Stock Market Crash? Indian banking stocks nosedive to rock bottom; HDFC eyes largest intraday drop since 2020

Stock Market Crash: The primary cause behind this market shake-up appears to be investor dissatisfaction with HDFC Bank's Q3FY24 performance.

Mayank Kasyap
Follow us:
Courtesy: ANI

Stock Market Crash: In a surprising turn of events, Indian banking stocks faced a substantial downturn in Wednesday's trade, marking one of the most significant intraday falls witnessed in the past two years. HDFC Bank, the country's largest private sector bank, took the lead in this downturn, experiencing an alarming drop of 8.44%, with its shares plummeting to ₹1,537.50 apiece in today's trade. This marks the most significant intraday drop for HDFC Bank since 2020, resulting in a staggering ₹92,000 crore reduction in the bank's market capitalisation.

Stock Market Crash: Market-wide impact on private sector banks

The negative trend extended to other leading private sector banks, with Kotak Mahindra Bank witnessing a substantial drop of 3.7%, while Axis Bank, ICICI Bank, and IndusInd Bank saw their shares decline by 3.3%, 2.7%, and 1.4%, respectively. This collective downturn resulted in a significant decrease in the market capitalisation of these banks, amounting to ₹1.44 lakh crore in today's trading session.

Stock Market Crash: Concerns over HDFC Bank's Q3 FY24 performance

The primary cause behind this market shake-up appears to be investor dissatisfaction with HDFC Bank's Q3FY24 performance. Despite reporting a noteworthy 33% improvement in net profit on a Year-over-Year basis, concerns arose over the bank's core net interest margin (NIM) on total assets, which decreased to 3.4% from 3.65% in the previous quarter (Q3FY23).

Stock Market Crash: Challenges, financial indicators

HDFC Bank faced challenges as its provisions increased to ₹4,217 crore on a standalone basis, compared to ₹2,904 crore in the quarter-ago period. Operating expenses during the quarter also surged to ₹15,900 crore, up by 28.1% YoY. The bank's December quarter performance triggered diverse reactions from brokerage houses, with varying outlooks on the stock.

Stock Market Crash: Market-wide impact?

The sharp decline in banking shares significantly impacted the broader market indices. The Nifty 50 experienced a notable drop of 2.08%, settling at 21,571 points. This intraday dip erased all gains accumulated over the last five trading sessions, marking the index's most substantial intraday drop since June 2022. The S&P BSE Sensex also witnessed a considerable decline of 1,628 points, or 2.23%, concluding the session at 71,500 points.

Stock Market Crash: Sectoral impact, notable exceptions

Among sectoral indices, the Nifty Bank observed a sharp decline, plunging by 2,060 points, or 4.28%, marking the most significant intraday fall since February 2022. Other sectoral indices that experienced declines include Nifty Metal (down by 3.13%), Nifty Realty (-1.42%), Nifty Auto (-1.42%), and Nifty FMCG (-0.87%). On a positive note, Nifty IT stood out, finishing today's trade with a gain of 0.64%.