While the Sensex shed 297.55 points to settle at 37,880.40 points, down 0.78%, the broader Nifty50 ended the day at 11,234.55, down 78.75 points.
The relief rally on Wednesday was short-lived as benchmark indices tumbled again on Thursday amid concerns over weak earnings growth for the September quarter and lingering stress in the financial sector.
Both the Sensex and Nifty lost about 1% on Thursday, with shares of HDFC Bank, ICICI Bank, and IndusInd Bank among them contributing over 80% to the Sensex’ fall. With Thursday’s fall, the Sensex has come off nearly 2% in the last six months.
While the Sensex shed 297.55 points to settle at 37,880.40 points, down 0.78%, the broader Nifty50 ended the day at 11,234.55, down 78.75 points. The fall in benchmark indices would have been much bigger, had it not been a 3% rise in shares of RIL, the largest company by market capitalisation.
Shares of IndusInd Bank fell 6.2% after the private lender reported a lower-than-expected profit for the quarter ended September 2019. The stock has lost 23.1% so far in 2019 against Sensex’ gain of 5%.
Indiabulls Housing Finance tumbled 18.85% to close at Rs 195 on the BSE. In early trade, the scrip touched its 52-week low of Rs 187.50, shedding almost 22%.
Banks and financial firms together command weightage of close to 39% on Nifty50. The Bank Nifty declined nearly 3% to end the session at 28,013.45 points. While the stock of RBL Bank slid 6.8%, Yes Bank shares fell 5.3% on the NSE.
Edelweiss Research expects the Nifty50 to report a fall in earnings for the three months ended September 2019. “We estimate PAT of Nifty companies to contract 4% y-o-y in Q2FY20 against a 2% growth in Q1FY20 and 10% in FY19.”
“While, a part of the hit in Q2 is likely to be on account of one-time markdown of deferred tax assets of corporate banks, even excluding it, the earnings momentum is still soft and earnings upgrades are likely to be modest,” said the domestic brokerage.
Meanwhile, Moody’s Investors Service on Thursday cut its growth forecast for India for FY20 to 5.8% from 6.2% citing weaker growth outlook.
Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services, said: “Rising concerns over US-China trade talks and poor earnings season domestically dampened the sentiments. Market was also cautious ahead of two IT majors’ (TCS & Infosys) results.”