Stock market fall explained: Adani stocks tumble, HDFC Bank drags Nifty; Reliance gains

The equity benchmark indices BSE Sensex and NSE Nifty remained under pressure on Monday (August 31) with the Nifty ending just above the key 24,000 support level.

The Nifty fell 95 points to 24,080, while the Sensex declined 307 points to 76,957. The Nifty Bank, however, saw a major adjustment after the closing auction session (CAS), ending 529 points higher at 58,025 and around 600 points above its 3:15 pm level.

The Nifty Midcap Index rose 155 points to 64,225.

Adani stocks slide

Adani Group stocks saw sharp declines following the Morgan Stanley Capital (MSCI) rejig. Adani Enterprises ended 10% lower, while Adani Ports closed 7% down. Adani Energy Solutions, Adani Green Energy and Adani Power were among the top midcap losers, declining 7-10%.

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HDFC Bank drags indices

HDFC Bank failed to hold its opening gains and dragged both the Nifty and Nifty Bank lower. ICICI Bank and Reliance Industries were among the top Nifty gainers, providing support to the benchmark indices. Reliance Industries saw a sharp upmove in the last hour and ended 1% higher.

Auto stocks gain

Auto stocks closed largely in the green ahead of the monthly sales numbers, with Bajaj Auto emerging as the top gainer. Ather Energy extended its gains, rising over 6% following the launch of its new scooter on the EL platform.

Midcap movers

Indian Hotels, Aurobindo Pharma, Nykaa and Paytm were among the top midcap gainers. Kaynes Technology fell 7% following concerns raised by Investec after its annual report. Eternal was among the top Nifty losers. Sources said Zomato is set to lay off 250 employees.

Dipan Mehta, Director, Elixir Equities, on Kaynes Tech, said, "When you invest in a company like Kaynes, you have to have a certain element of conviction in the management, and also confidence in the business.

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And you have to have a longer-term view because this is a company which is investing very aggressively. It's trying to mould itself into one of the top electronic manufacturing companies with a semiconductor business, and if it is able to succeed in this transformation, then who knows, 2-3 years from now, this stock could be even higher, and would continue to trade at such rich multiples.

So, that's the thing: the whole premise of investing in Kaynes is this particular premise: that eventually it'd be a superior EMS company with a semiconductor business, and the semiconductor business, when it gets to scale, will be one of the two or three companies which will offer semiconductor exposure to Indian investors.

So, that's a very unique factor that one needs to consider over here. But there are too many ifs and buts. So, if you don't have the conviction or the confidence, and you get troubled by all these kinds of issues in terms of balance sheet quality, then maybe it's best to sell. It's not a cheap stock.

But I think if you have a longer-term horizon and you believe in this sector, then you remain invested. I think it's a very difficult choice. From our point of view, we remain invested in the company and hope that all these transient changes taking place eventually yield to something which is quite big, because this is a company which has the potential to be a really large-cap company in 4-5 years from now, if all their plans play out as they have said so."

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Market breadth favoured declines, with the advance-decline ratio at 1:2.

From the Sensex basket, Bajaj Auto Ltd, Oil and Natural Gas Corporation Ltd, TVS Motor Company Ltd and Coal India Ltd were the major gainers. Adani Ports and Special Economic Zone Ltd, Tata Steel Ltd, Infosys Ltd, HDFC Bank Ltd, Hindalco Industries Ltd and InterGlobe Aviation Ltd were the biggest laggards.