Indian equity markets fall as crisis in US banking sector raises concern

“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,” Kotak Securities Ltd Head of Equity Research (Retail) Shrikant Chouhan said.

According to Geojit Financial Services’ Head of Research Vinod Nair the bloodbath was seen in the global market as the fallout of Silicon Valley Bank was followed by turmoil at Signature Bank, keeping investors worried about the strength of the US banking system.

The sell off in the global market was seen even as the US authorities stepped in to protect the interest of depositors and provide access to credit to households and businesses.

On March 12, the US Treasury Department and the Federal Deposit Insurance Corporation (FDIC) in a joint statement said all the depositors of SVB and Signature Bank will have access to their money starting Monday.

Nair further said the Fed’s decision in the upcoming meeting will have a crucial impact on the market sell-off, as the consensus is reversing to no rate hike trajectory. Also, the US inflation due on Tuesday will have a vital impact in the short-term as the market anticipates a cool down from January levels.

All sectors ended in red with banking and auto facing the major burnt, down 2 per cent each. India Vix jumped sharply by 19 per cent to 16 levels, indicating heightened volatility.

Bank Nifty fell 2.27 per cent to 39,564.7, with PSU banks down 2.87 per cent and private banks 2.44 per cent.

IndusInd Bank, SBI, Punjab National Bank, Bandhan Bank and Federal Bank were the top losers. Among the pack, IndusInd Bank was the biggest loser after it fell 7.33 per cent.

Private lender Yes Bank fell 5.27 per cent after the RBI-mandated three-year lock in period for individual investors who had invested in March 2020, as part of the Reconstruction Scheme, ended on Monday. This means the investors who were barred from selling their shareholding in the private lender are now free to sell their stake.

The foreign institutional investors (FIIs) net sold Rs 1,764.36 crore of domestic shares on Monday, according to CDSL data.

Meanwhile, Indian rupee depreciated by 10 paise to close at 82.16 against the US dollar, compared to the previous close of 82.06.