Sensex cracks 1,628 points, Nifty tests 21,550; should you press the panic button?

Domestic equity markets saw a sharp cut on Wednesday due to negative global and domestic cues. Higher interest rate expectations for longer than expected, rising US dollar and geopolitical tensions weighed on the market sentiments. Back home, lackluster earnings of HDFC Bank weighed on the sentiments at Dalal Street.

Investors of Dalal Street lost more than Rs 4.54 lakh crore during the session as the total market capitalization of BSE listed companies tumbled down to Rs 370.41 lakh crore against its close at Rs 374.95 lakh crore in the previous trading session on Tuesday.

A nosedive correction in banking stocks, along with concerns over delays in US FED rate cuts, impacted market sentiments. The addition of discouraging Chinese growth data and rising US bond yields, also resulted in widespread profit-booking, said Vinod Nair, Head of Research, Geojit Financial Services.

Given the elevated valuations, coupled with the fact that optimism regarding earnings and GDP growth for FY24 is already reflected in the market, triggered the correction, he said.

For the day, BSE's Sensex crashed 1628.01 points, or 2.23 per cent, to settle at 71,500.76. NSE's Nifty50 plunged 460.35 points, or 2.09 per cent, to end the day at 21,571.95. BSE midcap and smallcap indices dropped up to a per cent each. Fear gauge India VIX spiked more than 11 per cent to 15.08-mark.

Markets plunged sharply on Wednesday and lost over 2 per cent on the back of tracking feeble cues. Pressure in the private banking majors post HDFC bank’s number combined with weak global cues was weighing on the sentiment. All key sectors, barring IT, surrendered to the fall, said Ajit Mishra, SVP - Technical Research, Religare Broking.

"Nifty has engulfed the gains of the last four sessions but somehow managed to hold the support zone of the short-term moving average (20 EMA). The close indicates more pain ahead and can gradually inch towards the 21,200-21,450 zone. We thus suggest reducing existing longs on the bounce and looking for shorting opportunities as well," he said.

On a sectoral front, the Nifty IT index was the sole gainer. Among the laggards, he Nifty private bank and financial services indices dropped more than 4 per cent each. The Nifty metal index crashed more than 3 per cent. The Nifty PSU Bank index was down 1.75 per cent, while the realty indices dropped 1.4 per cent for the day.

In the Nifty50 pack, HDFC Bank tumbled more than 8 per cent after disappointing Q3 results. Tata Steel and Kotak Mahindra Bank dropped 4 per cent each. Axis Bank declined 3.4 per cent, while Hindalco, ICICI Bank and JSW Steel were down 3 per cent each. Among the gainers, Apollo Hospitals Enterprise and HCL Technologies gained more than a per cent each.

Markets went into a tailspin led by banking stocks as HDFC Bank faltered sharply on worries of a drop in total deposits in the December quarter over the preceding quarter. The fall in banking had a rub-off effect on rate-sensitive sectors as automobile and realty stocks too witnessed frenzied selling, said Prashanth Tapse, Senior VP (Research), Mehta Equities.

"India's stock market valuations are expensively valued compared to other global stock indices and investors would wait for more positive cues now to extend their equity exposure. There are challenges in the near term such as persisting conflict in the middle east and worries over delay in US Fed rate cut, which could dampen investors' sentiment going ahead," he said.

A total of 3,900 shares were traded on BSE on Wednesday, of which 2,506 settled with cuts. 1,305 stocks ended the session with gains while 89 shares remained unchanged. During the day, 294 shares hit their upper circuit, whereas 333 shares tested the lower circuit levels for the day.

In the broader markets, Indian Energy Exchanges tumbled more than 10 per cent, while Sanghi Industries was locked in the lower circuit of 10 per cent. Steel Authority of India crashed more than 5 per cent, while Kotle Patil tumbled on similar grounds. Among the gainers, Praveg was up 10 per cent, while Network18 Media and TV18 Broadcast rose about 9 per cent each.

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