The stock markets began the week on a weak note, with benchmark indices Sensex and Nifty falling more than 1% on Monday, October 19. The sharp decline wiped out approximately ₹3.6 lakh crore in investor wealth in a single trading session.
The sell-off came after markets had staged a recovery in the previous week, snapping an eight-week losing streak. However, weaker-than-expected quarterly earnings from major private sector banks, concerns over corporate profitability and uncertainty in global markets triggered renewed selling pressure.
The Nifty 50 declined 1.11% to close at 22,888, slipping below the psychologically important 23,000 mark. The BSE Sensex dropped 1.17% to settle at 73,852.
The broader market also remained under pressure, with the Nifty Midcap 100 and Nifty Smallcap 100 indices declining around 1% each.
Except for the Nifty PSU Bank index, all major sectoral indices ended in negative territory. Private banking, IT, FMCG, chemicals and cement stocks were among the worst performers.
The market correction resulted in a significant erosion of investor wealth.
The combined market capitalisation of companies listed on the Bombay Stock Exchange declined from ₹472.6 lakh crore in the previous trading session to approximately ₹469 lakh crore on Monday.
This represents a loss of nearly ₹3.6 lakh crore in market value in a single session.
Disappointing quarterly earnings from major private sector banks emerged as one of the biggest triggers for the market sell-off.
Private banking stocks declined around 1.7%, with HDFC Bank losing approximately 2% and Axis Bank falling more than 4%.
Although Axis Bank reported nearly 40% growth in net profit, concerns over declining net interest margins, rising operating expenses and weaker other income overshadowed the positive headline numbers.
HDFC Bank also disappointed investors as lower treasury income and higher provisions for potential loan losses weighed on profitability.
Both banks reported pressure on net interest margins, raising concerns about earnings growth in the banking sector.
HDFC Bank, ICICI Bank and Axis Bank together accounted for more than half of the Sensex's decline. The Nifty Private Bank index fell approximately 1.8%.
Market experts noted that investors were increasingly focusing on profitability, operating costs and asset quality rather than headline earnings growth.
Information technology stocks also came under selling pressure after a strong rally in the previous week.
The sector had recorded its best weekly performance in 18 years, prompting investors to book profits amid uncertainty surrounding upcoming corporate earnings in the United States.
Weakness in US technology and semiconductor stocks further dampened sentiment.
Investors remained cautious ahead of earnings announcements from major global companies, including Meta, Netflix, Tesla and IBM.
The combination of profit-booking and weak global signals dragged Indian IT stocks lower, adding to the broader market decline.
High crude oil prices continued to weigh on investor sentiment.
Brent crude declined more than 2% on Monday, moving towards $107 per barrel following a sharp rally in the previous week. However, prices remained elevated amid ongoing geopolitical tensions in the Middle East.
Attacks on Saudi Arabia by Iranian-backed Houthi rebels heightened concerns about potential disruptions to global energy supplies.
The US administration's decision to ease sanctions and tariffs on Russia raised expectations of increased Russian oil exports, offering some relief to supply concerns.
Nevertheless, persistent geopolitical uncertainty kept crude oil prices at elevated levels.
For India, which depends heavily on imported crude oil, sustained high oil prices could increase the import bill, put pressure on inflation and affect corporate margins.
While most sectors ended in the red, public sector banking stocks showed relative resilience.
The Nifty PSU Bank index was the only major sectoral index to avoid losses, supported by better-than-expected quarterly results from Punjab National Bank and improving operating trends.
Select infrastructure and commodity stocks also provided limited support, although gains were insufficient to offset the broader selling pressure.
Despite profit growth at some banks, investors remained concerned about narrowing margins, higher operating expenses and weaker treasury income.
Experts attributed the market correction to weak global cues and selling pressure in private banks and IT stocks. Global investors remained cautious ahead of a busy week of corporate earnings announcements.
The near-term direction of Indian equities will likely depend on upcoming quarterly earnings, global market trends and movements in crude oil prices.
Banking sector profitability will remain a key area of focus, particularly trends in net interest margins, operating expenses and provisions for bad loans.
Investors will also closely monitor earnings from major US technology companies for signals about global demand and corporate spending.
With volatility returning after the previous week's recovery, developments in global markets and corporate earnings could play a crucial role in determining whether Indian equities stabilise or face further selling pressure.