices raise input costs and inflationary pressures for oil-importing countries like India.
5. Selling in IT stocks: The Nifty IT index also witnessed pressure, with notable losses in Wipro, TCS, HCL Tech and Tech Mahindra. Vijayakumar added that the continued weakness in IT stocks is weighing on the broader market. TCS’s announcement of a 2 percent reduction in global workforce has also added to concerns.
6) Rising India Vix: The volatility index, India VIX, rose nearly 7 percent to 12.07, indicating rising nervousness among traders. A spike in the VIX typically reflects heightened fear in the market and can lead to increased selling pressure.
Technical View
Anand James, Chief Market Strategist at Geojit Financial Services, said Nifty may find support around 24,450 and 24,000. He noted that the index could see some downside in the near term, with a potential rebound expected if it crosses above 24,922, which may trigger short-covering. In such a scenario, the index could test 25,324, although resistance near the 25,000 mark remains.
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