The Indian stock market erased their early gains and crashed with Sensex struggling to hold around 74,000 pivotal levels and Nifty 50 falling below 22,500 mark. The market crashed after banking stocks witnessed sharp selling pressure on Monday, with IndusInd Bank major draggers. Private bank stocks were top losers in the second half, which was not the case in the first half of the March 10th trading session.
Sensex, Nifty:
As the market nears to closing, Sensex nosedived by at least 301 points to hit an intraday low of 74,031.93. While Nifty 50 slipped by at least 123.5 points to an intraday low of 22,429.05.
India's volatility index (VIX) surged by over 4.4%. Meanwhile, Nifty Midcap 100 and Nifty Smallcap 100 dropped by 1.5% and 1.7% respectively. Except for the FMCG index, all other indices were in deep red.
All stocks listed on Bank Nifty plunged with IndusInd Bank share crashing by 4% followed by PNB, Canara Bank, IDFC First Bank and Bank of Baroda shedding 1% to 3%. Other stocks like ICICI Bank, Axis Bank, HDFC Bank, Kotak Bank, AU Small Finance Bank and SBI were down.
Nifty Bank and Nifty Private Bank tumbled by nearly 1%, while Nifty PSU Bank plunged by 2%. Nifty Auto was down by 1.2%, while Nifty Realty, Nifty Oil & Gas, and Nifty Consume Durables stock plummeted by 1.5% to 2%.
One of the major reason why banking stocks dragged market is because of panic selling in IndusInd after RBI granted only one-year extension to MD & CEO Sumant Kathpalia, which is far lower from 3 years tenure that the bank had requested.
As per experts, the approval of lower tenure from RBI raises uncertainty in leadership and concerns over the bank's direction ahead.
Also, as per Trading Economics, traders continued to closely monitor developments in tariff talks amid a lack of domestic market catalysts. Market participants anticipated the release of the US inflation and jobs data for February to guide the Fed's monetary policy path. However, the latest data from India's top trading partner, China, limited the gains, as consumer prices in the mainland fell the most in 13 months, while producer prices continued to drop, highlighting further weak domestic demand.
Meanwhile, as per r. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, the important question which investors have in mind when the new trading week begins is: will Nifty's outperformance last week continue? The declining intensity of FII selling witnessed last week is a positive. But the market momentum witnessed last week is unlikely to continue beyond a point since the element of uncertainty is high.
Vijaykumar added, "The threat of reciprocal tariffs on India starting early April is a major negative which the market cannot shrug off. There is no clarity on which sectors will be impacted by the tariffs. This uncertainty will keep the market range bound."
Investors can play it safe by focusing on domestic consumption themes which will not be impacted by the potential tariffs. Export-oriented segments like IT and pharma will be volatile in responding to news flows surrounding US actions, Geojit's strategist said. He added fair valuation of large caps is ideal for calibrated systematic buying in them.
Nifty Weekly Outlook:
In its weekly outlook report, Axis Securities highlighted that 22750 remains a key short-term resistance, aligning with the previous breakdown level, a bearish gap on the weekly chart, and the 20-SMA. A decisive close above this level could drive the index toward the upper band of the falling channel from it's all-time high, around 23300.
On the downside, the 22000-21800 zone remains a critical support area, Axis Securities added, "A breakout above 22750 could trigger buying, pushing the index toward 23000-23300, while a drop below 22250 may invite selling toward 22000-21800."
Bank Nifty Weekly Outlook:
Axis Securities note said, "On the weekly chart, it has formed a long-legged Doji, reflecting market uncertainty. A decisive move in either direction will set the tone for the coming sessions."
The brokerage also pointed out that if Bank Nifty found support at 47850, aligning with the 78.6% Fibonacci retracement of the 46078-54467 rally and a recent swing low. Holding this level could trigger a rebound, but a decisive close above the downward-sloping trendline from mid-December 2024, placed at 48750, is crucial for confirmation. A sustained move above 48750 could drive the index toward 49000-49500, whereas a break below 48000 may lead to 47500-47000. For the week, Bank Nifty is expected to trade within 49500-47000 with a mixed bias.
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