Explained: Why Sensex and Nifty closed lower even as Midcaps outperformed

The equity benchmark indices BSE Sensex and NSE Nifty closed lower on Monday (July 20), although they pared losses from the day's lows after a "mediation" comment from Iran. The BSE Sensex fell 443 points to 77,708, while the Nifty50 declined 96 points to 24,239, holding above the 24,200 mark.

The Nifty Bank index dropped 576 points to 57,945, while the Nifty Midcap index gained 374 points to 62,802. Market breadth favoured advances, with the advance-decline ratio ending at 1:1.

1. Private banks weighed on the benchmarks

Private banking stocks remained under pressure after their first-quarter results. HDFC Bank, Axis Bank and Kotak Mahindra Bank fell 2-5%, dragging the benchmark indices lower. Support from ICICI Bank and Bharti Airtel helped the Nifty recover from its intraday lows.

ALSO READ | HDFC Bank shares get a downgrade from Investec after Q1 results, no more a 'consensus buy'

2. Market recovered from the day's lows

The benchmarks trimmed losses following a "mediation" comment from Iran, allowing the Nifty to hold above the 24,200 level by the close.

3. Earnings kept key stocks in focus

Reliance Industries ended with minor losses despite a healthy first quarter. UltraTech Cement rose over 1% after meeting Street expectations, while Trent gained 3% on Tata's commentary regarding Westside expansion.

4. PSU banks and power stocks outperformed

Punjab Bank's healthy quarterly results lifted most public sector lenders, with the Nifty PSU Bank index gaining 3%. Buying also emerged in power stocks, with JSW Energy and Torrent Power rising 3-5%. Elevated crude oil prices supported upstream oil companies including Oil India and ONGC.

ALSO READ | Shyam Metalics Q1 Results: Stock extends gains after strong operating performance, fund raise approval

5. Select stocks posted strong gains

Oriental Hotels surged 12%, while Jana Small Finance Bank extended its gaining streak and is now up 14% this month. Sansera Engineering and Craftsman Automation gained 3% each following a positive brokerage note.

From the Sensex basket, Trent Ltd, Power Grid Corporation of India Ltd, Bharti Airtel Ltd, Cipla Ltd, NTPC Ltd and State Bank of India were the major gainers. Axis Bank Ltd, HDFC Bank Ltd, Maruti Suzuki India Ltd, Kotak Mahindra Bank Ltd, Jio Financial Services Ltd and Infosys Ltd were the biggest laggards.

ALSO READ | Reliance Industries share price can go up to ₹1,890, analysts project after Q1 results