Indian stocks retreated sharply in Monday’s trade on 19 October, giving up much of their recent gains after snapping an eight-week losing streak, as market sentiment was dampened by weak earnings from large private sector banks, while elevated crude oil prices and weak global cues triggered profit booking.
The Nifty 50 crashed 1.11%, slipping below the key psychological level of 23,000 to close at 22,888. The Sensex also finished the trade lower at 73,852, down 1.17% from Friday’s close. Broader markets mirrored the weak trend, with the Nifty Smallcap 100 and Nifty Midcap 100 indices falling 1% each.
Barring the Nifty PSU Bank index, all sectoral indices finished the trade in the red, with losses led by private banks, chemicals, FMCG, cement, and IT.
Investors lost ₹3.6 lakh crore in a single session as the overall market capitalization of BSE-listed firms dropped to ₹469 lakh crore from ₹472.6 lakh crore in the previous session.
Banks led sell-off
Private sector banks dropped 1.7%, with HDFC Bank and Axis Bank losing 2% and 4.1%, respectively, after reporting results for the July-September quarter that missed profit estimates.
Weaker treasury income and higher provisions for bad loans weighed on HDFC Bank, while Axis Bank reported higher operating expenses and weaker other income. Net interest margins declined at both banks.
HDFC Bank, ICICI Bank, and Axis Bank together accounted for more than half of the Sensex’s decline, while the Nifty Private Bank index fell around 1.8%, said Ponmudi R, CEO of Enrich Money.
HDFC Bank’s muted profit growth disappointed investors, while Axis Bank dropped approximately 4.2% despite a nearly 40% rise in net profit, as concerns over margins overshadowed earnings growth.
Hariselvan Radhakrishnan, founder and CEO of HST Wealth, said the principal domestic trigger was the market’s response to weekend bank earnings. Despite headline profit growth, investors focused on margin pressure, higher operating costs, and weaker treasury income, leading to selling in HDFC Bank, Axis Bank, and other private lenders. IT stocks also declined after their recent sharp rally, as weakness in US technology and semiconductor stocks encouraged traders to book profits.
PSU banks outperformed, supported by Punjab National Bank’s better-than-expected earnings and improving operating trends. Infrastructure and select commodity stocks provided limited support, while IT, FMCG, realty, and private banks were the principal laggards, he added.
Elevated crude oil prices
Although Brent crude fell more than 2% towards $107 per barrel on Monday following last week’s strong rally, prices remain elevated amid attacks on Saudi Arabia by Iranian-backed Houthi rebels.
The losses followed after the US President Donald Trump waived sanctions and tariffs on Russia, a move that could increase Russian fuel exports and ease supply concerns, persistent tensions in the Middle East continued to support prices.
Trump’s decision came shortly after he said earlier this month that he had reached a diesel deal with Russia in an attempt to bring down elevated US fuel prices ahead of the November 3 midterm elections.
Retreat in tech stocks
After posting their best weekly surge in 18 years, domestic tech stocks came under renewed selling pressure as investors appeared to book profits ahead of major corporate earnings announcements in the US, including those from Meta, Netflix, General Motors, Tesla, and IBM.
Vinod Nair, Head of Research at Geojit Investments Limited, said Indian equities came under renewed selling pressure, reversing the recent recovery as weak global cues and selling in private banks and IT stocks weighed on investor sentiment. Global markets remained cautious ahead of a busy week of corporate earnings.
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