HDFC Bank stock takes a big toll on key indices

HDFC Bank is currently under pressure after outperforming the market in the days leading up to the MSCI rebalancing, driven by expectations despite its weak earnings. The stock is now facing profit-booking as investors react to the phased inflows- Santosh Meena,Head of Research, Swastika Investmart Ltd

Bearish Markets 

♦ BSE tumbles 692.89 pts to 78,956.03

♦ NSE slumps 208 pts to 24,139

♦ HDFC Bank tanks over 3%

♦ Tata Steel, Bajaj Finance, SBI other laggards

♦ Mid, smallcap indices decline

♦ FIIs offloaded Rs4,680.51 cr in equities

Mumbai: Equity benchmark BSE Sensex tumbled nearly 700 points to sink below the 79,000 level on Tuesday, extending its losses for the second straight day due to selling pressure in HDFC Bank, SBI and ITC amid fresh foreign capital outflows.

The 30-share BSE Sensex tumbled 692.89 points or 0.87 per cent to settle at 78,956.03. During the day, it tanked 759.54 points or 0.95 per cent to 78,889.38. The NSE Nifty slumped 208 points or 0.85 per cent to 24,139. From the 30 Sensex firms, HDFC Bank declined over 3 per cent. Tata Steel, Bajaj Finance, State Bank of India, Tata Motors, Power Grid and JSW Steel were the other laggards.

In contrast, Titan, HCL Tech, Nestle, Sun Pharma, Reliance and Mahindra & Mahindra were the gainers. “The MSCI rebalancing is unfolding as anticipated, leading to mixed reactions among stocks -- some are seeing gains, while others are experiencing profit-booking. A key focus is HDFC Bank, which will see an increased weight, though with a lower adjustment factor. Consequently, the inflows will occur in two tranches, amounting to over $1.8 billion.

“HDFC Bank is currently under pressure after outperforming the market in the days leading up to the MSCI rebalancing, driven by expectations despite its weak earnings. The stock is now facing profit-booking as investors react to the phased inflows,” said Santosh Meena, Head of Research, Swastika Investmart Ltd.

Foreign Institutional Investors (FIIs) again turned sellers on Monday as they offloaded equities worth Rs 4,680.51 crore after a day’s breather, according to exchange data. “The weightage of HDFC Bank, the biggest private lender in India, would rise in its MSCI Global Standard Index over the course of two tranches. Although the street had expected the same thing to happen all at once,” Arvinder Singh Nanda of Master Capital Services Ltd said.

Meanwhile, retail inflation declined to a five-year low of 3.54 per cent in July mainly on account of subdued prices of food items, and base effect, according to official data released on Monday. India’s industrial production slowed to a five-month low of 4.2 per cent in June 2024, mainly due to poor performance of the manufacturing sector, though power and mining sectors continue to perform well, as per official data released on Monday. Global oil benchmark Brent crude declined 0.35 per cent to $82.01 a barrel. The BSE benchmark ended lower by 56.99 points or 0.07 per cent at 79,648.92 on Monday. The Nifty dipped 20.50 points or 0.08 per cent to 24,347.