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Sensex and Nifty fell sharply on Monday, weighed down by Kotak Bank, sustained FII outflows, and weak Asian market cues.
Stock Market Crash
Why Is Stock Market Falling Today? The benchmark equity indices Sensex and Nifty declined sharply on Monday amid heavy selling in Kotak Mahindra Bank, continued foreign fund outflows, and weak cues from Asian markets.
The Sensex fell by 578.21 points or 0.71 percent to 80,884.88, while the broader Nifty dropped below the crucial 24,700 mark to 24,668.35, down 168.65 points or 0.68 percent, as of around 1:35 p.m.
Among the top laggards were Kotak Mahindra Bank, Bharat Electronics, Bharti Airtel, Titan, and Apollo Hospitals Enterprise, with intraday losses of up to 7 percent.
Key Reasons Behind Monday’s Market Fall:
1. Kotak Mahindra Bank drags the market:
Shares of Kotak Mahindra Bank plunged nearly 7 percent after the bank reported a consolidated net profit of Rs 4,472 crore for the June quarter, compared to Rs 7,448 crore in the same quarter last year. The year-ago figure included a one-time gain of over Rs 3,000 crore from a stake sale in its general insurance arm. The bank flagged stress in its retail commercial vehicle loan portfolio, citing unfavourable macroeconomic conditions. Kotak was the top loser in the Nifty Bank index, which itself was down by up to 0.4 percent, with eight of its constituents in the red.
2. Persistent FII selling:
Foreign Institutional Investors (FIIs) sold equities worth Rs 1,979.96 crore on Friday. According to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, FIIs offloaded Rs 13,552 crore from the cash market in the previous week alone, adding significant pressure on the domestic markets.
3. Weak Asian market cues:
Asian equity markets were largely negative on Monday. Indices like South Korea’s Kospi, Japan’s Nikkei 225, and China’s Shanghai Composite were trading lower, which weighed on investor sentiment in Indian markets.
4. Brent crude oil price rises:
The global oil benchmark Brent crude edged higher by 0.29 percent to USD 68.64 per barrel. Rising crude prices tend to increase input costs and stoke inflationary pressure in oil-importing countries like India, contributing to negative market sentiment.
5. Selling pressure in IT stocks:
IT stocks also came under pressure. The Nifty IT index witnessed losses led by Wipro, TCS, HCL Tech, and Tech Mahindra. Vijayakumar noted that continued weakness in the IT pack is dragging broader markets. Investor sentiment was further dampened by TCS’s announcement of a 2 percent reduction in its global workforce.
6. Spike in market volatility:
The India VIX, a measure of market volatility, rose by nearly 7 percent to 12.07, signaling growing nervousness among traders. A rising VIX often corresponds with heightened fear and can lead to increased selling pressure in the market.
Technical Outlook
According to Anand James, Chief Market Strategist at Geojit Financial Services, Nifty may find immediate support at 24,450 and further at 24,000. He indicated that the index could face near-term downside risk. However, if Nifty crosses above 24,922, it may trigger short-covering, potentially pushing the index to test levels around 25,324. That said, resistance around the 25,000 mark may still pose a challenge for the bulls.
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Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a…Read More
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a… Read More
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