Banking Pack Takes a Hit as HDFC Bank’s Q3 Results Cause Market Plunge

At the close, the Nifty 50 was at 21,571.95 down by 2.09%

In a tumultuous trading session, the NSE Nifty 50 began in the red, marking a 2.09 percent decline and closing below 21600. The domestic equity benchmarks faced intense selling pressure, settling with sharp cuts of over 2 percent. The triggering factor was a substantial sell-off in banking stocks, notably led by the bellwether HDFC Bank. This resulted in an imbalance in market breadth, with two stocks falling for each one that rose.

The Indian market witnessed its most significant single-day fall in 18 months, fueled by HDFC Bank’s disappointing Q3 performance, amplifying concerns amid weak global cues. Last week’s Nifty rally, driven by large-cap IT companies exceeding margin estimates through cost optimization, took a turn this week as Nifty banks experienced a notable 4% decline, with HDFC Bank’s share price slipping 7% on worries about a slowdown in deposit growth.

Market sentiments further dipped due to comments from US Federal Reserve Governor Christopher Waller, dampening expectations of a March rate cut. This resulted in higher 10-year treasury yields and a strengthened dollar index, creating ripples across the market. The correction was accentuated by discouraging Chinese growth data, rising US bond yields, and widespread profit-booking. With elevated valuations and optimism already factored in for earnings and GDP growth in FY24, the correction indicates a cautious near-term outlook influenced by negative global and domestic cues.

Bank Nifty: Down by 4.28%

The Bank Nifty commenced the day in negative territory, witnessing a substantial decline of 4.28 percent and concluding the session at 46,064.45, firmly in the red. Simultaneously, the BSE Sensex experienced a significant dip of 2.23 percent, closing at a low of 71,500.76. This downward trajectory marked a challenging day for both key equity benchmarks.

On the sectorial front, the Information Technology (IT) sector exhibited resilience, registering a commendable gain of 0.64%. Noteworthy performers in this sector included L&T Technology Services Ltd., which surged by an impressive 3.52%, and HCL Technologies Ltd., posting a gain of 1.13%. These positive movements underscore the sector’s strength amid broader market fluctuations.

Contrastingly, the Financial Services sector emerged as the top loser, experiencing a significant decline of 4.28%. Within this sector, Indian Energy Exchange Ltd. faced a notable setback, witnessing a substantial loss of -9.51%, while HDFC Bank Ltd. also grappled with a significant downturn, losing -8.16%. The pronounced losses in the Financial Services sector were primarily influenced by concerns surrounding deposit growth and the disappointing Q3 performance of key banking players.

Foreign Institutional Investors (FIIs/FPIs) exhibited a net selling position with a sale value of Rs. 27,896.04 crore, surpassing their buy value of Rs. 17,317.91 crore. Consequently, the net value for FIIs/FPIs stood at a deficit of Rs. 10,578.13 crore. Contrastingly, Domestic Institutional Investors (DIIs) engaged in net buying, recording a buy value of Rs. 15,188.62 crore against a sale value of Rs. 11,182.18 crore. This resulted in a positive net value of Rs. 4,006.44 crore for DIIs.

Bank Nifty

The Nifty Banking sector had some gainers and some losers for the day.

There are no gainers in the Bank Nifty today. On the other hand, the biggest losers in the sector included HDFC Bank with a 8.16% decline, Kotak Bank with a 3.76% decline, Axis Bank with a 3.43% decline, IDFC First Bank with a 3.40% decline, and ICICI Bank with a 2.93% decline. These results suggest that most of the banking stocks not performed better for the day.

Rupee Faces Minor Downturn Amidst Market Volatility

On Wednesday, the Indian rupee experienced a marginal slip of 1 paisa, closing at 83.13 against the US dollar. The dip was influenced by significant selling in the domestic equity markets and the strength of the greenback overseas. Despite this, the rupee found support from renewed foreign capital inflows and a substantial decline in crude oil prices in the international market, mitigating potential losses.

Trading within a range of 83.07 to 83.17 against the dollar, the rupee ultimately settled at 83.13, down by 1 paisa from its previous close. Analysts suggest that, given the rise in the dollar index and the ongoing sell-off in capital markets, the rupee’s weakness may persist, possibly reaching levels around 83.25-83.30.

