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India's stock market woes are only continuing and the investors' Tuesday morning might have just gotten worse following IndusInd Bank shares hitting lower circuit. IndusInd Bank suffered a massive blow on Tuesday as its shares plummeted 25%, hitting a 52-week low of Rs 674.55. The steep drop came after the bank disclosed discrepancies in its derivatives accounting, sparking concerns among investors and analysts. This marks the steepest fall in IndusInd Bank’s stock since March 2020. With analysts warning of a possible earnings hit and raising concerns about weak internal controls, the stock has taken a severe beating. But what exactly happened, and what does it mean for IndusInd Bank and its investors? ET explains the whole discrepancy saga of IndusInd Bank shares in 5Ws and 1H.What happened?IndusInd Bank reported accounting discrepancies in its derivatives portfolio, leading to a 20% crash in its stock price. An internal review found that the bank had underestimated hedging costs related to past forex transactions. This revelation has forced the bank to acknowledge a potential impact of Rs 1,600-2,000 crore on its net worth, equivalent to 2.35 per cent as of December 2024.Following this, investors reacted sharply, causing the bank’s shares to hit their lowest level since November 2020. Analysts have also raised concerns about weak internal controls and governance issues within the bank.Also Read: IndusInd Bank shares hit by downgrades, target price cuts. What investors should doWho is affected?The biggest impact is on IndusInd Bank and its investors. The bank's stock has already lost 42% over the past year. Analysts believe that the findings raise concerns about the bank’s internal controls and compliance measures.When did this issue emerge?The discrepancies were identified between September and October 2024, following the Reserve Bank of India’s (RBI) updated master directions on derivatives. The bank disclosed the issue in its exchange filing on March 10, Monday, after a board meeting. Further, the stock reacted on Monday, too, ending nearly 4 per cent lower after the Reserve Bank of India's (RBI) decision to extend the incumbent CEO's term by just one year against three years that was sought by India's fifth largest private lender.Also Read: Indian stocks look attractive, valuations cheapest since Covid: Morgan StanleyWhere is the impact visible?Apart from IndusInd Bank’s stock crash, the Indian banking sector also faced minor setbacks. The Nifty Bank index fell 0.7%, while the broader Nifty 50 declined by 0.27%. The issue could also affect investor confidence in banking stocks, particularly regarding risk management practices.Why did IndusInd Bank face this issue?The discrepancies stem from past forex transactions where the bank underestimated hedging costs. This led to an incorrect valuation in its accounts. The issue is linked to compliance with RBI's new guidelines on derivatives portfolio management.How is IndusInd Bank responding?The bank has launched a detailed internal review and appointed an external agency to validate its findings. It has assured investors that its profitability and capital adequacy remain strong enough to absorb the one-time impact. The loss will be accounted for in either Q4 FY25 or Q1 FY26.What’s next?Analysts warn that the stock may face further de-rating due to concerns over weak internal controls. Emkay Global has downgraded IndusInd Bank to 'Add' from 'Buy' and slashed its target price by 22% to Rs 875. Meanwhile, Nuvama downgraded IndusInd Bank to 'Reduce' from 'Hold' and cut its target price to Rs 750. Motilal Oswal downgraded IndusInd Bank to ‘Neutral’ with a revised target price of Rs 925, down from an earlier estimate.

Mumbai: India's equity benchmark indices ended lower in a late sell-off on Monday, giving up all of early gains, as traders cut their bullish bets, taking cues from the drop in US futures at open."Monday's market decline was largely influenced by global cues, with Dow futures dropping more than 200 points. In line with this, domestic markets also experienced a downturn," said Dharmesh Shah, head of technical research at ICICI Direct. "Profit-taking was observed around the 20-day moving average (DMA) at the 22,600 level and a close above this level could take the Nifty towards the 23,000 mark."NSE's Nifty fell 92.2 points, or 0.4%, to close at 22,460. It made an intraday high of 22,676. BSE's Sensex declined 217 points or 0.3% to end at 74,115. Both the indices fell nearly 1% from the day's high. All sectoral indices on the NSE ended lower on Monday except for the Nifty FMCG index. Foreign portfolio investors remained net sellers of equities worth ₹485 crore on Monday but their selling was lower than what has been in recent weeks. Domestic institutions were buyers to the tune of ₹264 crore.Shah said that the 22,100 level is a strong support for the index and as long as the Nifty holds above this level, he anticipates a pullback in the index.Nifty Midcap 150 dropped 1.4% and Nifty Smallcap 250 fell 1.9% on Monday.