SENSEX plunges nearly 700 points, NIFTY50 drops below 24,700; here are key factors dragging markets

The Indian equity benchmarks fell for third straight session on Monday dragged down by losses in index heavyweights like Kotak Mahindra Bank, Bharti Airtel, Bajaj Finance, Tata Consultancy Services, Axis Bank and Bharat Electronics. The SENSEX fell as much as 687 points or 0.84% to hit an intraday low of 80,776 and NIFTY50 index touched an intraday low of 24,646.60. In the last three trading sessions, the SENSEX and NIFTY have declined over 2% each.

FII selling

Consistent selling by foreign institutional investors (FIIs) is adding to bearish sentiment on Dalal Street. The FIIs have so far this month sold shares worth ₹6,503 crore, data from the National Securities Depository Limited (NSDL) showed. The selling by FIIs came after three months of buying wherein they bought shares worth ₹38,673 crore.

The FIIs have so far this year sold shares worth ₹84,404 crore.

Weak Q1 earnings

Below par first quarter earnings by the Indian companies is also adding to weakness for equity markets. Most of the NIFTY50 companies that have reported earnings so far have missed street estimates, analysts said.

Kotak Mahindra Bank on Saturday reported a consolidated net profit of ₹4,472 crore for the June quarter and flagged stress on the retail commercial vehicle portfolio due to adverse macroeconomic conditions.

The consolidated net profit in the year-ago period was ₹7,448 crore, but it had included gains of over ₹3,000 crore on its stake sale in the general insurance arm, while the net profit for the March quarter stood at ₹4,933 crore.

On a standalone basis, the private sector lender's net profit dropped 7% year-on-year (YoY) to ₹3,282 crore, which was attributed to reverses on the core income front due to rate cuts by the RBI, slower growth in fee income, and also higher provisions.

Uncertainty over India-US trade deal

India must tread carefully in its ongoing trade negotiations with the United States, think tank Global Trade Research Initiative (GTRI) said on Sunday, pointing to the lessons from recent trade deals announced by the Trump administration with countries like Japan and Vietnam.

In order to prevent any misrepresentation, GTRI founder Ajay Srivastava said New Delhi should insist on a jointly issued written statement before acknowledging the final terms of any agreement.

Citing a July 25 document from Japan’s Cabinet Secretariat, GTRI highlighted a major disconnect between Tokyo’s interpretation of its recent trade engagement with the US and President Donald Trump’s public assertions.

Trump claimed the deal includes large Japanese investments and sweeping US access to Japanese markets, claims not supported by Japan’s official summary, which describes an ongoing negotiation with no binding commitments.

Japan has pushed back on Washington's assertions, saying no final agreement exists.

Sectoral landscape

Most of the major sector gauges compiled by the National Stock Exchange (NSE) were trading lower dragged down by NIFTY Realty index's nearly 4% fall. NIFTY Private Bank, PSU Bank, Metal, Media, IT, Bank and Financial Services indices also fell between 0.7-2%.

Broader markets were also trading on a weak note as NIFTY Midcap 100 index declined 0.65% and NIFTY Smallcap 100 index dropped 0.9%.

India VIX, the gauge of market volatility spiked by 6.56% to 12.02.

NIFTY50 losers and gainers

As many as 30 shares in the NIFTY50 index were trading lower. Kotak Mahindra Bank was top loser in the NIFTY50 index, the stock fell as much as 7.74% to hit an intraday low of ₹1,960 after the bank flagged stress on the retail commercial vehicle portfolio due to adverse macroeconomic conditions.

Bajaj Finance, Bharat Electronics, IndusInd Bank, Bharti Airtel, Nestle India, TCS and Titan also fell between 2-3.5%.

On the flipside, Shriram Finance, Cipla, Hero MotoCorp, SBI Life, Grasim and Hindustan Unilever were among the gainers.