Sensex, Nifty decline in early trade; Manappuram Finance tanks 15%

The S&P BSE Sensex was down 400.17 points to 80,606.44 at 10:12 am, while the NSE Nifty50 declined 96.85 points to trade at 24,653. 

In Short

• Sensex, Nifty dip as IT stocks drag post-Infosys results
• Manappuram Finance plunges 15% after RBI action against its subsidiary
• FII selling driven by high valuations, weak earnings outlook

Benchmark stock indices dipped in early Friday trade, pressured by a decline in IT stocks after bellwether Infosys reported disappointing Q2 results.

The S&P BSE Sensex was down 400.17 points to 80,606.44 at 10:12 am, while the NSE Nifty50 declined 96.85 points to trade at 24,653.

All the other broader market indices were also trading in negative territory as volatility dampened the mood on Dalal Street. IT stocks were the biggest losers after Infosys' weak forecast.

The top five gainers on the Nifty50 were Axis Bank, Wipro, Eicher Motors, Tata Motors and HDFC Life. On the other hand, the top losers were Infosys, Tech Mahindra, ITC, BPCL and Nestle India.

Meanwhile, shares of Manappuram Finance tanked 15% after Reserve Bank of India (RBI) action against its subsidiary Asirvad Micro Finance. The RBI has asked it to stop sanctions and disbursals of loans.

Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, "The 6% correction in Nifty from the peak has made India an under-performer with only 13.83% return YTD in contrast to the 23.16% return in S&P 500 YTD. The Hang Seng index with 23.16% return YTD has been the best performing market in recent weeks assisted by massive buying by FIIs."

"The high valuations in India has been the main trigger for the sustained selling by FIIs, and recent developments like consensus downward revision of FY25 earnings estimates to below 10% and Bajaj Auto’s concerns regarding weak demand during the festive season dampened the sentiments resulting in big selling in auto stocks," he added.

"Trends indicate that FII selling and DII buying is likely to continue. A bounce back is likely in the next two or three days but it is unlikely to sustain since sentiments have turned weak," Vijayakumar noted,

"Investors may wait and watch for the market to stabilise and slowly accumulate largecaps like leading private sector banks beaten down by FII selling. ICICI Bank and HDFC Bank have the potential to give decent returns in the medium-term."