Sensex sinks 420 pts, Nifty slides below 23,350 as Adani bribery charges compound fragile global sentiment

Adani Enterprises, Adani Ports, NTPC, SBI Life Insurance, and ONGC were the major laggards on the Nifty

Benchmark indices Nifty and Sensex tumbled on November 21, reeling under heavy pressure as bribery charges against Gautam Adani further dented already fragile investor sentiment amidst weak global cues. The market opened with a steep sell-off following a New York court indictment against Gautam Adani and seven others, alleging bribery of Indian officials to secure solar energy contracts. Adani Group stocks plunged as much as 20 percent in intraday trade, wiping out a cumulative Rs 2.2 lakh crore in market capitalization.

The nervousness triggered by the Adani news spread across sectors, with banking stocks, particularly public sector banks, experiencing significant losses.

At close, the Sensex was down 422.59 points or 0.54 percent at 77,155.79, and the Nifty was down 168.60 points or 0.72 percent at 23,349.90. About 1,179 shares advanced, 2,606 shares declined, and 89 shares unchanged.

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"The Adani saga was the main driver for the market fall today, followed by the escalating tensions in the Russia-Ukraine war," Narendra Solanki, Head of Fundamental Research at Anandi Rathi Shares and Stock Brokers, said in a conversation with Moneycontrol. He added that how these two events unfold in the coming weeks would be crucial for the markets.

International brokerage Bernstein has said that markets are likely to move past the Adani group bribery charges news within a day or a week, adding that the development is unlikely to have lasting consequences for the broader market.

PSU banks faced a sharp sell-off on November 21 as concerns mounted over their exposure to Adani Group companies. Shares of public sector lenders like SBI, Bank of Baroda, and Punjab National Bank fell up to 8 percent during afternoon trade.

Sectoral indices painted a grim picture on November 21, with Nifty Energy, Metal, FMCG, Infra, and Bank sliding up to 2 percent. The energy index bore the brunt of the sell-off, dragged down by heavyweights like Adani Green, IOC, and Adani Power. Auto stocks, too, faced profit booking and fell 1 percent as industry giants M&M, Maruti Suzuki, Tata Motors, and Bajaj Auto traded deep in the red.

Also read: Adani Group denies bribery charges as baseless, says will seek all possible legal recourse

Nifty IT, which started the day on a strong note with over 1 percent gains, lost steam by afternoon to close just 0.5 percent higher. Tech heavyweights like Tech Mahindra, HCL Tech, TCS, and Infosys erased most of their early momentum, leaving the index barely clinging to positive territory.

Despite recovering nearly 500 points during the session, the broader market mirrored the overall bearish trend. Mid-cap and small-cap indices declined 0.3 percent and 0.7 percent, respectively. However, market experts remain optimistic about a potential rebound in these segments, citing oversold levels as a trigger for a near-term recovery.

"We've seen quite a healthy correction in the past month or so and current levels seem attractive for investors to buy," Sanjeev Hota, Vice President and Head of Research at Sharekhan by BNP Paribas, told Moneycontrol. However, he cautioned investors to be 'extremely careful' while choosing stocks in the space as weak fundamentals of companies could trigger a further correction in the counters.

Read more: Adani Group market-cap plummets Rs 2.2 lakh crore as stocks fall up to 20% on US bribery charges

Among individual stocks, Paytm parent One97 Communications darted up 4 percent in the afternoon after international brokerage Bernstein reaffirmed its bullishness suggesting that the discussions on the company have taken a turn, moving from discussions about the firm's survival risks to a discussion on the bull and bear case scenarios.

Indian Hotel's stock surged over 4 percent, extending its rally to a second day and hitting a fresh record high after Jefferies hiked the target price. The management has outlined ambitious goals to drive consistent growth through FY30, building on its strong track record of delivering on past guidance. The company aims to open an average of one new hotel per week until FY30, reflecting its confidence in achieving these targets.

"On the levels front, 23650-23700 remains a strong resistance for Nifty, while 23800-24000 remains the sturdy hurdle for a trend reversal in the near period. On the lower end, 23400-23350 is anticipated to serve as an intermediate support level. Should this level be breached, there is a potential for a further downward correction toward 23200-23100 in the comparable period," Sameet Chavan, Head of Research and Technical and Derivative at Angel One, said.

The biggest Nifty losers were Adani Enterprises, Adani Ports, SBI Life Insurance, Britannia Industries and SBI, while gainers included Power Grid Corp, UltraTech Cement, Hindalco Industries, Tata Steel and Grasim Industries.

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