In a volatile trading session on Tuesday, Indian shares experienced a significant downturn, erasing early gains. The financial sector, led by HDFC Bank, played a pivotal role in dragging down the market. Furthermore, Zee Entertainment faced a staggering 32% plunge following the collapse of its anticipated merger with Sony’s India unit.
The NSE Nifty 50, a key benchmark index, concluded the day 1.54% lower at 21,238.80 points, while the S&P BSE Sensex lost 1.47% to settle at 70,370.55. Despite opening with positive momentum, both indices succumbed to selling pressure that intensified as the session progressed.
HDFC Bank, a major player in the financial sector, witnessed a 3.5% decline, exerting significant downward pressure on the Nifty index. This drop extended the bank’s losses to approximately 15% since the disappointing release of its financial results last week. Ajit Mishra, SVP – Technical Research at Religare Broking, noted that the continuous selling in HDFC Bank has had a cascading effect on other banking majors, contributing to the overall market decline.
The broader market scenario was reflected in twelve of the thirteen major sectoral indexes settling in the red, with financials experiencing a notable 2% slide. The impact of disappointing results from banking majors reverberated across the markets. Saurabh Jain, Assistant Vice President for Research at SMC Global Securities, highlighted that the correction in small and mid-cap indexes, which had been anticipated for some time, further added pressure to the market. Small-caps and mid-caps both recorded a roughly 3% decline, marking a departure from their outperformance seen earlier in the year.
In the individual stock realm, Zee Entertainment faced a substantial setback, plummeting more than 32%, marking its worst performance ever. The steep decline followed the collapse of the broadcaster’s anticipated $10 billion merger with Sony’s local unit.
In summary, the Indian market’s sharp decline was attributed to the financial sector’s struggles, led by HDFC Bank, and the significant impact of Zee Entertainment’s failed merger. The broader correction in small and mid-cap indexes further contributed to the overall negative sentiment in the market. Investors are closely monitoring the unfolding situation as the market navigates through these challenges.