The two key equity benchmarks, Sensex and Nifty, on Friday witnessed a bloodbath as the stock markets buckled under severe selling pressure to close at 3-month lows. The domestic indices plunged sharply on Friday, mostly led by an extended slump in Adani Group stocks which dampened investor sentiment. Somehow both the indices recouped a little bit of their losses minutes before closing.
The S&P BSE Sensex declined 874 points to close at 59,331, its lowest level since Oct 21, 2022 when it ended at 59,307. The NSE Nifty dropped to 17,604 with a massive loss of 288 points.
On the 30-share Sensex platform, SBI, ICICI Bank, IndusInd Bank, Axis Bank, Kotak Bank, TechM, HDFC Bank, Reliance emerged as prime losers. On the flip side, Tata Motors, ITC, M&M, UltraCemco, NTPC ended day’s trade in the green.
According to analysts, banking stocks were the top laggards as claims of high debt of Adani firms made by Hindenburg in its recent report had a sentimentally negative impact on the banking space, especially PSU banks.
In the broader markets, the BSE midcap index shed 1.2 per cent, while the Smallcap index declined 1.9 per cent.
Bucking the trend, auto stocks Tata Motors and Mahindra & Mahindra closed with gains. Tata Motors, which returned to profitability in the third quarter of FY23, rose the most by 6.34 per cent among Sensex shares. Mahindra & Mahindra advanced 0.71 per cent. ITC and UltraTech Cement were also among the winners.
"The sharp slump in the Indian market was triggered by an unfavourable research report on Asia’s richest promoter group companies. This is also affecting the banking stocks even though the results of the sector are optimistic due to high group lending, indicating potential risk. PSU banks are the most impacted compared to private banks owing to high exposure.
"The FIIs' cautious stance ahead of the Union Budget and FOMC meetings also fuelled the collapse," said Vinod Nair, Head of Research at Geojit Financial Services.
Adani group stocks took a beating falling up to 20 per cent after the US-based investment research firm Hindenburg Research made damaging allegations.
The group's flagship Adani Enterprises, which launched the 20,000 crore FPO on Friday, tanked 18.52 per cent. Adani Ports plunged 16 per cent, Adani Power by 5 per cent, Adani Green Energy by 19.99 per cent, and Adani Total Gas by 20 per cent.
Elsewhere in Asia, equity markets in Seoul, Tokyo and Hong Kong ended in the green. European benchmarks were trading higher during mid-session deals. Markets in the US had ended higher on Thursday. Stock markets were closed on Thursday on account of Republic Day.
International oil benchmark Brent crude climbed 1.35 per cent to $88.65 per barrel.
Foreign Institutional Investors (FIIs) offloaded shares worth Rs 2,393.94 crore on Wednesday, according to exchange data.
"Traders will now gear up for the next 2-big catalysts; interest-rate decision from the Federal Reserve to trickle in on February 1, and the Union Budget for 2023-24 to be presented on the same day," said Prashanth Tapse - Research Analyst, Senior VP (Research), Mehta Equities Ltd.