Nifty Bank falls 2,100 points to record biggest single-day fall since March 2022
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Synopsis
HDFC Bank's 7.51% intraday fall caused a 4.7% or 2,145 points decline in Nifty Bank, its worst since March 2022. All 12 Nifty Bank constituents were in the red, including AU Small Finance Bank, Kotak Mahindra Bank, Federal Bank, and State Bank of India (SBI). The fall affected Nifty Financial Services, which dropped 3.8% or over 800 points. HDFC Bank's Q3 earnings showed a 34% increase in net profit, but investors were concerned about loan growth and margins.
HDFC Bank's fall created a ripple effect in the entire banking and financial basket as Nifty Financial Services followed suit, correcting by over 960 points or 4.5% to test the day's low of 20,486.90
Read More: HDFC Bank shares tank 7% post Q3 earnings. What irked investors?
HDFC Bank's correction comes on the back of its December quarter earnings on Tuesday where the private lender reported higher provisions on a year-on-year basis. Despite a 34% uptick in its net profit, investors appeared unimpressed by the outlook on loan growth and margins by top brokerages.
"If we talk about the overall market, then 21,650–21,500 is a key demand zone for the Nifty. Until buy-on-dip texture is continued, while below 21,500, we can expect short-term weakness towards the 21,000–20,800 zone," Santosh Meena, Head of Research, Swastika Investmart said.
As for Bank Nifty, 46,500–46,250 is a key demand zone where we can expect a bounceback, Meena said, adding that below 47,250, there will be a risk of further weakness.
Stocks Recommendations
HDFC Bank's Q3 earnings were the first among top Indian lenders that also include ICICI Bank, SBI, Kotak Mahindra Bank, Axis Bank and IndusInd Bank.
Following its earnings, top brokerages like CLSA and Morgan Stanley red-flagged loan growth and lower liquidity coverage ratio (LCR) while maintaining their buy and overweight ratings, respectively. Kotak Equities, on the other hand, cut its earnings estimates while retaining a buy. Nuvama has downgraded the counter to hold.
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