Sensex fall 1,350 points, Nifty sheds 1.5% — These are the key factors behind Monday’s drop

The S&P BSE Sensex is down over 1,150 points on Monday, extending the fall seen during last Friday’s trading session. The Nifty 50 index too has shed 350 points on Monday, extending the two-day drop to over 500 points.

Multiple factors are contributing to the fall seen in the benchmark indices on Monday.

The street is reacting to a slew of business updates, particularly from banking names. HDFC Bank reported a loan growth of 3% during the quarter, compared to the same quarter last year. While this is due the lender’s focus on bringing down the Credit-Deposit ratio, which did decline during the quarter, and the management also expects it to fall to 85% to 90%, the street has not reacted well to the stock.

HDFC Bank’s shares had declined 2.5% on Friday and are down another 2% in Monday’s session. The stock is contributing 43 points to the Nifty fall and is the second-biggest contributor to the downside. You can read more on that here.

PSU Banks too are faring no better. The Nifty PSU Bank index is down 4% on Monday, led by Union Bank and Bank of Baroda, both of which reported their business updates for the December quarter. Union Bank shares are down 8% on Monday, while those of Bank of Baroda fell as much as 6%.

There are also concerns with regards to the rise in the US Dollar Index, which has crossed levels of 109 and has had an effect on the rupee. The currency has once again tumbled to a new record low. Treasury yields in the US also continue to be at the higher side, with the 10-year yield now at 4.6%, adding to the concerns.

Another area of concern is the rise in crude oil prices benchmark oil prices in London remain locked in a range around $75 a barrel after slipping about 3% last year as sluggish demand growth, especially in China, threatens an increase in surplus barrels. This has had an impact on shares of India’s Oil Marketing Companies (OMCs), with shares of HPCL, BPCL and Indian Oil trading with losses of up to 5%.

Additionally, there are also concerns with regards to the HMPV virus outbreak in China. India has also detected two cases of the virus in Karnataka, although China and India have both said that there is nothing to worry about.

Some of it may also be attributed to the foreign institutions returning to the market in full force after the new year holiday. Today’s figure will be an important one to watch.