Banking stocks drag down, Indian stock market experiences "Black Tuesday"

Indian stock market experiences a "Black Tuesday" as it is dragged down by financial stocks. The Sensex index drops over 1,000 points, and the Nifty 50 falls below 21,300 points. Zee Entertainment plunges 30% due to the failed merger with a subsidiary of Sony India.

On Tuesday, the Indian stock market opens high but then declines. In early trading, the Nifty index briefly rises by 0.8%, and the Sensex index opens up by 0.86%. However, both the Nifty 50 and Sensex indices continue to decline and close down by approximately 1.5%, reaching 21,238 points and 70,370 points, respectively.

The decline in the financial sector is the main factor dragging down the Nifty. HDFC Bank falls by over 3%, leading the decline in financial stocks. The largest-weighted financial stocks among the 13 major sectors drop by 1.6%. HDFC has fallen by 14% since its earnings report was released last week.

To make matters worse, Zee Entertainment plunges by 30%, marking its largest decline since January 2019. Sony plans to terminate the merger deal between its subsidiary and ZEE.

Saurabh Jain, Assistant Vice President of Research at SMC Global Securities, points out:

The mixed results of this earnings season indicate that specific stocks will drive the market. Due to the withdrawal of overseas investors, HDFC Bank continues to weaken, while the mid-cap index is experiencing a correction after a rise in valuation.

The small-cap and mid-cap indices in India fall by 1.5% and 2.2% respectively. So far this year, they have outperformed the large-cap stocks, continuing the trend from last year.

Rahul Sharma, Research Head at Equity99, a stock advisory firm, states:

Another reason for the market losses is that participants have reduced their stock positions during the volatile futures and options (F&O) expiry week.