Investors are keenly watching the US retail data, which could provide new triggers for the dollar’s movement. Meanwhile, the dollar index, indicating the greenback’s strength against a basket of currencies, edged 0.06 percent higher to 103.05. Additionally, Brent crude futures, the global oil benchmark, saw a notable 2.09 percent decline, settling at $76.65 per barrel. The rupee’s trajectory remains subject to evolving market dynamics, making it crucial for investors to stay abreast of both domestic and global factors influencing currency movements.

Stocks Highlights

Apollo Hospitals Enterprise Ltd. witnessed a positive uptrend as its share price increased by 1.28%, reaching Rs 5,980.35 from the previous close of Rs 5,904.55. In the last 19 years, only 2.33% of trading sessions recorded intraday gains exceeding 5%. Notably, a bullish signal emerged with a 5-day moving crossover on Jan 15, 2024, indicating a potential upward trend. Historical data suggests an average price gain of 3.23% within 7 days of such signals in the last 5 years.

Conversely, HDFC Bank Ltd. experienced a decline, with its share price dropping by -8.16% to Rs 1,542.15 from Rs 1,679.15. Despite this, the bank showcased robust performance with a YoY loan book growth of 16.96%, surpassing its 5-year CAGR of 13.84%. Additionally, the company’s annual revenue growth of 22.05% outperformed its 3-year CAGR of 11.52%. Investors noted a positive indication as a 20-day moving crossover appeared on Jan 15, 2024, historically leading to an average price gain of 2.76% within 7 days. As investors analyze these trends, cautious optimism prevails in the market.

Advance Decline Ratio

Today, the advance-decline ratio was 0.35, and the market breadth was negative. The volatility index India Vix increased by 11.10 percent to settle at 15.08 and the FIIs were net sellers today.

DAILY MARKET ACTION
Advancers – 654
Decliners – 1852
52Wk High –  94
52Wk Low – 16
High Band Hitters – 75
Low Band Hitters – 89
200d SMA – 19437
50d SMA – 20805
20d SMA – 21629

Top Gainers and Losers Stocks

The top gainers were Apollo Hospitals (+1.28%), HCL Technologies (+1.13%), Tech Mahindra (+0.95%), SBI Life (+0.87%), and LTIM (+0.71%).

The top losers were HDFC Bank (-8.16%), Tata Steel (-3.97%), Kotak Bank (-3.76%), Axis Bank (-3.43%), and Hindalco (-3.26%).

Top Gainers and Losers Sector

The top gainers sector were IT (+0.64%).

The top losers sector were Financial Services (-4.28%), Metal (-3.13%), Auto (-1.42%), Realty (-1.42%), and Oil & Gas (-0.99%).

SECTORS – NOTABLE ACTION
IT +0.64%
FINANCIAL SERVICES -4.28%
METAL -3.13%
AUTO -1.42%

Stocks Ban List

(SEBI) F&O ban list (NATIONALUM open at -136.75 and close at -133.60), (POLYCAB open at +4340.00 and close at +4439.30), (ABFRL open at -229.70 and close at -223.65), (ZEEL open at +248.60 and close at -245.85), (ASHOKLEY open at -174.20 and close at -171.40), (METROPOLIS open at -1544.00 and close at +1567.30), (HINDCOPPER open at -263.00 and close at +259.20), (DELTACORP open at -147.25 and close at -146.35), (CHAMBLFERT open at -384.30 and close at -384.95), (PVRINOX open at -1499.90 and close at +1509.40), (BANDHANBNK open at -227.15 and close at -228.30), (INDIACEM open at -255.00 and close at -252.35), (BIOCON open at +286.25 and close at -279.70), (INDUSTOWER open at -215.90 and close at -211.25), and (PEL open at -925.15 and close at +902.60) are not currently on the stock exchange.

A stock enters the Ban List if its MWPL is above 95%. Implying that, Ban List shows the Futures and Options (FnO) stocks whose combined open interest in all FnO contracts for a given period crosses 95% of Market-Wide Position Limit.

GNFC, BALRAMCHIN, IEX, RBLBANK, PNB, GMRINFRA, GRANULES, NMDC, IDEA, SUNTV, IRCTC, and UPL stocks has the possibilities of entrance in the ban list.

INDIACEM, BIOCON, INDUSTOWER, and PEL stocks has the possibilities of exit from the ban list.

Daily Pivots

As per the above pivots data, 21400 to 21800 is the Nifty 50 trading range.

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This article is only for educational purposes and is not an investment advice.