Sensex slides for second day. 11,050 seen as key level for Nifty3 min read . Updated: 27 Jul 2020, 06:27 PM IST
- ICICI Bank today slumped 6% while Axis Bank and HDFC Bank declined over 3% each
- Gains in HCL Tech, Infosys and TCS capped losses
Indian markets moved lower today today, dragged by heavyweight banking stocks while IT stocks capped losses. The NSE Nifty 50 index closed down 0.56% to 11,131.8 and the benchmark S&P BSE Sensex ended about 200 points lower at 37,934 as indices extended losses to the second day. Global markets were impacted due to rising US-China tensions and suspected second wave of virus infections.
Banking stocks slid after a report released by the Reserve Bank of India (RBI) on Friday evening said bad loans could rise as much as 15% of the total loans by March 2021. Rating agency Fitch today also said India's state-run banks would have "substantially higher" recapitalisation requirements as a pandemic-led asset quality deterioration begins.
The Nifty banking index fell as much as 3.6%, with HDFC Bank shedding 3.3% and Axis Bank dropping 3%. The state-run banking index declined as much as 3.3%.
ICICI Bank fell about 6% after the lender reported a profit that missed estimates for the quarter ended June as its provisions for bad loans rose sharply.
IT stocks capped losses a with HCL Technologies rising 3.13% while Infosys gained 2.8% and Tata Consultancy Services advanced 2.3%.
Here is what analysts said on on today’s market performance:
Nagaraj Shetti, Technical Research Analyst, HDFC Securities
"Today's decline is so far not showing any reversal indication in the market. A sustainable move above 11250 and a sharp weakness below 11050 levels is expected to bring sharp momentum into the market on either side. The short term trend of Nifty is range bound with weak bias. Upside breakout could pull Nifty towards 11550 and a downside breakout of the range open lower target of 10900-10850 in the near term."
Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities
“Our stock indices mirrored the volatility in global markets. The Nifty ended lower mainly due to weakness in financial and pharmaceutical stocks. Consolidation in the market is on the verge of breaking down in the near future. One needs to be careful when adding long positions at high levels. Buying on dips should only be on large supports such as 10900 or 10800. Avoid shopping on minor repairs. The resistance exists at 11300/11350 levels."
Ajit Mishra, VP - Research, Religare Broking Ltd.
"Markets started the week on a negative note as RBI’s recent statements over a possible rise in NPAs in FY21 spooked investor sentiments. However, strength in IT and Oil & Gas names managed to restrict the losses for the Nifty as it ended lower by 0.6% to close at 11,132 levels. The broader markets underperformed wherein both Midcap and Smallcap ended lower by 0.9% each."
"We expect a breather in the index, after rising for the six successive weeks. Meanwhile, earnings announcements from select Nifty majors and upcoming derivatives expiry of July month contracts will keep the participants busy. Globally, the US Fed meet scheduled this week and key economic data announcements will also be on their radar. We suggest limiting leveraged trades and preferring index majors over others."
Manish Hathiramani, Index Trader and Technical Analyst, Deen Dayal Investments
"The markets did threaten a close below 11100 but managed to keep above that level for most of the day. It is crucial that we do not break those levels on a closing basis as that would make the short term weak and we could see a slide of 150-200 points. In order to resume the existing uptrend, we need to cross 11300."
Vinod Nair, Head of Research at Geojit Financial Services
"Indian benchmark indices ended a volatile day in the red, following negative global cues and domestic uncertainties. Financials led the losses following an RBI report which expected a surge in bad loans this year. Record number of virus infections in India also added to the uncertainty. Investors are advised to remain stock specific and keep accumulating only quality stocks in this scenario." (With Agency Inputs)