Indian equity markets ended lower on Monday as heavy selling in private banking stocks and escalating tensions in the Middle East dampened investor sentiment. Disappointing quarterly earnings from some lenders fuelled concerns over pressure on net interest margins, while the continuing conflict between the United States and Iran kept global markets on edge.
The BSE Sensex declined 442.93 points, or 0.57%, to close at 77,708.52, while the NSE Nifty50 fell 95.80 points, or 0.39%, to settle at 24,238.50.
Banking stocks weigh on markets
Private banking stocks led the decline after their latest quarterly earnings failed to meet market expectations.
Axis Bank emerged as the biggest loser on the Nifty, dropping 5.48%, followed by HDFC Bank, which fell 5.12%. Maruti Suzuki India also ended lower, declining 2.18%.
Among the gainers, Trent rose 2.98% to top the Nifty chart, while Power Grid Corporation advanced 1.82% and NTPC gained 1.57%.
Profit booking after recent rally
Riyank Arora, Associate Vice President – HNI & Derivatives at Hedged.in, said Monday's decline reflected healthy profit booking rather than a reversal of the broader market trend.
"Indian equity markets ended today's session in the red, with benchmark indices witnessing mild profit booking after the recent sharp rally. Selling pressure was visible across select heavyweight stocks, although the overall market structure remains constructive as key support levels are still intact," he said.
He added that the decline appeared to be a natural pause following the recent rally rather than the beginning of a sustained downturn.
"As long as benchmark indices remain above their immediate support levels, the broader outlook continues to be positive. Traders may continue to adopt a buy-on-dips strategy while maintaining disciplined risk management and closely monitoring key support zones," Arora said.
Broader market remains resilient
The broader market outperformed the benchmark indices during the session.
The Nifty Midcap 50 gained 0.61%, while the Nifty Smallcap 100 edged up 0.16%.
Among sectoral indices, Nifty Media emerged as the top performer with a gain of 1.09%, followed by Nifty Consumer Durables, which advanced 0.72%. In contrast, Nifty Auto declined 0.26% and Nifty IT slipped 0.22%.
Meanwhile, the India VIX, widely regarded as the market's volatility gauge, fell 1.29%, indicating that overall market volatility remained relatively subdued despite the decline in benchmark indices.
Geopolitical concerns remain in focus
Apart from domestic corporate earnings, investors closely monitored developments in the Middle East.
Ponmudi R, Chief Executive Officer of Enrich Money, said geopolitical tensions continued to weigh on market sentiment.
"On the global front, the conflict between the US and Iran deepened further, with strikes now entering a ninth day and tensions increasingly centred around the Strait of Hormuz. With shipping activity in the region nearly at a standstill and no clear path towards de-escalation, concerns over global energy supplies remain firmly in focus," he said.
He added that developments in the Middle East, along with upcoming technology sector earnings, are likely to influence global market direction in the near term, with corresponding implications for Indian equities.
Key factors to watch
Despite Monday's weakness, analysts believe the broader market trend remains constructive.
Investors are expected to closely monitor upcoming corporate earnings, movements in crude oil prices and geopolitical developments in the Middle East, all of which are likely to play a significant role in shaping market direction over the coming sessions.
