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Indian Markets May Start the Day with a Flat to Negative Opening

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U.S. stocks ended sharply lower Friday as investors parsed mixed signals from the February jobs report amid ongoing concerns about contagion in the banking sector from the troubles at Silicon Valley Bank.

For the week, the Dow sank 4.4%, S&P 500 dropped 4.5% and the Nasdaq shed 4.7%, according to Dow Jones Market Data. The Dow booked its worst week since June, the S&P 500 saw its biggest weekly percentage decline since September, and the Nasdaq had its biggest percentage slide since November.

In a sign of investor anxiety, the CBOE Volatility Index was up Friday afternoon at almost 25, after jumping Thursday

The non-farm payrolls report showed the U.S. economy added more jobs than expected in February while average hourly earnings rose at a slower 0.2% last month after versus 0.3% in January while unemployment rose to 3.6%.
US benchmark 10-year notes last rose 61/32 in price to yield 3.6892%, from 3.923% late on Thursday. Earlier in the week, the yield on the 2-year Treasury note traded above the key 5% level. It last traded 32 basis points lower at 4.58%.

Analysts now look to Tuesday’s consumer prices data, which will flesh out the February inflationary picture.

Financial markets are now pricing in a 42.5% chance of a 50 basis-point rate hike and a 57.5% chance of a smaller, 25 basis-point increase to the fed funds target rate at the conclusion of the March 21-22 monetary policy meeting.
Long-time regional foes Iran and Saudi Arabia agreed to resume diplomatic relations and reopen embassies in each other’s countries following China-led negotiations in Beijing, both governments announced via their respective state media agencies.

India’s industrial output grew by 5.2 percent in January. Industrial growth, as per the Index of Industrial Production (IIP), in December has been revised up to 4.7 percent from 4.3 percent. For the first 10 months of 2022-23, IIP growth was 5.4 percent, down from 13.7 percent in the corresponding period of 2021-22.

The US Federal Reserve on Sunday announced a new emergency loan program to bolster the capacity of the banking system in the wake of the collapse of Silicon Valley Bank. The program will help assure banks have the ability to meet the needs of all their depositors. Under the new program, banks and other lenders will be able to pledge Treasurys and mortgage-backed securities for cash. Banks can pledge collateral at par, or face value, rather than marking the assets to their current market value. This will eliminate the need for a bank to quickly sell its assets in times of stress. U.S. financial regulators also announced all depositors at Silicon Valley Bank will get their money back.

Asia-Pacific markets fell on Monday (but were recovering from lower levels) as U.S. regulators announced plans to backstop both depositors and financial institutions associated with Silicon Valley Bank, seen as a move to stem further systemic risk.

Nifty fell on Friday as expected with a gap down but did not close at the intra day low. On weekly charts Nifty ended 1.03% lower after a positive week. Up gap support of 17328 has been repeatedly tested. A couple of more testing’s could result in that support being breached. 17573-17672 could be tough to breach for the Nifty in the near term. Key data points to watch out for in the coming week include India CPI on Monday, US CPI on Tuesday and US retail sales on Wednesday. These could influence the expectations on interest rate trajectory and risk appetite of investors.

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