Market wrap: SENSEX, NIFTY50 resume decline after a day's pause, dragged by banks

The Indian equity benchmarks resumed their downward journey after a day's pause in the previous session on Tuesday, September 2, dragged down by losses in banking shares.

The SENSEX fell as much as 753 points from the day's highest level, and the NIFTY50 index touched an intraday low of 24,522 after hitting an intraday high of 24,756.

The benchmarks staged a gap-up opening but succumbed to selling pressure in index heavyweights like HDFC Bank, ICICI Bank, Mahindra & Mahindra, Kotak Mahindra Bank, Bharti Airtel and Larsen & Toubro.

Losses in HDFC Bank, ICICI Bank, Mahindra & Mahindra, Kotak Mahindra Bank, Bharti Airtel and Larsen & Toubro collectively dragged over 300 points from the SENSEX.

The SENSEX ended 207 points lower at 80,158, and the NIFTY50 index declined 45 points to shut shop at 24,580. The measure of banking stocks on the National Stock Exchange (NSE), the NIFTY Bank index, fell 0.63%, or 341 points, to settle at 53,661.

On the macroeconomic front, the Reserve Bank of India said on Monday that India's current account deficit (CAD) narrowed to 0.2% of GDP, or $2.4 billion, during the April-June period of 2025–26, compared to 0.9% of GDP, or $8.6 billion, in the year-ago period, on the back of services exports.

Seven of 15 major sector gauges compiled by the NSE ended lower, led by the NIFTY Private Bank index's 0.7% fall. NIFTY Bank, Auto, Financial Services, Pharma and Healthcare indices also dropped between 0.2% and 0.66%.

On the other hand, FMCG, realty, oil & gas, metal and consumer durable shares witnessed buying interest.

Broader markets outperformed their larger peers as the NIFTY Midcap 100 index rose 0.27% and the NIFTY Smallcap 100 index advanced 0.53%.

Among the individual shares, shares of sugar companies such as Dhampur Sugar Mills, Balrampur Chini Mills, Shree Renuka Sugars, and Triveni Engineering, among others, witnessed a sharp rally after a report suggested that the government on Monday permitted sugar mills and distilleries to produce ethanol without any quantitative restrictions in the 2025-26 marketing year starting in November.

Shares of tyre companies rallied ahead of the Automotive Tyre Manufacturers Association (ATMA) meeting with the GST Council, chaired by the Union Finance Minister, on September 3 and 4.

ATMA on Monday sought a reduction of GST rates on tyres for automobiles to 5% from the current 28%, while asking the government not to treat them on par with luxury goods, citing their cost impact on key sectors such as transportation, agriculture, mining, and construction.

Dr Reddy's Labs was the top loser in the NIFTY50 index; the stock fell 2.34% to close at ₹1,250. Mahindra & Mahindra, ICICI Bank, Asian Paints, Cipla, Kotak Mahindra Bank, Trent, Cipla and Grasim Industries also fell between 0.85% and 2.33%.

On the flipside, Tata Consumer Products was the top gainer in the NIFTY50 index; the stock rose 2.77% to close at ₹1,105. Nestle India, Power Grid, NTPC, Tata Steel, Hero MotoCorp and Hindustan Unilever also rose between 1.15% and 2.22%.

The overall market breadth was positive, as 2,530 shares ended higher while 1,612 closed lower on the BSE.