Domestic equities suffered strong losses on March 13, while the benchmark indices the Sensex and the Nifty extended their losing run into the third consecutive session as investors remained concerned that the collapse of Silicon Valley Bank (SVB) may have a contagion effect on other banking majors.
Weak global cues after the Silicon Valley Bank collapse and strong February jobs data in the US further dampened sentiment.
Major European markets, such as the UK's FTSE, Germany's DAX and France's CAC 40, fell up to 3 percent in trade over fears of contagion in the financial sector.
Strong February employment data also reinforced fears that the US Fed will remain on the course of rate hikes for a longer period. As per media reports, the US economy added 3,11,000 jobs in February which was above expectations.
Sensex opened 101 points lower at 59,033.77 but traded in the green for a brief period, rising 376 points to the intraday high of 59,510.92.
However, it failed to hold gains and nosedived 1,041 points in intraday trade to 58,094.55. The index finally closed 897 points, or 1.52 percent, lower at 58,237.85. The Nfty50 closed at 17,154.30, down 259 points, or 1.49 percent.
Mid and smallcaps suffered more. The BSE Midcap index ended 1.82 percent lower while the Smallcap index fell 2.08 percent.
The overall market capitalisation of BSE-listed firms dropped to ₹258.56 lakh crore from ₹262.95 lakh crore in the previous session, making investors poorer by ₹4.39 lakh crore in a day.
In the last three sessions of losses, Sensex has fallen 3.5 percent and Nifty is down 3.4 percent while investors have lost ₹7.7 lakh crore.
As many as 219 stocks, including Reliance Industries, Tata Consumer Products, Crompton Greaves Consumer Electricals, Muthoot Finance, Biocon, Gland Pharma, Ipca Laboratories, Laurus Labs and Pfizer, hit their 52-week lows in intraday trade on BSE.
Top Nifty gainers: Only four stocks - Tech Mahindra (up 6.86 percent), Apollo Hospitals Enterprise (up 0.74 percent), Britannia Industries (up 0.26 percent) and ONGC (up 0.13 percent) - ended in the green in the Nifty50 index.
Top Nifty losers: Shares of IndusInd Bank (down 7.33 percent), SBI (down 3.18 percent) and Tata Motors (down 2.93 percent) ended as the top losers in the Nifty index.
Sectoral indices: All sectoral indices ended in the red with Nifty Bank, PSU Bank, Private Bank, Media and Auto indices falling over 2 percent each.
Nifty Realty, Financial Services and Consumer Durables fell up to 2 percent.
Experts' views on markets
Mitul Shah, Head of Researchat Reliance Securities pointed out that the crisis in the US banking system roiled markets globally with the banking sector coming under pressure across markets on fears of contagion.
Shah said the selloff in the global markets was on the back of the collapse of Silicon Valley Bank following losses in its bond portfolio, prompting the biggest bank failure since the global financial crisis and sending shockwaves through the banking sector.
Meanwhile, the February non-farm payrolls came at 3,11,000, far higher than the estimate of 2,05,000, indicating a strong labour market and increasing the probability of a 50bps rate hike in the March Fed meeting. Unemployment edged up to 3.6 percent.
The India CPI for the month of February is due today. This will be the last inflation print before the RBI’s next MPC meeting in April. The markets will closely track the macroeconomic data due this week both in India and globally as well as the unfolding crisis in the US banking system, said Shah.
Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities said that the downward spiral continued in a highly volatile charged trading session due to weakness in the US and European markets.
"Investors once again exited financial stocks on worries that the collapse of US-based SVB could worsen the overall mood already reeling under rising interest rates and slowing global growth," said Chouhan.
Technical views on markets
Rohan Patil a technical analyst at SAMCO Securities highlighted that the Nifty, on the daily chart, formed a tall bearish candle and revisited its October 17, 2022, levels.
Patil observed that the index is trading below all its important averages and the slope of the average has tilted lower. Prices on the daily chart are trading within the falling channel pattern and have to find the overhead resistance near the upper band of the pattern.
"The support for the Nifty is placed at around 17,050 – 17,000 levels and resistance is capped at 17,500 – 17,550 levels. In case the Nifty breaches below 17,000 levels then, 16,800 will be the next support zone. A strong break above 17,550 will indicate a strength to move higher," said Patil.
Jatin Gedia a technical research analyst at Sharekhan by BNP Paribas pointed out that the Nifty, on the daily charts, breached and closed below the previous swing low of 17,255 which is a sign of weakness.
The daily momentum indicator has triggered a negative crossover which is a sell signal. Prices are trading along the expanding lower Bollinger band and the fall is likely to continue, said Gedia.
"Both price and momentum indicators suggest a further downside. On the way downside, we expect the Nifty to touch the lower end of the falling channel (16,950). On the upside, 20-day moving average placed at 17,630 shall act as an immediate hurdle for the Nifty," 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.
