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After 1,628-point Sensex plunge, what's next for stock markets?
The Sensex, Nifty free fall occurred day after HDFC Bank posted a net profit of ₹16,732 crore in its Q3 results. The private lender's stock dropped by 9%.
It was the biggest single-day slide for the Bombay Stock Exchange (BSE) benchmark Sensex in more than 18 months on Wednesday. The Sensex nosedived by 1,628 points while NSE index Nifty registered biggest plunge since 2022.
Sensex had closed in red at 71,500 while Nifty ended at 21,571. The free fall came days after HDFC Bank posted a net profit of ₹16,732 crore in its third quarter results. Then private lender's shares dropped 8.46 per cent to settle at ₹1,536.90 on the BSE. During the day, it plunged 9 per cent to ₹1,527.25.
"HDFC Bank's share price slipped on concerns around slowdown in deposit growth," Jaykrishna Gandhi, Head - Business Development, Institutional Equities, Emkay Global Financial Services, told PTI.
ALSO READ: Why did Sensex drop over 1300 points, Nifty below 22,000 after record high?
What happens to markets now?
After a bloodbath on Dalal Street on Wednesday, will the stock exchange fall continue tomorrow as well?
Sanjiv Bhasin, director at IIFL Securities, predicted that the domestic equities will witness some sort of weakness in the next two weeks. “The Nifty has no room for comfort at 22,100 levels, from where it has witnessed profit booking,” he said.
On the other hand, Vinod Nair, head of research at Geojit Financiual Services, said,"A nosedive correction in banking stocks, along with concerns over delays in US FED rate cuts, impacted market sentiments."
"Given the elevated valuations, coupled with the fact that optimism regarding earnings and GDP growth for FY24 is already reflected in the market, triggered the correction," he added.
“Today’s market fall is led by banks on the back of HDFC Bank results, showing heightened levels of credit/deposit (CD) ratio beyond RBI’s comfort levels. This is the case with most other banks as well,” Naveen Kulkarni, Chief Investment Officer, Axis Securities PMS, said.
"Thus, the markets expect either margin pressure, in case banks go in for aggressive deposit mobilization, a slowdown in lending growth, or both. This development can lead to some de-rating of the sector. "After the significant up move we have witnessed recently, markets are taking a breather, especially since market valuations are higher than historical multiples," he added.
