Indian stocks drop over 1%, led by HDFC Bank, Reliance Indian shares fell 1% on Wednesday in their worst day in two months, led by Reliance Industries and HDFC Bank, whose warning about its asset quality ratios also weighed on other financials.The Nifty 50 closed 1.2% lower at 19,901.4 points, while the S&P BSE Sensex closed 1.2% down to 66,800.84 points. The benchmarks have fallen for two straight sessions after hitting all-time highs last week. HDFC Bank, the heaviest weighted stock on the Nifty, slid 4% in its worst day since early May after it said its completed merger with HDFC Ltd would hit key financial metrics, including its margins and bad loan ratios.Finance stocks overall dropped 1.5%, while bank stocks in particular fell 1.3%. Private bank shares shed 1.2%. The more locally focussed mid-cap and small-cap companies dropped 0.3% and 0.9%, respectively.The public sector enterprises index was the only one of the 13 major sectors to gain, climbing 0.17%, led mainly by coal and power stocks, as they continued to rally on expectations of unusually high electricity consumption in October and November.The bright spots included wires and cables maker RR Kabel , which ended nearly 16% higher on its first day of trading.
However, he believes that the impact on the Indian market is going to be temporary since there could be some short-term impact on flows into Indian equity markets. But since the Indian economy is on a strong wicket and will continue to remain resilient.
“Improved fiscal situation, controlled current deficit, stable interest scenario combined with good corporate earnings should lead to limited impact on the Indian bond market and equity market too,” he added.
The midcap and smallcap indices took a bigger knock with the BSE MidCap fell 2.51%, while BSE SmallCap index dived 4.18%. According to Amnish Aggarwal, head, research, Prabhudas Lilladher, the valuations were already high and some correction was expected. “If the situation sustains as it is then further correction can’t be ruled out,” Aggarwal said.
Telecommunication and industrials indices were the top laggards with BSE Telecommunication declining 3.82%, followed by BSE Industrials falling 3.26%. JSW Steel (-2.99%), Tata Steel (-2.52%) and Tata Consultancy Services (-2.44%) were the top losers of Sensex.
Surprisingly, both foreign portfolio investors and domestic institutional investors were net buyers today. While, FPIs net bought shares worth Rs 252.25 crore, DIIs have purchased shares worth Rs 1,111.84 crore, as per provisional data from exchanges.
Calling this a “normal phenomena” Pankaj Pandey, head, research, ICICI Direct said, “I will not really give too much weight to a single day buying figure. Amid concerns of elevated interest rate and geopolitical tensions, in a typical market cycle, 8-10% correction is possible at any point in time.”
The brunt of geopolitical conflict, elevated interest rates and rising crude oil prices was also felt by other Asian- Pacific markets. Jakarta Composite Index lost 1.57% followed by Shanghai Composite Index and PSEi, which fell 1.47% and 0.89%, respectively. Nikkei and KOSPI declined 0.83% and 0.76%.
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