Indian equity benchmarks Sensex and Nifty fell sharply by over 1% in opening trade on Wednesday, dragged down largely by HDFC Bank results while lofty valuations also triggered widespread profit-taking.
HDFC Bank Single-handedly Pulls Market Down
HDFC Bank shares plunged nearly 7% to ₹1,560, accounting for a massive 167 points out of 250 points decline in Nifty 50 index.
This came as India’s largest private lender posted a 34% rise in Q3 net profit, which failed to enthuse investors amid concerns on slower loan growth and margin outlook.
Top brokerages like CLSA and Morgan Stanley also flagged the weak loan growth and lower liquidity coverage ratio as areas of worry.
Profit Booking from Record Market Highs
According to analysts, the crash also came as investors rushed to book profits after the markets hit lifetime highs earlier this week.
Nifty 50 had breached the 22,100 mark on Tuesday, indicating stretched valuations across market segments that were overdue for corrective action.
There are particular concerns that the mid and small cap space has run way ahead of fundamentals amid huge liquidity flows into the segment.
“With positives priced in and valuations at elevated levels, some profit booking from these highs is warranted. Investors can consider moving money to fixed income in a calibrated manner,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial.
Global Cues Remain Weak
Besides the above domestic factors, weak global cues added to the bearish sentiment.
Asian indices traded lower taking negative cues from Wall Street’s overnight losses due to jump in bond yields and growth worries
