Kolkata: The market has been witnessing a massive sell-off these days. The banking sector has been particularly affected. On Monday, the Bank Nifty index fell more than 3% to its lowest level in nearly 11 months. The index slipped below 52,000 for the first time since April 2025. Market sentiment remains weak due to the weak rupee, continued FII selling, and rising tensions in West Asia.
Bank Nifty fell to 51,437 in Monday’s trading, clearly indicating weakness. Technically, the index is now forming a pattern of lower highs and lower lows, reinforcing the downtrend. The RSI has reached 28, indicating oversold conditions. This could lead to a slight recovery in the short term, but the overall trend remains weak. According to experts, the 54,500 to 56,000 zone is a strong resistance, from where selling could resume.
PSU banks under more pressure
PSU bank stocks led the decline on Monday. Union Bank of India and Punjab National Bank fell by nearly 5%. Canara Bank, Bank of Baroda, and IDFC First Bank also fell more than 4%. Major banks such as State Bank of India, HDFC Bank, ICICI Bank, Axis Bank, and Kotak Mahindra Bank also slipped by 1.5-4%.
Moreover, over the past few days, the heavyweight stock of HDFC Bank fell and set 52-week lows, after its chairman Atanu Chakraborty resigned citing ethical concerns. Even after RBI issued a statement trying to assuage concerns, the stock kept moving down last week. HDFC Bank has a big presence in the Nifty 50 and the weightage reportedly varies between 6% and 11%, depending on the market capitalisation.
Reason for decline
The major reasons for market pressure are global. Rising crude oil prices, the war in West Asia, and persistent FII selling have weakened investor confidence. More than 85% of India’s energy needs are import-dependent, and rising crude oil prices increase inflation, the current account deficit, and pressure on the rupee. This is why the rupee is experiencing continued weakness. A declining rupee also raise the current account deficit which is a very important marker for financial institutions. There is also a gradual rise in prices of different items, thanks to the rise in input prices though the government is trying to avoid a rise in the retail prices of petrol and diesel.
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