Banks drag Sensex down 443 points; HDFC Bank, Axis Bank fall over 5%

Indian equity benchmarks ended lower on Monday as sharp declines in heavyweight lenders HDFC Bank and Axis Bank offset gains in power and select defensive stocks, while renewed geopolitical tensions in West Asia kept investor sentiment subdued.

The BSE Sensex fell 442.93 points, or 0.57%, to close at 77,708.52, after plunging as much as 783 points during the session. The Nifty50 declined 95.80 points, or 0.39%, to settle at 24,238.50.

The broader weakness was largely driven by banking stocks after investors reacted negatively to earnings from HDFC Bank and Axis Bank, particularly concerns around net interest margins (NIMs).

"HDFC Bank has disappointed, particularly on the NIM front," said V K Vijayakumar, chief investment strategist at Geojit Investments Ltd.

Banks bear the brunt

Axis Bank emerged as the top loser on the Nifty, falling 5.37%, while HDFC Bank declined 5.08%, exerting the biggest drag on the benchmarks. Maruti Suzuki (-2.06%), Kotak Mahindra Bank (-1.96%), Jio Financial Services (-1.66%), Infosys, Tata Consultancy Services, Mahindra & Mahindra and Bharat Electronics also ended lower, according to NSE data.

On the other hand, Trent gained 3.04%, followed by Power Grid (+2.01%), Nestle India (+1.81%), NTPC (+1.65%) and Bharti Airtel (+1.63%), providing some support to the market.

Sectorally, financial stocks remained under pressure, with the Nifty Bank index falling 0.98% and the Nifty Financial Services index declining 1.22%. However, the Nifty Next 50 rose 0.88%, while the Nifty Midcap Select gained 0.44%, indicating selective buying beyond frontline banking counters.

Geopolitical tensions add to caution

Market participants also remained cautious after tensions between the US and Iran escalated, pushing Brent crude close to $90 per barrel earlier in the day before prices eased.

"The collapse of the June ceasefire between the US and Iran has pushed crude prices to touch USD 90 a barrel. Markets have started the week on a cautious note, reflecting rising pressure on the global economy," said Vinod Nair, head of research at Geojit Investments Ltd.

Among Asian markets, Hong Kong's Hang Seng and Shanghai's SSE Composite ended higher, while South Korea's KOSPI tumbled 4.46%. Japanese markets remained shut for a holiday. European markets traded mostly higher in afternoon trade, while US markets had ended lower on Friday.