The markets are in correction mode, and benchmark indices slumped in Friday’s trade. The 30-pack Sensex declined almost 800 points intra-day, and the Nifty 50 is struggling below 25,000. The selling pressure can be seen in financial stocks, with the maximum cut in several key counters seeing over 5% cut.
The banking and financial stocks primarily fell after Bajaj Finance reported its quarterly performance. The company’s management highlighted that MSME and auto loans are distressing.
Not just banking, the Nifty Auto index pulled back 1.3%, other sectoral declines include metal, PSU Bank, IT, and Oil & Gas were all trading in the red. In line with the bearish sentiments, broader indices also underperformed. The BSE and Smallcap corrected 1.3% and 1.7%, respectively.
The total market capitalisation of companies listed on the BSE decreased by Rs 4.75 lakh crore, bringing it down to Rs 453.35 lakh crore.
Here are the key reasons behind today’s market slide:
Banking and financial stocks under pressure
The banking and financial sector was the biggest drag, with the Nifty Financial Services index falling over 1% and the Nifty Bank dropped over 600 points. Bajaj twins were the top losers in the Nifty 50, declining 5.5% and 4.5%, respectively.
Union Bank, Indian Bank, and Canara Bank were the major losers in the Nifty Bank, shedding over 3%.
Uncertainty over US-India trade deal
Investor sentiment is also affected by the uncertainty regarding a potential temporary trade agreement between India and the US. As the August 1 deadline set by Washington draws near, talks are still at a standstill regarding tariffs on agricultural and dairy goods.
A significant advancement seems unlikely in the short term, as India’s trade delegation came back from Washington without reaching any agreement. The lack of an official tariff announcement from the US contributes to the ongoing uncertainty.
Continuous FII selling
Foreign institutional investors (FIIs) have been net sellers in the past trading sessions, dumping around Rs 11,500 crore in the cash market in the past four trading sessions alone.
“The near-term market construct has turned weak. Sustained FII selling of Rs 11572 crores in the last four trading days will weigh on the market. The weakness in the broader market, particularly in smallcaps, might continue since valuations had turned excessive and difficult to justify,” said VK Vijayakumar, Chief Investment Strategist at Geojit Investments, before markets opened.