Stock markets decline dragged by banks, elevated crude oil prices

Market benchmark indices Sensex and Nifty ended lower on Friday after two days of gains, dragged down by bank, financial stocks, and crude oil prices trading above $80 per barrel mark.

The 30-share BSE Sensex dropped 455.59 points, or 0.58 per cent, to settle at 78,499.17. During the day, it tanked 577.69 points, or 0.73 per cent, to 78,377.07.

The 50-share NSE Nifty dipped 65.35 points, or 0.27 per cent, to end at 24,570.65. Intra-day, it declined 113.25 points, or 0.45 per cent, to 24,522.75. From the Sensex pack, Bajaj Finance tanked 5.90 per cent and Bajaj Finserv was down 4.18 per cent. ICICI Bank, Trent, Axis Bank, and Asian Paints were also among the laggards. Tata Consultancy Services, Mahindra & Mahindra, State Bank of India, and Tech Mahindra were among the winners. Financial stocks bore the brunt of the selling after the Reserve Bank of India released a draft framework proposing tighter norms for certain revolving credit products offered by non-bank financial companies (NBFCs).

“Bajaj Finance plunged 5.9 per cent, while Bajaj Finserv and other lending stocks also came under pressure as investors assessed the potential impact on future loan growth, product flexibility, and profitability,” Ponmudi R, CEO of Enrich Money, an online trading and wealth tech firm, said.

Bajaj Finance tumbled 5.90 per cent to end at Rs 1,082, while Bajaj Finserv declined 4.18 per cent to Rs 2,001.90. “Indian equities ended lower on Friday as a sharp sell-off in financial stocks, lingering uncertainty over a lasting peace agreement in the Middle East and investor caution ahead of the closely watched US non-farm payrolls report weighed on market sentiment,” Hariselvan Radhakrishnan, Founder & CEO of HST Wealth, a Research Analyst firm, said.

Shares of Bajaj Finance and Bajaj Finserv were among the biggest drags on the benchmark indices, with selling pressure spreading across the broader NBFC space as investors assessed the potential implications of proposed regulatory changes, he added.

The BSE SmallCap Select index went up by 0.20 per cent and MidCap Select index edged higher by 0.19 per cent. Among sectoral indices, financial services dropped 1.33 per cent, private banks index (1.04 per cent), top 10 banks (0.97 per cent), consumer durables (0.90 per cent), housing finance (0.81 per cent), bankex (0.61 per cent) and insurance (0.61 per cent). Focused IT jumped 1.44 per cent, auto (1.33 per cent), IT (1.16 per cent), PSU bank (0.76 per cent) and healthcare (0.50 per cent).

This week, the BSE benchmark climbed 404.53 points, or 0.51 per cent, and the Nifty went up by 187.05 points, or 0.76 per cent. Brent crude, the global oil benchmark, dipped 0.35 per cent to $82.20 per barrel. Foreign Institutional Investors (FIIs) offloaded equities worth Rs 17.86 crore on Thursday, according to exchange data. “Indian equity markets ended modestly lower on Friday as renewed uncertainty surrounding the Strait of Hormuz negotiations and broad-based weakness in financial stocks overshadowed an otherwise supportive earnings backdrop.

“Investor sentiment remained cautious as markets weighed geopolitical risks alongside the potential implications of fresh regulatory proposals for the non-bank lending sector,” Ponmudi R, CEO of Enrich Money, an online trading and wealth tech firm, said. For the entire week, both benchmark indices faced divergence after stock exchanges introduced a new auction mechanism for shares having futures and options (F&O) contracts.

The closing auction session in the equity cash segment became operational on Monday, introducing a new auction-based mechanism for determining the closing prices of eligible stocks in a move aimed at making the price discovery process more transparent and robust.

“Market sentiment remains measured as the absence of a definitive geopolitical resolution in the Middle East continues to keep crude oil prices volatile,” Vinod Nair, Head of Research, Geojit Investments Ltd, said. In Asian markets, South Korea’s KOSPI and Japan’s Nikkei 225 index ended lower, while Shanghai’s SSE Composite index and Hong Kong’s Hang Seng index settled higher.

Markets in Europe were trading in positive territory. US markets ended lower on Thursday. On Thursday, the Sensex climbed 373.76 points, or 0.48 per cent, to settle at 78,954.76. The Nifty traded in a narrow range for the day and edged marginally higher by 11.35 points, or 0.05 per cent, to end at 24,636.