Closing Bell: Market Ends Lower Amid Volatility, Sensex & Nifty Dip; Why Did Midcaps Fall Today?

The Indian stock market closed in the red on Monday, despite a strong start led by gains in HDFC Bank. The benchmark indices, Sensex and Nifty 50, failed to hold onto their opening momentum and ended the day lower amid market volatility and heavy selling in midcap stocks.

At the close, the Sensex fell 73 points to 81,151, while the Nifty 50 also shed 73 points, ending the session at 24,781. A sharp sell-off in Kotak Mahindra Bank and IT giant Infosys dragged the indices down, overshadowing early gains from HDFC Bank.

Midcap stocks took a significant hit, with the Nifty Midcap 100 index plunging by 972 points, or 1.73%, to close at 57,678. The Nifty Smallcap 100 index was not spared either, dropping 1.63% to end at 18,766 points. The underperformance of midcaps kept the overall market breadth tilted heavily in favour of declines, with the advance-decline ratio standing at 1:3.

The selling pressure in midcaps was most pronounced in stocks such as RBL Bank, which hit a 52-week low and ended the day 14% lower following weak Q2 results. IndiaMART, which faced a brokerage downgrade after a disappointing Q2 performance, plunged 17%. PNC Infratech saw a dramatic 20% decline after being disqualified from participating in road ministry tenders for a year.

Among Nifty 50 stocks, 36 of the 50 constituents closed in negative territory. Tata Consumer Products led the pack of losers with an 8% fall following weaker-than-expected Q2 earnings. Kotak Mahindra Bank tumbled 4% as its net interest margin (NIM) slipped both quarter-on-quarter (QoQ) and year-on-year (YoY). Bajaj Finserv, BPCL, and IndusInd Bank also recorded losses exceeding 3%.

Infosys, which had earlier posted stable growth in its Q2 results, saw profit booking, adding to the pressure on the indices. UltraTech Cement ended the day lower, though it managed to recover from its intra-day lows after reporting a mild miss in its Q2 earnings.

On the flip side, HDFC Bank emerged as the top gainer in the Nifty 50, rising 3% on the back of its strong Q2 results. Bajaj Auto also saw gains of 3%, buoyed by positive management commentary. Other notable gainers included Asian Paints, Mahindra & Mahindra, and Eicher Motors, which posted gains of up to 4.3%.

Tejas Networks stood out in the broader market, surging 10% to a three-month high after reporting robust Q2 earnings. Garden Reach Shipbuilders also bucked the trend, rising 2% after receiving a Letter of Intent (LoI) for a project worth Rs 491 crore from the Ministry of Defence.

The ongoing Q2 FY25 earnings season has done little to lift investor sentiment, with most companies reporting subdued results. This has weighed heavily on market sentiment, especially with many stocks trading at elevated valuations that require strong performance to sustain these levels.

CG Power, which had surged earlier, fell 13% after weak Q2 results, while MRPL, L&T Finance, Mastek, and Swaraj Engines also reacted negatively to their respective earnings reports. On a positive note, Oberoi Realty, Netweb Technologies, and MCX reacted favourably to their Q2 numbers, providing some respite in an otherwise gloomy session.