Benchmark stock indices hit its biggest intraday fall in over a year on Wednesday due to panic selling in the shares of index heavyweight HDFC Bank Ltd.
The NSE Nifty 50 closed 460 points or 2.09%, down at 21,571.95, while the S&P BSE Sensex fell 1,628 points or 2.23%, to end at 71,500.76.
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The Nifty 50 recorded its biggest fall since June 16, 2022, while the Sensex logged its biggest fall since Aug. 29, 2022.
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"A nosedive correction in banking stocks, along with concerns over delays in US Fed rate cuts, impacted market sentiments," Vinod Nair, head of research at Geojit Financial Services, said. "The addition of discouraging Chinese growth data and rising US bond yields also resulted in widespread profit-booking."
"Given the elevated valuations, coupled with the fact that optimism regarding earnings and GDP growth for FY24 is already reflected in the market, this triggered the correction," Nair said.
Compared to the Nifty Bank, the Nifty 50 is not seeing much pain, according to Omkar Patil, technical and derivatives analyst at Ashika Stock Broking.
The Nifty 50 index has again entered the range of 21,450–21,800. The Nifty Bank has broken its crucial support of 47,000 and is expected to fall to 45,800–46,000 levels, according to Patil.
Short-term charts indicate that the market is in oversold territory, and it is ideal to wait for the next few weeks before making any decisions. Among sectors, Patil is positive on IT and metals.
Shares of HDFC Bank fell the most since March 23, 2020. ICICI Bank Ltd., Kotak Mahindra Bank Ltd., Reliance Industries Ltd. and Axis Bank Ltd. weighed on the Nifty 50.
Infosys Ltd., Tata Consultancy Services Ltd., HCL Technologies Ltd., SBI Life Insurance Co. and Titan Co. capped the losses in the benchmark index.
Eleven out of the 12 sectors on the NSE declined, with the Nifty Bank closing 4.28% lower, the biggest intra-day fall since March 7, 2022, due to sharp losses in shares of index-heavy HDFC Bank.
The broader markets also fell as the BSE Midcap was down 1.09% and the Smallcap was 0.90% lower.
Seventeen out of the 20 sectors compiled by BSE declined, while three advanced.
The market breadth was skewed in favour of the sellers as 2,487 stocks fell, 1,318 rose and 95 remained unchanged on the BSE.
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