Benchmark indices end 1 per cent lower amid global sell-off

Our Bureau Mumbai | Updated on July 19, 2021

A man walks past a screen displaying news of markets update inside the Bombay Stock Exchange (BSE) building in Mumbai ( file photo)   -  REUTERS

Financials lead downtrend on HDFC Bank Q1 results

Benchmark indices fell one per cent at closing amid global-sell off as bears took over on Monday. Market, after a negative opening, extended losses through the day, led primarily by financials, tracking losses in heavyweights such as the HDFC twins.

The BSE Sensex closed at 52,553.40, down 586.66 points or 1.10 per cent. It hit an intraday high of 52,821.17 and a low of 52,405.89. The Nifty 50 closed at 15,752.40, down 171.00 points or 1.07 per cent. It hit an intraday high of 15,836.90 and a low of 15,707.50.

Breadth remains positive

Despite the global sell-off, the breadth of the market remained positive with 1,757 stocks advancing, 1,571 declining and 164 remaining unchanged on the BSE. As many as 622 securities hit the upper circuit and 223 the lower circuit; 520 hit their 52-week high while 29 touched a 52-week low.

Vinod Nair, Head of Research at Geojit Financial Services, said, "Shadowing global sell-off, Indian indices slipped succumbing to world inflation woes, FOMC meeting next week and rising covid cases.”

“Banks led the domestic downtrend as initial quarterly results pointed to cautious asset quality due to the impact of the second wave. Slackening economic growth in the US-led to reports of likely downgrade in growth forecast in current year triggering global sell-off," added Nair.

NTPC, BPCL, Divi’s Labs, Nestle India and Tata Consumer were the top gainers on the Nifty 50 while HDFC Bank, IndusInd Bank, HDFC Life, Axis Bank and HDFC were the top laggards.

Binod Modi, Head Strategy at Reliance Securities, said, “Domestic equites fell sharply today on weak global cues as concerns over recent rise in fresh Covid-19 cases in various part of the world including US weighed on sentiments.”

“Financials have witnessed steeper correction today as subpar performance delivered by HDFC Bank in Q1-FY22 and visible deterioration in asset quality created apprehension among investors about Banks and NBFCs having exposure in retail and SME,” said Modi.

HDFC Bank down 3% on Q1 results

HDFC Bank suffered losses post its Q1-FY22 results which failed to meet expectations. HDFC Bank was down 3.28 per cent while HDFC was down 2.14 per cent.

The private sector lender reported a 16.1 per cent increase in its standalone net profit for the quarter ended June 30, 2021, at ₹7,729.6 crore.

Its net profit was ₹6,658.62 crore in the first quarter of last fiscal.

Noting that the country was hit by a second Covid wave in the first quarter of the fiscal, the bank said business activities remained curtailed for almost two-thirds of the quarter.

It also led to a decrease in the efficiency in collection efforts, it said.

HDFC Life also suffered losses and was down 2.74 per cent at closing post its Q1 FY 2022 results. HDFC Life Insurance reported a 33 per cent drop in its net profit to ₹302.25 crore for the quarter ended June 30, 2021 as against ₹451.09 crore in the same period a year ago.

Financials under pressure

On the sectoral front, as financials lagged, only pharma and realty managed to remain resilient. Auto, metals and IT also suffered losses.

Nifty Bank was down 1.88 per cent while Nifty Financial Services was down 1.94 per cent. Nifty Private Bank was down 2.03 per cent while Nifty PSU Bank was down 1.12 per cent. Nifty IT was down 0.46 per cent while Nifty Metal was down 1.36 per cent. Nifty Auto was down 1.13 per cent.

Meanwhile, Nifty Pharma was trading flat, up 0.24 per cent and Nifty Realty was up 0.43 per cent.

Broader indices

Broader indices were also in the red amid profit-booking.

Nifty Midcap 50 was down 1 per cent while Nifty Smallcap 50 was down 0.22 per cent. The S&P BSE Midcap was down 0.58 per cent while the S&P BSE Smallcap was down 0.31 per cent.

The volatility index rose 8.32 per cent to 12.68.

Published on July 19, 2021

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