Sensex, Nifty fall 1%; investors lose Rs 1.85 lakh crore in a day

A sharp selloff in the Indian market resulted in losses to the equity benchmarks for the third consecutive session on October 1 as worries over a crisis in the banking and NBFC space deepened.

The market opened higher but failed to hold altitude, with the health of banks and NBFCs weighing on investor sentiment.

The recent developments around Punjab & Maharashtra Co-operative (PMC) Bank and Lakshmi Vilas Bank have shaken investor confidence that were already under pressure due to the gloomy macroeconomic environment.

September auto sales numbers reaffirmed the slowdown in consumer demand, while a set of government data on September 30 showed that eight core industries in August recorded a 0.5 percent decline in output of coal, crude oil, natural gas, cement, and electricity.

“The Indian equity indices witnessed a sharp fall following a heavy selling in banking stocks due to rising fears of their exposure to troubled real estate and housing finance companies,” said Ajit Mishra, Vice President–Research, Religare Broking.

“We expect that weak macro data points as well as disappointing auto sales numbers may weigh on investor sentiment in the near-term. Further, global developments such as the US-China trade war as well as crude oil price movement, amid rising tension between Saudi Arabia and Iran would keep the market participants on edge.”

The RBI monetary policy may provide further direction to the market. A 25bps rate cut is widely expected and all eyes will be on the central bank’s outlook on inflation and growth.

The Sensex closed 362 points, or 0.94 percent, down at 38,305.41, with 23 stocks in the red and only seven – HDFC Bank, Mahindra & Mahindra, Maruti Suzuki, HDFC, Kotak Mahindra Bank, Hindustan Unilever and Asian Paints – in the green.

YES Bank, IndusInd Bank, State Bank of India, Bharti Airtel and ONGC were among the top losers.

The overall market capitalisation of BSE-listed firms dropped to Rs 1,45,32,392.02 crore from Rs 1,47,17,456.10 crore on October 1, making investors poorer by Rs 1.85 lakh crore in a single day.

The Nifty pack fell 115 points, or 1 percent, to 11,359.90. As many as 39 stocks ended in the red in the 50-share index.

Broader markets suffered more than the headline indices. The BSE Midcap cracked 1.54 percent and Smallcap finished 1.61 percent lower.

All sectoral indices remained in the line of fire. BSE Telecom was down 4.53 percent, Realty 3.88 percent and Teck lost 2.20 percent.

Top news of the day

The Supreme Court said Maharashtra Chief Minister Devendra Fadnavis will have to stand trial for allegedly failing to furnish details of two pending criminal cases in his affidavit for the 2014 state poll.

The Finance Ministry has left unchanged the interest rates on small savings schemes such as the Public Provident Fund, National Savings Certificate, Sukanya Samriddhi Yojana (SSY) and post-office savings schemes.

The RBI began its rate-setting huddle amid widespread expectations that the monetary policy committee headed by Governor Shaktikanta Das would slash benchmark interest rate to revive the sagging economy.

India’s June-September monsoon rains are likely to start withdrawing from the northwest region from October 10, marking the most delayed retreat of the seasonal rainfall, reported Reuters, quoting Indian Meteorological Department.

The Supreme Court recalled its direction in the March 20, 2018 verdict that allegedly diluted provisions of arrest under the SC/ST Act.

The top court has fixed November 14 to commence hearing on a bunch of petitions challenging the constitutional validity of the Centre’s decision to abrogate the provisions of Article 370 that gave special status to Jammu and Kashmir.

Stocks in news

Falling for the fifth session in a row, shares of YES Bank closed the day with a loss of 22.80 percent at Rs 32 on BSE on October 1 amid concerns over its exposure to some troubled NBFCs, including Indiabulls Housing Finance. The overall market capitalisation of the firm now stands at Rs 8,161 crore.

Shares of Dewan Housing Finance Corporation (DHFL) cracked 19.90 percent to Rs 31 despite the company’s clarification that it had no exposure to either Housing Development and Infrastructure (HDIL) or PMC Bank.

Extending its losses to the third consecutive session, shares of RBL Bank ended 8.71 percent down at Rs 300.10 over concerns of its exposure to troubled Indiabulls Housing Finance.

Ending the losing spree of the five consecutive sessions, shares of Indiabulls Housing finance jumped 4.68 percent to Rs 267.45 after it said the Delhi High Court had issued notices to Prashant Bhushan for perjury and for dismissal of the PIL.

Shares of Container Corporation of India (Concor) rallied 5.77 percent to settle at Rs 639.50 after a media report indicated that the Adani Group might acquire a stake in the company from the government.

Shares of Escorts climbed 4.89 percent to Rs 609.40 after the farm equipment and engineering major reported a 2.2 percent increase in tractor sales at 10,855 units in September.

Bharat Petroleum Corporation jumped 5.11 percent to Rs 494.05 after a group of secretaries cleared divestment in the public sector downstream company.

Global updates

European shares dipped as weak factory activity data from across the eurozone spurred fears of an economic slowdown, overturning early gains due to signs the US was not seeking another radical escalation of its trade war with China, reported Reuters.

Asian share prices ticked up, as some investors clung to hopes that the fourth quarter will bring progress in resolving the US-China trade war. Korea’s Kospi climbed 0.45 percent to end at 2,072.42, while Japan’s Nikkei ended 0.59 percent higher at 21,885.24. Chinese markets were closed and will remain so until October 7 on account of the national day.

Technical outlook

The Nifty saw a gap up opening and attempted to build upon the early gains. A falling trendline on the hourly chart, however, restricted the upside and pushed the index down to 40-hour exponential moving average and the hourly lower Bollinger Band.

The two in combination acted as a cushion in the first half. In the second half, however, the bears cracked through the support zone and pushed the Nifty down 226 points intraday.

“The benchmark index is unlikely to witness deeper correction hereon. On the downside, 11,200-11,180 is a crucial support zone for the Nifty. Though the index can take some time to pick up momentum on the upside, the overall trajectory is likely to be positive from short to medium-term perspective,” said Gaurav Ratnaparkhi, Senior Technical Analyst at Sharekhan by BNP Paribas.Get access to India’s fastest growing financial subscriptions service Pro for as little as Rs 599 for first year. Use the code “GETPRO”. Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the website or mobile app.