New Delhi, 19 October (H.S.): The Indian stock market witnessed a sharp decline on Monday, the first trading day of the week, as investors engaged in heavy profit-booking in shares of major companies. The biggest factor behind the reversal of the market’s strong upward momentum over the previous two sessions was reportedly a steep fall in heavyweight banking stocks. In particular, the second-quarter results of HDFC Bank, the country’s largest private sector lender, released over the weekend, disappointed investors.
According to Prashant Dhami, Vice President of Dhami Securities, the bank’s latest results raised concerns among domestic and foreign investors about mounting pressure on its net interest margin (NIM) and the sluggish pace of earnings growth. As a result, HDFC Bank’s shares fell by nearly 2 per cent on Monday, weighing heavily on overall market sentiment.
Weakness in the domestic market was further compounded by deeply negative signals from international markets. Asian equities faced widespread selling pressure during Monday’s trading session, and the impact was also felt on Dalal Street.
Dhami said technology stocks came under heavy selling pressure amid concerns over the substantial funding and large-scale investments being channelled into artificial intelligence (AI)-related companies. The MSCI Asia Index fell by around 0.5 per cent, while Japan’s Nikkei futures registered a sharp decline of 1.3 per cent.
Hong Kong’s Hang Seng Index and the Shanghai Composite Index also traded in negative territory. Earlier, US markets had witnessed a significant sell-off on Friday amid turbulence in AI and technology stocks and a surge in crude oil prices. The Nasdaq Composite fell 2.19 per cent to close at 26,128.13 points, while the S&P 500 and the Dow Jones Industrial Average declined by 1.22 per cent and 0.55 per cent, respectively.
Market experts said persistently high international crude oil prices were another major source of concern for investors. Although Brent crude fell by around 1.5 per cent to USD 108.27 per barrel on Monday, while West Texas Intermediate (WTI) crude slipped to USD 100.83 per barrel, prices remained above the psychologically significant USD 100-per-barrel threshold.
Geopolitical tensions and concerns over potential supply disruptions have continued to keep crude oil prices elevated despite Monday’s decline.
India imports approximately 85 per cent of its crude oil requirements from international markets. Consequently, persistently high oil prices remain a significant concern for the Indian economy and corporate profitability, weighing on investor sentiment.
Despite the prevailing negative sentiment and the sharp market correction, technical analysts and market experts have not turned entirely pessimistic about the market’s underlying strength. According to market observers, the market’s ability to close above its 20-day simple moving average (SMA) in the previous trading session for the first time since August suggests that the potential for an upward move remains intact.
Experts noted that the market had rallied by more than 4 per cent in a largely one-sided move from the lower Bollinger Band. Against this backdrop, Monday’s decline could be viewed as a normal technical correction or a mean-reversion move rather than a fundamental deterioration in the market outlook.
From a technical perspective, the short-term outlook for the market is expected to remain positive as long as the Nifty does not break below the crucial support level of 22,780. If this support holds, the upside target of 23,600 remains firmly in place, according to market experts.
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Hindusthan Samachar / Jun Sarkar
