August 13th 2024.
The Indian stock market faced a significant drop on Tuesday as the BSE Sensex fell by almost 700 points and reached below the 79,000 level. This was the second consecutive day of losses, and it was primarily due to selling pressure in some major companies such as HDFC Bank, SBI, and ITC. Along with this, there were also fresh outflows of foreign capital, which added to the already existing concerns.
The BSE Sensex, which consists of 30 shares, saw a decline of 0.87%, settling at 78,956.03. The market was quite volatile throughout the day, with the Sensex dropping as low as 759.54 points or 0.95% to 78,889.38. The NSE Nifty also experienced a significant drop of 208 points or 0.85%, reaching 24,139.
Out of the 30 companies listed on the Sensex, HDFC Bank saw the biggest decline of over 3%. Other major companies such as Tata Steel, Bajaj Finance, State Bank of India, Tata Motors, Power Grid, and JSW Steel also faced losses. However, there were a few gainers as well, including Titan, HCL Tech, Nestle, Sun Pharma, Reliance, and Mahindra & Mahindra.
According to Santosh Meena, Head of Research at Swastika Investmart Ltd, the ongoing MSCI rebalancing has led to mixed reactions among different stocks. While some have seen gains, others have faced profit-booking. HDFC Bank, in particular, has been under pressure as it had outperformed the market before the rebalancing, and now investors are reacting to the phased inflows.
The Asian markets, including Seoul, Tokyo, Shanghai, and Hong Kong, ended on a positive note. Similarly, the European markets were mostly in the green, while the US markets showed a mixed trend on Monday. Foreign Institutional Investors (FII) once again became net sellers on Monday, offloading equities worth Rs 4,680.51 crore, as per the exchange data.
Arvinder Singh Nanda of Master Capital Services Ltd noted that the weightage of HDFC Bank in the MSCI Global Standard Index is expected to rise over the course of two tranches, rather than all at once. This was different from the street's expectations, which could have caused some impact on the stock's performance.
Meanwhile, official data released on Monday showed that retail inflation has declined to a five-year low of 3.54% in July. This was mainly due to the subdued prices of food items and the base effect. In addition, India's industrial production has also slowed down to a five-month low of 4.2% in June 2024. The manufacturing sector's poor performance was the primary reason for this, although the power and mining sectors continue to do well.
The global oil benchmark, Brent crude, also saw a decline of 0.35% to $82.01 a barrel. On Monday, the BSE benchmark ended lower by 56.99 points or 0.07% at 79,648.92, while the Nifty dipped by 20.50 points or 0.08% to 24,347. These figures indicate the current volatility and uncertainties in the market, which may continue to impact the stock prices in the coming days.
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