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Axis Bank and HDFC Bank Lead Sell-Off Amid Margin Concerns; Rising US-Iran Tensions and Higher Crude Oil Prices Weigh on Investor Sentiment

Indian benchmark equity indices ended sharply lower on Monday as heavy selling in frontline banking stocks, coupled with rising geopolitical tensions in the Middle East, dampened investor sentiment. The BSE Sensex declined 442.93 points, or 0.57 per cent, to close at 77,708.52, while the NSE Nifty 50 slipped 95.80 points, or 0.39 per cent, to settle at 24,238.50, closing below the key 24,240 level.

The market remained under pressure throughout the session after disappointing reactions to the quarterly earnings of Axis Bank and HDFC Bank, with investors expressing concerns over margins and future profitability. Escalating tensions between the United States and Iran, which pushed global crude oil prices close to $90 per barrel, further added to market volatility, increasing concerns over inflation, the rupee, and corporate earnings.

Despite the broad weakness, select defensive and utility stocks managed to post gains, helping benchmark indices recover from the day’s lowest levels.

Banking Stocks Lead Market Decline

The sharp correction in banking shares emerged as the biggest drag on the benchmark indices.

Axis Bank was the worst-performing stock on the Sensex, plunging 5.48 per cent after investors reacted negatively to its latest quarterly financial results.

HDFC Bank also witnessed heavy selling, falling 5.12 per cent, as analysts highlighted concerns regarding pressure on its Net Interest Margin (NIM) and earnings outlook.

Since both banks carry significant weight in benchmark indices, their decline accounted for a substantial portion of the day’s losses.

Sensex and Nifty End Lower

The 30-share BSE Sensex closed at 77,708.52, down 442.93 points, after touching an intraday low of 77,368.29, representing a decline of nearly one per cent during the trading session.

Meanwhile, the NSE Nifty 50 ended at 24,238.50, losing 95.80 points.

Although the indices recovered part of their intraday losses during the second half of trading, persistent weakness in banking stocks prevented any meaningful rebound.

Market breadth also remained largely negative as investors preferred profit booking in heavyweight stocks.

Margin Concerns Hurt Banking Sentiment

Market experts attributed much of the weakness to investor disappointment over banking sector earnings.

According to market analysts, HDFC Bank’s quarterly performance particularly disappointed investors because of weaker-than-expected net interest margins.

Pressure on margins has raised concerns regarding earnings growth in the coming quarters, prompting institutional investors to reduce exposure to banking stocks.

The banking sector remains one of the largest contributors to benchmark indices, making its performance crucial for overall market direction.

Geopolitical Tensions Add to Volatility

Apart from domestic earnings, global developments also weighed on investor confidence.

Renewed military tensions between the United States and Iran pushed international crude oil prices close to $90 per barrel, raising fears of higher inflation and increased import costs for India.

Higher crude prices generally exert pressure on India’s trade balance, inflation outlook, and corporate profitability, making investors more cautious toward equities.

Global uncertainty also encouraged investors to adopt a risk-off approach during Monday’s trading session.

Other Sensex Losers

Besides Axis Bank and HDFC Bank, several blue-chip companies ended the session in negative territory.

Among the major losers were Maruti Suzuki India, Kotak Mahindra Bank, Infosys, Tata Consultancy Services (TCS), Mahindra & Mahindra, and Bharat Electronics.

Profit booking in information technology, automobiles, and financial services further contributed to the decline in benchmark indices.

The broad-based selling reflected cautious investor sentiment ahead of additional quarterly earnings announcements this week.

Defensive Stocks Provide Some Support

Despite the overall weakness, a few heavyweight stocks managed to limit market losses.

Trent, Power Grid Corporation, NTPC, and Bharti Airtel finished the day in positive territory as investors shifted towards relatively defensive sectors.

Utility and telecom companies continued to attract buying interest because of their comparatively stable earnings outlook amid uncertain global conditions.

Their gains prevented the benchmark indices from closing near the day’s lowest levels.

Rupee Weakens as Crude Prices Rise

The weakness in equities coincided with pressure on the Indian currency.

The Indian rupee fell to a two-month low against the US dollar as rising crude oil prices increased demand for foreign currency.

Although market participants reported intervention by the Reserve Bank of India (RBI) to contain excessive volatility, the rupee remained under pressure because of global geopolitical developments.

Currency movements are being closely monitored as prolonged weakness could influence inflation and foreign investment flows.

Gold Bonds Continue Delivering Strong Returns

Even as equity markets witnessed volatility, investors in Sovereign Gold Bonds (SGBs) continued to enjoy healthy returns.

Recent data indicated that several SGB series have generated returns ranging between 34 per cent and 44 per cent, despite periodic corrections in international gold prices.

However, recent changes in tax treatment have somewhat reduced the attractiveness of new investments compared with earlier issuances.

Gold continues to remain an important portfolio diversification tool during periods of heightened geopolitical uncertainty.

Hyundai Expands EV Charging Network

In another significant corporate development, Hyundai Motor India announced the integration of nearly 30,000 electric vehicle charging points into its myHyundai mobile application.

The company also reaffirmed its plan to expand its fast-charging infrastructure to 600 charging stations by 2030, strengthening India’s growing electric mobility ecosystem.

The move is expected to improve charging accessibility and encourage wider adoption of electric vehicles across the country.

Investors Await More Corporate Earnings

Market participants are now focusing on the next round of quarterly earnings from major listed companies.

Analysts believe upcoming financial results from banking, IT, automobile, and manufacturing companies will provide clearer indications regarding corporate profitability during the current financial year.

At the same time, investors will continue monitoring developments in the Middle East, global crude oil prices, currency movements, and monetary policy expectations.

With geopolitical uncertainty remaining elevated and earnings season gathering momentum, market volatility is expected to persist in the near term.

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