Indian equity markets extended their losses on Monday, with the BSE Sensex plunging more than 1,000 points and the NSE Nifty 50 falling nearly 300 points by 1.48 pm. Weakness in heavyweight private sector banks, elevated crude oil prices and concerns over foreign investor flows weighed on sentiment.
The sell-off came after both benchmark indices recorded their strongest weekly performance in around six months last week, gaining approximately 3% each. Monday’s decline wiped out a substantial portion of those gains as investors reassessed September-quarter earnings from major lenders, including HDFC Bank, ICICI Bank and Axis Bank.
The market opened on a weak note. The Sensex began the session at 74,594.65, down 134.62 points, or 0.18%, while the Nifty opened at 23,096.85, declining 49.30 points, or 0.21%.
According to market estimates reported on Monday, the sell-off erased around ₹4 lakh crore in market capitalisation as losses spread across benchmark and broader market indices.
Private banks lead the decline after quarterly results
Banking stocks were among the biggest drags on the market as investors assessed the latest earnings and profitability trends at major private sector lenders.
HDFC Bank, ICICI Bank and Axis Bank weighed on the Sensex, with concerns over earnings performance and net interest margins adding to the selling pressure.
HDFC Bank reported a second-quarter profit that narrowly missed analyst estimates. Weaker treasury income and higher provisions for bad loans offset strong lending growth. Axis Bank also posted a quarterly profit below expectations, as higher operating expenses and weaker other income weighed on its results.
Net interest margins declined at both HDFC Bank and Axis Bank, raising concerns about profitability.
In early trade, private sector banks fell around 1.7%. HDFC Bank shares were down 2%, while Axis Bank declined 4.1% as of 10.05 am.
ICICI Bank, however, reported a better-than-expected September-quarter profit, supported by stronger loan growth and lower provisions for bad loans. Its performance failed to offset the wider weakness across private banking stocks.
Public sector banks moved in the opposite direction, gaining around 2.2% in early trade. Punjab National Bank led the advances, surging 5.4% after reporting an expansion in its net interest margin.
Crude oil near $109 adds to market concerns
Oil prices remained another source of pressure, with Brent crude trading at around $108 to $109 a barrel during Monday’s session. Although prices eased from the $110-a-barrel level reached on Friday, geopolitical tensions in the Middle East continued to support crude prices.
Concerns about potential supply disruptions around the Strait of Hormuz, a crucial route for global energy shipments, added to uncertainty in financial markets.
US President Donald Trump’s move to waive sanctions and tariffs on Russia could potentially increase Russian fuel exports and ease supply concerns. However, persistent tensions in the Middle East have offset some of the potential relief.
For India, which relies heavily on imported crude oil, sustained high prices can increase the import bill, put pressure on the rupee and fuel inflation. Higher energy costs can also squeeze corporate margins and complicate the outlook for economic growth.
Foreign fund flows and Jio IPO liquidity in focus
Foreign portfolio investor (FPI) activity remained another concern for the market. Overseas selling has weighed on Indian equities amid elevated oil prices, a stronger US dollar and rising US bond yields.
FPIs turned net buyers on Friday after 15 consecutive sessions of selling, purchasing Indian shares worth ₹11.66 billion, according to provisional exchange data. Domestic institutional investors, however, recorded net outflows of ₹36.61 billion on the same day.
The return of foreign buying in a single session has not been sufficient to remove concerns over the broader direction of capital flows.
Investors are also watching the expected initial public offering of Jio Platforms, linked to billionaire Mukesh Ambani’s Reliance Industries. The offering, expected to open for subscription this week, could attract substantial investor funds and affect liquidity available for other stocks.
Mid-cap and small-cap stocks also face selling pressure
The downturn extended beyond heavyweight companies, with broader market indices also trading lower in early deals.
The Nifty Midcap 100 and Nifty Smallcap 100 indices declined, reflecting cautious sentiment among investors. The mid-cap and small-cap segments were down around 0.2% and 0.5%, respectively, as of 10.05 am.
Among individual stocks, Urban Company fell 7.4% after the online home services provider reported widening quarterly losses.
What investors will watch next
The market’s near-term direction is likely to depend on corporate earnings, crude oil movements and foreign investor flows.
Banking stocks will remain in focus as investors assess lenders’ net interest margins, loan growth, asset quality and management commentary following their September-quarter results.
Developments in the Middle East will also be crucial. A sustained rise in crude oil prices could increase inflationary pressure, widen India’s import bill and weaken the rupee, potentially limiting the scope for a recovery in equities.
Investors will also monitor the Jio Platforms IPO and its potential effect on market liquidity as they weigh the outlook for Indian stocks.