Sensex ends 500 pts lower, Nifty settles below 25,000; all eyes on HDFC Bank, RIL, ICICI Bank Q1 results

Laggards on the index included Axis Bank, Shriram Finance, Bharat Electronics, Bharti Airtel, and HDFC Life Insurance.

Benchmark indices Nifty and Sensex ended the session in the red on July 18, wrapping up the week with losses of almost a percent each as selling pressure in banking and FMCG stocks dragged markets lower. The broader market also remained under pressure, while a rise in India VIX reflected growing investor nervousness.

At close, the Sensex was down 484.63 points or 0.59 percent at 81,774.61, and the Nifty was down 139.35 points or 0.55 percent at 24,972.10. About 1619 shares advanced, 2265 shares declined, and 153 shares unchanged.

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On Monday, July 21, HDFC Bank, ICICI Bank and Reliance Industries shares will be in focus as they're set to report their earnings later today and over the weekend. Moneycontrol research shows HDFC Bank is likely to see single-digit net interest income (NII) and profit growth amid soft loan growth. Meanwhile, Reliance Industries Ltd is poised for a robust performance in the June quarter, with key business segments such as telecommunications, retail, and oil-to-chemicals (O2C) expected to deliver growth in operating profits.

Global uncertainty and a muted start to the earnings season are weighing on investor sentiment. "While near-term sentiment remains cautious, there is still hope pinned on a recovery in earnings during the second half of the financial year, he added," Pratik Gupta, CEO of Kotak Institutional Equities, said in an interaction with CNBC TV-18. "At present, market valuations remain elevated, with the Nifty trading at around 22 times forward earnings, levels that are considered expensive by historical standards. Earnings growth has been tepid across key sectors such as IT, consumer goods, and banking, all of which are expected to post single-digit growth for the full year," he added.

Read more: RIL Q1 Preview: Company set for strong June quarter, O2C division poised for turnaround 

Among heavyweights, Wipro gained over 3 percent after the company reported a June quarter performance that was better than expected, driven by strong execution of large deals. However, brokerages remain in a wait-and-watch mode as the management has guided for a stronger recovery in the second half of this fiscal year.

Axis Bank shares slid 5 percent after lender posted a weak set of numbers for the June quarter. Profit and net interest income (NII) growth were muted, fresh slippages increased sharply owing to a technical impact, and margins contracted. Brokerages expressed disappointment over the Q1 performance and downgraded their ratings on the stock. The Global Depositary Receipts (GDRs) of Axis Bank also tumbled 5 percent to $64.3 on July 18 after the bank's asset quality worsened during the June quarter.

Shares of Clean Science and Technology fell 8 percent after the company reported its June quarter results and management shared commentary on a potential promoter stake sale. For the June quarter, Clean Science’s revenue rose 8 percent year-on-year to Rs 240 crore, while Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) grew 5 percent over the same period to Rs 100 crore.

Shares of PSU mining major Gujarat Mineral Development Corporation (GMDC) are sharply higher by over 10 percent, after reports emerged that PMO is likely to hold a key stakeholder meeting on the rare-earth magnet crisis on July 18. CNBC-TV18 cited sources to state that the meeting is likely to take place today afternoon. GMDC has stated intentions of entering the critical mineral space, including rare earth, and the company has been working towards this, through it has not officially disclosed details of its plans yet.

"On the technical front, the market formed a bearish candle on the daily chart and a lower top on the intraday chart, signalling continued selling pressure and a negative bias. As long as Nifty/Sensex stays below 25,255/ 82,700, sentiment is expected to remain weak," Shrikant Chouhan of Kotak Securities said.

"Immediate support lies at the 50-day Simple Moving Average—25,000 for the Nifty and 82,000 for the Sensex. A breach below these levels could open the door to further downside toward 24,900–24,850 and 81,600–81,500, respectively," he added.

Wipro, Bajaj Finance, Tata Steel, ONGC, and Nestle were the top gainers on the Nifty. Laggards on the index included Axis Bank, Shriram Finance, Bharat Electronics, Bharti Airtel, and HDFC Life Insurance.