NBFCs drag: Sensex plunges 470 pts as investors book profit

Equities declined on Monday for the second straight session, with the Sensex declining 470.4 points (0.96%) to close at 48,564.27. The 50-share Nifty declined by 152.4 points (1.06%) to close at 14,281.3. The broader markets led the decline with the Nifty Midcap 100 falling as much as 2.12%.

The markets were also weighed down by non-bank financial companies on fears over possible tighter rules for the sector. Shares of the country’s largest mortgage lender, HDFC, fell 2.41%, while Bajaj Finance and Bajaj Finserv dropped over 3%.

Experts believe along with its global peers, the Indian markets were also in an overbought zone which has led to investors book profits. In the last two trading sessions, the Nifty declined by 2.52%. The stock markets have also priced in the rollout of the Covid-19 vaccines and the economic recovery, according to experts.

Additionally, tepid cues from global markets contributed to the decline. Deepak Jasani, head – retail research, HDFC Securities, said, “The market could see some volatility till the Budget 2021. The markets are also responding to the global nervousness as most markets seem overvalued going by historical methods; also, the Covid-19 cases have not come under control in developed markets.”

The Nifty Midcap 100 had hit an all-time high in January because of the start of economic recovery, liquidity in the markets and a rush of new investors buying stocks. However, on Monday, the Nifty Midcap 100 underperformed the markets by falling sharply. The index fell by 2.2% to close at 21,470.15 whereas the Nifty Smallcap 100 fell by 1.77%.

Brokerages believe that the third quarter results for midcap stocks will be strong on the back of revival in housing, improving resumption and festive demand. Jefferies in its report said, “In Q3 fiscal year 2021, we expect our midcap coverage to clock double-digit growth in EBITDA/PAT, driven by improving resumption, housing revival, festive uptick and weak YoY base.”

Despite the overall weakness in the market, shares of HDFC Bank hit their 52-week high, they rallied by 0.91% to close at Rs 1,480 because of strong Q3 numbers.

Major losers on the Nifty were Tata Motors, Tata Steel, ONGC, Hindalco, and JSW Steel, down by 6.07%, 5.79%, 4.93%, 4.28% and 4.25%, respectively. Significant gainers were UPL, RIL, Titan, HDFC Bank, and Eicher Motors, up by 6.2%, 1.82%, 1.4%, 0.91% and 0.09%.

Foreign portfolio investors bought stocks worth $89 million, while domestic institutional investors sold stocks worth $5.8 million.