Among the broader markets, Nifty Smallcap 100 traded flat with a 0.03% gain but, Nifty Midcap 100 declined by 0.36% outperforming the benchmark.
Banking stocks dragged the benchmark indices down on Monday, after a poor set of numbers reported by some banks for the quarter-ended December 2019 coupled with higher-than-anticipated fiscal deficit number. Bank Nifty shed 1.3% led by selling in IndusInd Bank, Bank of Baroda, HDFC Bank and State Bank of India (SBI).
HDFC Bank, which boasts of highest weightage of 10.7% on the Nifty Index, fell 2.5% on Monday. The stock has been falling for the last six of the seven sessions and has come off nearly 7% from its December peak of Rs 1,302.40.
The benchmark Sensex tumbled 458.07 points to close at 41,155.12 points whereas the broader Nifty declined 1.06% to close at 12,119 points. With Monday’s fall, the Bank Nifty has declined 4.12% so far in January. Metal stocks led the fall on Monday after JSW Steel reported its lowest quarterly net profit in four years. The most valuable steelmaker reported a net profit of Rs 211 crore in Q3FY20 as slowing economy and weak consumption impacted its over all performance.
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While Vedanta fell the most on Nifty50 with a fall of 4.5%, Tata Steel and Hindalco Industries followed with 4.3% and 3.5%, respectively. On the other hand, Dr Reddy’s Laboratories, M&M and Cipla were the top gainers. Shares of ICICI Bank gained 0.64% to close at Rs 537.25 a piece after the bank reported a robust performance on Saturday.
Sectorally, Nifty Metal was the biggest loser followed by Nifty PSU Bank and Nifty Bank. Globally, Nikkei 225, the benchmark index in Japan shed 2.03%, most Asian markets were shut due to Lunar new year holiday. However, Crude slid to three-and-a-half-month low on demand fears after coronavirus outbreak and was trading at $58.99 a barrel. The spot gold on MCX rose 1.6% to Rs 40,638.
Banking stocks have been under selling pressure with the onset of earnings season, the reason being tepid performance and higher slippages reported by some banks. For instance, HDFC Bank reported a 33% y-o-y earnings growth but also saw an increase in slippages. This was not expected by the markets and the stock has faced selling pressure since then. Bank Nifty has so far in January has shed 4.12%.
State-run Bank of Baroda, too, reported a weak performance with the bank reporting a loss of Rs 1,407 crore. Higher provisions and elevated slippages along with a muted business growth were some of the reasons behind its weak performance.
According to a market expert, the tepid performance of Bank of Baroda dragged the PSU Bank stocks down. “The PSU Bank index opened lower on back of weak global cues and dismal quarterly results from Bank of Baroda putting pressure on the entire PSU banking stocks. With SBI enjoying the highest weightage among PSU Bank index, too followed the weak trend ahead of its quarterly numbers.”
Explaining the weak global cues, Vinod Nair, head of research, Geojit Financial Services, said, “Growing catastrophic effect of coronavirus is impacting the world financial market, raising fears of a slowdown in the global economy. In India, investors are turning cautious given selling pressure in global market and big event risk of Budget announcement this weekend, since a lot has been factored in the market about wish list.”