SENSEX, NIFTY close down over 1%: Key factors that pulled down markets

MUMBAI, Jan 23: Indian markets witnessed a sharp plunge today, with NIFTY50 and SENSEX pared early gains to decline 1.5% and 1.4% respectively. Sell-off in frontline banking stocks like HDFC Bank (-3.2%), SBI (-4.0%), Axis Bank (-3.4%), IndusInd Bank (-6.1%) dragged down the market.

Heavy sell-off was witnessed in broader markets as well, with Nifty Midcap 100 and the Nifty Smallcap 100 indices declined 3.1% and 2.8% each. Meanwhile, on the sectoral front, NIFTY Media tanked 12.8% as Zee Entertainment shares declined 30% intraday after Sony Pictures scrapped its $10-billion merger with the company.

Here are the key factors behind today’s market crash

Banking stocks on decline: A sell-off in bank stocks led to a decline in the overall market. BANK NIFTY closed 2.2% lower, while NIFTY PSU Bank index was down 4.1%. HDFC Bank was amongst the top losers again, hitting a 52-week low of ₹1,425 per share. In the past one week, the stock has tanked 15% due to liquidations from foreign investors.

Consistent FIIs selling: So far this month, foreign institutional investors (FIIs) have offloaded Indian equities worth more than ₹23,000 crore. A sustained outflow by foreign investors too has dented the investor sentiments.

Geopolitical concern: Tensions in the Red Sea region and war escalation between Israel-Palestinian has also dented investors sentiments in the global market. Repercussions of these events were felt in the commodity market as Crude oil prices gained strength over the weekend and traded above $80 per barrel.

F&O expiry week: Markets are also highly volatile this week as monthly F&O contracts of NIFTY50 and the NIFTY Bank expire this week. Also, market trading sessions are cut short because of two trading holidays.