Headline indices the Sensex and the Nifty ended in the negative territory for the fourth consecutive session on March 14 as concerns over a contagion effect of Silicon Valley Bank's collapse continued pounding market sentiment.
In the last four sessions of losses, the Sensex and the Nifty have fallen 4 percent each while the overall market capitalisation of BSE-listed firms has dropped to ₹256.39 lakh crore from ₹266.24 lakh crore on March 8, making investors poorer by ₹9.85 lakh crore.
On March 14 alone, investors lost more than ₹2 lakh crore in domestic equities.
Fears over the health of banks have been mounting in the last few days after the SVB collapse amid a rate-hike regime globally.
As per Reuters, “an indicator of credit risk in the euro area banking system leapt to its highest since mid-July, as worries about contagion risk after two US banks collapsed compounded investor concerns about the impact on the banking sector of rising interest rates.”
In under a week, three US banks have collapsed but the fall of Silicon Valley Bank (SVB), which was the 16th largest bank in the US at the end of 2022, has shocked markets. SVB is the largest lender to fail since 2008, as per Reuters.
Meanwhile, the US consumer prices data for February is expected later on March 14 which is expected to show an increase. This was also a factor which weighed on market sentiment.
Sensex remained in the red throughout the session, barring a few minutes of gains, and ended 338 points, or 0.58 percent, lower at 57,900.19 while the Nifty settled at 17,043.30, down 111 points, or 0.65 percent.
The BSE Midcap index fell 0.46 percent while the Smallcap index closed with a loss of 0.84 percent.
As many as 338 stocks, including Reliance Industries, Bandhan Bank, Cipla, Divi's Labs, HDFC Life Insurance Company, ICICI Lombard General Insurance Company, ICICI Prudential Life Insurance Company, Info Edge and Mphasis, hit their 52-week lows in intraday trad eon BSE.
Crude oil prices fell more than two percent in a weak market. Brent Crude traded near the $79 per barrel mark. The rupee also fell 36 paise to close at 82.49 per dollar as per Bloomberg data.
Top Nifty gainers: Shares of Titan, BPCL and Larsen & Toubro ended as the top gainers in the Nifty index.
Top Nifty losers: Shares of Adani Enterprises, Adani Ports and Mahindra and Mahindra ended as the top losers in the Nifty pack.
As many as 38 stocks ended in the red among the 50 Nifty stocks.
Most sectoral indices ended in the red as the selloff in the market was widespread.
Nifty PSU Bank (down 1.90 percent) lost the most, followed by Nifty IT (down 1.65 percent) and Metal (down 1.22 percent).
Nifty Realty, Auto, Oil & Gas, Consumer Durables, FMCG and Financial Services fell between one percent to half a percent.
Nifty Bank ended with a loss of 0.39 percent.
Expert's views on markets
Vinod Nair, Head of Research at Geojit Financial Services observed that the selling continued while the degree of ambiguity over the US Banks was reduced due to supportive measures announced by the US Fed.
Nair said 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 the hawkish monetary policy and high inflation. However, the disruptive development in the US Banks and the 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," said Nair.
Technical views on markets
Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas said that the Nifty has corrected around 800 points during this period and hence a relief rally cannot be ruled out.
Gedia pointed out that the momentum indicator has a negative crossover which is a sell signal and prices trading along the expanding lower Bollinger band suggests that the fall is likely to continue.
"The preferred strategy to trade in Nifty would be to sell on the rise around the 17,150 – 17,200 zone. On the downside, we expect the Nifty to target levels of 16,950 where the lower end of the downward-sloping channel is placed. On the upside, 17,380 – 17,400 where the 40-hour moving average is placed should act as an immediate hurdle zone from a short-term perspective," said Gedia.
Key market data
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of MintGenie.