Sensex, Nifty nosedive as MSCI threat looms over HDFC shares

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India’s stock market fell on Friday to become the largest in the country Private sector bank HDFC Bank experienced significant selling pressure Against the background of the global index provider MSCI’s announcement regarding the bank. Sensex shares fell 694 points, or 1.13 percent, to close at 61,054 points. The Nifty index fell 186 points, or 1.02 percent, to 18,069 points.

The heavy selling by Foreign Portfolio Investors (FPIs) in the indices and stock futures sector has affected the markets. FPI sale in equity futures was ₹2,126 crore and index futures were ₹804 crore, according to provisional figures.

Indicator weight

It was reported that MSCI will likely use an adjustment factor of 0.5 while calculating the weighting of the combined entity. Effectively, the adjustment could result in $200 million in outflows for the mortgage lender against expectations of strong inflows. HDFC and HDFC Bank shares fell by 5.80 percent.

HDFC’s market capitalization has, for the first time in many years, fallen below the government-owned State Bank of India’s cap. HDFC share price fell 4.97 per cent to a low of €2,720 and a maximum order of Rs.5,01,7247 crore, down nearly Rs.23,400 crore from Thursday’s market value of Rs.5,25,114 crore. SBI share price rose 1.3 per cent to a high of ₹587.35 on BSE, which requires a cap of ₹5,24,098 crore as against ₹5,17,627 crore in the previous session.

MSCI’s update came a day after HDFC on Thursday reported a 20 per cent year-on-year rise in its net profit to ₹4,425 crore. HDFC said its assets under management (AUM) grew by 10.71 per cent to INR 7,23,988 crore in FY23.

Nifty unite

“Nifty is now consolidating around 18,000-18,200 areas. While the overall market structure remains positive, we expect Nifty to consolidate in the near term on the back of weak global cues and profit booking in heavyweight indices. Next week, the market will also take cues from inflation and results State elections and continuous earning season,” said Siddhartha Kimka, Head of Retail Research, Motilal Oswal Financial Services.

“Positive chart pattern such as higher tops and bottoms remains intact and the current weakness could go along with the formation of new higher lows. Hence, further weakness from here could indicate a higher bottom reversal around the next important support level at 17800. Nifty figure, on the chart Weekly chart, small negative candle with long upper shadow Nagaraj Shetti, Technical Research Analyst, HDFC Securities said:

Mixed Asian trends

Asian stocks were mixed, as investors weighed in on the prospect of the US Federal Reserve reversing its policy tightening drive ahead of US jobs data, due later on Friday. European shares held steady, heading for the worst weekly decline in seven on a profitable day.

“The markets were under a bear hug on massive profit-taking amid a sell-off in the HDFC twins, US banking woes and weak Wall Street signals. The negative was that Nifty Bank fell 2.32 per cent on reports that a merger of the HDFC twins could lead to to minor inflows of $150-200m. Traders will get their first chance to react to US April jobs data for trading this evening. Expect a choppy session with major Nifty hurdles seen at 18,300, while support to watch will be at the 17,971 mark,” said Prashanth Tapsee, Senior Vice President (Research), Mehta Equities.