Sensex, Nifty deep in red post flat open; IndusInd Bank slides 18% on weak earnings

Among sectoral indices, Nifty Bank, Auto, PSU Bank, and Metal were the hardest hit, each falling 1.5-2.5 percent.

The Sensex and Nifty opened flat on October 25 but quickly dipped into negative territory amid lacklustre earnings and ongoing foreign outflows. IndusInd Bank was the worst performer on Nifty 50, plunging 18 percent after its Q2FY25 net profit dropped 40 percent year-on-year to Rs 1,331 crore, missing estimates due to a sharp rise in loan loss provisions.

In contrast, consumer major ITC's shares jumped over 4 percent following an impressive Q2 performance, driven by strong growth in cigarette volumes and a booming hotel business.

At 10.15 AM, the Sensex was down 390 points or 0.5 percent at 79,672, and the Nifty was down 160 points or 0.7 percent at 24,235. About 741 shares advanced, 2,112 shares declined, and 113 shares remained unchanged.

"The market may remain under pressure for a while, with a slight negative bias," said Gaurang Shah, Senior Vice President at Geojit Financial Services. Nifty has already corrected around 7 percent from its all-time high, and Shah expects a further downside of 3-5 percent due to selling by Foreign Institutional Investors (FIIs).

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"From a long-term perspective, it's an opportune time to accumulate and build a portfolio, starting with large-caps and then selectively adding mid-caps. While we may not see an immediate upside, the more time the market spends consolidating and building a base, the more durable the eventual rally will be," Shah told Moneycontrol.

Several headwinds have been weighing on market sentiment—disappointing Q2 earnings, relentless selling by Foreign Institutional Investors (FIIs), Middle East tensions, and the looming US election.

The Nifty 50 and Sensex have declined by 1.8 percent and 1.4 percent, respectively, this week, heading towards their fourth consecutive weekly loss — the longest losing streak since August 2023.

In the broader market, both the BSE Midcap and BSE Smallcap indices declined by nearly 2 percent. Market experts believe there is still pain in the mid-cap and small-cap space, particularly in small-caps, as earnings have yet to catch up with valuations, leading to expectations of further downside in the segment.

Among sectoral indices, Nifty Bank, Auto, PSU Bank, and Metal were the hardest hit, each falling 1.5-2.5 percent.

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Pranay Aggarwal, CEO of Stoxkart, said that the market is currently in an oversold zone, with the bearish trend persisting in the medium term as long as Nifty remains below 25,000. "A decisive move above 24,500 could trigger a short-term pullback or relief rally following the recent decline," he said. However, "A slide below 24,300 may increase selling pressure, potentially pushing the Nifty down towards 24,200 and 24,100 levels as well," Aggarwal added.

On the Nifty 50, IndusInd Bank, NTPC, Shriram Finance, M&M, and L&T led the decline, with losses ranging from 1 to 10 percent. Conversely, ITC, Axis Bank, HCLTech, Kotak Mahindra, and Britannia emerged as the top gainers, rising between 1 and 4 percent.

Asia-Pacific were mixed as investors looked ahead to Japan's general election over the weekend.

In the US, the S&P 500 edged up 0.2 percent, driven by a nearly 22 percent surge in Tesla shares following stronger-than-expected Q3CY24 results, marking Tesla's best day since 2013. The Nasdaq Composite climbed 0.8 percent, while the Dow Jones Industrial Average dipped 0.3 percent.

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