Banking, IT stocks drag down Sensex and Nifty 50 on earnings miss

Domestic equities fell over half a per cent on Friday weighed down by declines in banking and IT stocks after they missed their earnings estimates.

 

The losses capped a third straight weekly loss for the benchmark indices, their longest weekly losing streak in six months.

 

The Sensex ended the session at 81,758, with a decline of 502 points, or 0.6 per cent, while the Nifty 50 index closed at 24,968, with a drop of 143 points or 0.6 per cent.

 

For the week, the Sensex declined 0.9 per cent and the Nifty by 0.7 per cent. The total market capitalisation of BSE-listed firms declined by ₹2.5 trillion on Friday to ₹458.4 trillion. However, the total market capitalisation rose ₹1.7 trillion for the week thanks to the outperformance of the broader markets. 

 

Private banks contributed the most to the declines. Top weight HDFC Bank, which declined by 1.5 per cent, was the biggest contributor to the Sensex decline, followed by Axis Bank, which fell 5.2 per cent. Axis Bank was also the worst-performing Sensex and Nifty stock. The private lender's stock took a beating after it reported weak earnings, due to significantly higher slippages.

 

The bank reported a 4 per cent year-on-year (Y-o-Y) decline in net profit to ₹5,806 crore for the April–June quarter of FY26 (Q1FY26). The bank's loan and deposit growth was muted in the June quarter, raising concerns about the bank's growth plans. 

 

"The early trend in Q1 results has been muted, with management commentary reflecting caution amid global uncertainty, which is weighing on market sentiments. Additionally, the prolonged wait for the India–US trade deal ahead of the looming August 1 tariff deadline is keeping investors on the sidelines," said Siddhartha Khemka, head of research, wealth management of Motilal Oswal Financial Services.

 

Khemka added that going forward, the banking sector would continue to be in focus with Q1 results of heavyweights HDFC Bank and ICICI Bank, scheduled for release over the weekend.

 

"Overall, we expect the market to remain in consolidation mode amid continued global trade uncertainty and a subdued start to the Q1FY26 earnings season,” said Khemka.

 

Going forward, the earnings season and progress of the trade deal with the US will determine the market trajectory.

 

"Markets will react to the earnings of the three heavyweights — Reliance, HDFC Bank, and ICICI Bank — in early trade on Monday, which will likely set the tone for the session. On the index front, a decisive break below 24,900 in Nifty could lead to further pressure, while any rebound may face resistance near the 20-day EMA zone around 25,200," Ajit Mishra, SVP-Research of Religare Broking.

 

The market breadth was weak, with 2,440 stocks declining and 1,622 advancing. Foreign portfolio investors were net buyers worth ₹375 crore, and domestic institutions bought shares worth ₹2,103 crore.