Domestic benchmark indices slumped sharply on Wednesday as heavy selling in banking, auto and IT stocks dragged the Indian stock market lower.
At around 2:51 pm, the BSE Sensex plunged 1,194.69 points, or 1.53%, to 77,011.29, while the Nifty 50 dropped 347 points, or 1.43%, to 23,914.60, slipping decisively below the key 24,000 mark during the session.
Selling pressure intensified across several heavyweight stocks, pulling benchmark indices deeper into the red and keeping overall market sentiment weak.
Market breadth also remained negative, as declines in financial, automobile, and information technology stocks outweighed gains in a handful of defensive sectors.
BANKING STOCKS DRAG MARKET LOWER
The decline in the market was largely led by banking stocks, which carry significant weight in benchmark indices such as the Sensex and Nifty.
Shares of HDFC Bank dropped nearly 2%, while ICICI Bank slipped about 1% during the session. Axis Bank declined around 3.8%, putting strong pressure on the benchmark indices.
Other financial stocks also witnessed notable losses. Shares of Bajaj Finance fell more than 4.5%, while Bajaj Finserv declined close to 4%, adding to the broader market weakness.
Given the large weightage of banking and financial stocks in the benchmark indices, declines in these stocks significantly dragged the overall market lower.
AUTO AND IT STOCKS UNDER PRESSURE
Auto stocks also came under heavy selling pressure as investors booked profits after recent gains.
Shares of Mahindra & Mahindra fell more than 3.6%, while Bajaj Auto declined around 2.5% during the session.
Maruti Suzuki also traded sharply lower, falling about 2.6%, adding to the weakness in the automobile sector.
Technology stocks were also weak, with Tata Consultancy Services (TCS) declining around 1.6%, while Infosys traded more than 1% lower, reflecting continued pressure on IT stocks.
SOME DEFENSIVE STOCKS BUCK TREND
Despite the broader market weakness, a few defensive stocks managed to trade higher.
Shares of Sun Pharmaceutical Industries gained about 1%, emerging as one of the few gainers on the benchmark indices.
Meanwhile, Coal India, ONGC, and Hindalco Industries also traded in positive territory, showing relative strength amid the market decline.
The gains in these stocks, however, were not enough to offset the sharp losses seen in banking, auto and financial stocks.
WHAT SHOULD INVESTORS DO?
According to Dr. V. K. Vijayakumar, Chief Investment Strategist at Geojit Investments, investors should closely watch institutional flows to understand the market’s near-term direction.
“There are some important market trends that investors should analyse and try to understand now. One, the FII vs DII game is back to the last one-year pattern of sustained selling by FIIs being more than matched by sustained buying by DIIs. Given the continuing indifference of FIIs towards India and the sustaining inflows into Indian equity mutual funds, this game is likely to continue in the near-term,” he said.
Vijayakumar noted that despite the broader weakness, some sectors are still showing resilience.
“Segments like pharmaceuticals and domestic consumption themes like telecom, automobiles and defence are exhibiting resilience,” he said.
He added that continued foreign investor selling has made large banking stocks attractive for long-term investors.
“Sustained FII selling has made large banking stocks, which constitute the largest segment of FIIs’ assets under management, attractive. These stocks have the potential to reward investors who can buy and hold them for at least two years. Here patience is the key,” he said.
Vijayakumar also said the decline in Brent crude prices to below $88 per barrel could improve risk-on sentiment in the market going forward.
