Sensex drops 1,628 points, posts worst day in nearly 3 years dragged by HDFC Bank

The BSE benchmark 30-share S&P BSE Sensex posted its worst single-day performance in nearly three years on Wednesday dragged down by losses in HDFC Bank after its December quarter earnings failed to enthuse investors. The Sensex fell 1,628 points or 2.23 per cent to close at 71,500.76 and Nifty 50 index dropped 2.09 per cent or 460 points to close at 21,571.95.

Last time, the Sensex dropped over 2.23 per cent was on February 22, 2021, data from the stock exchange showed.

The sharp drop in markets came after the country's largest private sector lender HDFC Bank reported stagnant margins in December quarter and its provisions rose sharply to Rs 4,216 crore from Rs 2,904 crore in the previous quarter causing concerns among investors, analysts said.

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HDFC Bank posted its worst day in nearly four years. The stock had fallen over 8 per cent on March 18, 2020 last time, data from stocks exchange showed.

Losses in HDFC Bank alone contributed 944 points loss towards the Sensex and also had its ripple effect on other banking shares which led to Nifty Bank crashing 2,060 points or 4.28 per cent. All the 12 banking shares in the Nifty Bank index ended lower in range of 1-8 per cent with Private Bank index taking a cut of over 4 per cent.

ICICI Bank, Kotak Mahindra Bank, Axis Bank, IDFC First Bank and AU Small Finance Bank shares dropped around 3-4 per cent.

"Markets plunged sharply on Wednesday and lost nearly 2 per cent tracking feeble cues.  Pressure in the private banking majors post HDFC bank’s number combined with weak global cues was weighing on the sentiment. Nifty has engulfed the gains of the last four sessions but somehow managed to hold the support zone of the short term moving average (20 EMA).  The close indicates more pain ahead and can gradually inch towards the 21,200-21,450 zone," said Ajit Mishra, SVP, technical research at Religare Broking.

All the major sector gauges compiled by the National Stock Exchange, barring the measure of IT shares,  ended lower. Nifty Bank, Financial Services, Private Bank and PSU Bank indices dropped between 2-4 per cent.

Metal stocks also came under selling pressure after China, the biggest consumer of metals in the world, showcased slower than expected economic growth of 5.2 per cent in 2023.

Apart from HDFC Bank, Tata Steel, Hindalco, Adani Enterprises, UPL, JSW Steel, Divi's Labs, Grasim, Dr Reddy's Labs and Bajaj Finserv also fell between 2-4 per cent.

On the flipside, Apollo Hospitals, HCL Tech, Tech Mahindra, SBI Life, LTI Mindtree, Infosys and TCS were among the notable gainers.

The overall market breadth was extremely negative as 2,510 shares ended lower while 1,301 ended higher on the BSE.