Crack in HDFC; blood on the Street
₹4.6 trillion loss on investors as key indices fell the most in 19 months. Provisional data from BSE showed that foreign portfolio investors (FPIs) sold ₹10,578.13 crore worth of shares, the highest in a day, pulling down the Nifty and the Sensex by over 2%. HDFC Bank, India’s largest private lender with the highest weight in the indices, contributed to over a fifth of the day’s total wealth erosion.
The bank’s shares plunged 8.46% on BSE, erasing ₹1.07 trillion of value. The decline, the lender’s biggest fall in three years and 10 months, came after a mixed bag of earnings the previous day, with net interest income falling below market expectations. The steep fall pushed indices below important technical levels; unless indices cross their record highs scaled recently, investors may sell every time the market rises, analysts said.
Wednesday’s FPI selling was partly absorbed by domestic institutional investors, who purchased a provisional ₹4,006.44 crore, and retail/high net-worth investor buying of ₹34 crore till 12 noon, according to BSE. The fall in banks, which coincided with the expiry of the weekly Bank Nifty options expiry on Wednesday, dealt a severe blow to those long on banking stock futures and short on their options contracts, apart from the notional losses for holders of banking shares. The Sensex plunged by 1,628.01 points or 2.23% to 71,500.76, while the Nifty fell 460.35 points or 2.09% to 21,571.95.
HDFC Bank alone contributed to 944.11 points of the Sensex’s fall, followed by ICICI Bank Ltd (176.75 points), Axis Bank Ltd (88.29 points) and Kotak Mahindra Bank Ltd (84.85 points). Overall, these banks contributed to almost four-fifths or 80% of the Sensex’s fall. Not surprisingly, the Bank Nifty, which
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