Indian Equity Indices End in Red for Fourth Consecutive Day
Continued fears among investors triggered by the collapse of Silicon Valley Bank (SVB) and nervousness ahead of US inflation data later in the day forced Indian equity indices to end in the red for the fourth consecutive day on Tuesday, dragged by banking, financial and IT stocks.
Sensex and Nifty Performance
Sensex Laggards and Top Gainers
From the Sensex pack, M&M, Bajaj Finance, TCS, and Wipro were the top laggards, declining 1.5-3%. Tech Mahindra, Kotak Bank, Asian Paints, and HCL Tech also closed lower. On the flip side, Titan, Bharti Airtel, L&T, and Sun Pharma closed with gains.
Adani Group Performance
Shares of Adani Group‘s flagship firm Adani Enterprises ended over 7% lower on the BSE. Meanwhile, Adani Transmission, Adani Power, Adani Total Gas, Adani Wilmar, and NDTV closed with a 5% lower circuit.
Sector-wise, Nifty PSU Bank fell 1.65% and Nifty IT declined 1.65%. Financials, auto, FMCG, metal, consumer durables, and oil & gas stocks also closed with losses. In the broader market, Nifty Smallcap100 dropped 0.83% and Nifty Midcap100 plunged 0.52%.
The market capitalisation of all listed companies on the BSE declined by Rs 2.01 lakh crore to Rs 256.55 lakh crore.
The selling continued while the degree of ambiguity over the US Banks reduced due to supportive measures announced by the US Fed. The underlying issue of the market is high interest rates, which will continue to wreak havoc in the world economy. Yields will take time to moderate to the long-term trend given hawkish monetary policy & high inflation.
However, the disruptive development in the US banks and slowing economy have created a precursor to presume that yields will peak in the near future, supported by a change in monetary policy from hawkish to neutral, which will diminish the worries of long-term investors.
Global Market Performance
Asian shares declined on Tuesday, with heavy selling of bank shares in Tokyo and some other markets, as investors around the world closely watched what’s next following the second- and third-largest bank failures in US history.
Japan’s benchmark Nikkei 225 dropped 2.2% to finish at 27,222.04, extending losses from the day before. South Korea’s Kospi fell 2.6% to 2,349. Hong Kong’s Hang Seng fell 2.4% to 19,233. The Shanghai Composite declined 0.6% to 3,248.
UK’s FTSE 100 Performance
UK’s FTSE 100 opened lower on Tuesday as fears of contagion risks from the collapse of SVB continued to knock down bank stocks, while energy stocks tracked declines in oil prices.
The blue-chip FTSE 100 lost 0.41%, extending declines after a 2.6% tumble on Monday, which was its biggest single-day drop in more than eight months.
Crude Price Falls
Oil prices took a hit on Tuesday, dropping more than $2 a barrel and extending the previous day’s slide. The collapse of Silicon Valley Bank rattled equities markets and sparked fears of a fresh financial crisis.
Brent crude futures fell $1.64, or 2%, to $79.13 a barrel. US West Texas Intermediate crude futures (WTI) dropped $1.74, or 2.3%, to $73.06 a barrel. On Monday, Brent and WTI fell to their lowest since early January and December, respectively.
The rupee posted its worst performance against the dollar in five weeks on Tuesday, as fears of contagion from the collapse of Silicon Valley Bank weighed on risk sentiment ahead of key US inflation data.
The rupee ended down 0.44% at 82.49 per dollar, marking its biggest percentage drop since February 6.
Traders were adding long USD/INR positions ahead of the US inflation data that could influence the Federal Reserve’s monetary policy decision next week.
The Indian equity market continued its downward trajectory on Tuesday, with the Sensex declining by 337 points or 0.58% to settle at 57,900, and the broader NSE Nifty dropping 111 points or 0.65% at 17,043. Banking, financial, and IT stocks dragged the market down, and Adani Group’s flagship firm, Adani Enterprises, ended over 7% lower on the BSE.
The continued fears among investors triggered by the collapse of Silicon Valley Bank and nervousness ahead of US inflation data later in the day led to the fourth consecutive day of losses in the Indian equity market. The global markets were not immune to the jitters, with Asian shares and crude oil prices also falling on Tuesday.
The high-interest rates and hawkish monetary policies continue to cause ambiguity in the market, but experts predict that yields will peak in the near future, supported by a change in monetary policy from hawkish to neutral, which will diminish the worries of long-term investors.