Market Today: Benchmark indices snapped two days of winning streak and ended lower on March 20 with Nifty around 17,000. The S&P BSE Sensex fell 361 points, or 0.62 per cent, to end at 57,629 levels on Monday, while the Nifty50 settled below the 17,000-mark at 16,988, lower by 112 points or 0.65 per cent. The indices rebounded from their intra-day lows of 57,085, and 16,828, respectively.
However, for better part of the day, equity markets roiled in global rout as fears of a contagion banking sector failure soured sentiment. Despite Swiss giant, UBS, agreeing to but Credit Suisse for over $3 billion, investors remained averse of risky assets. Moreover, a drop in crude oil prices (Brent is now hovering around $70 per barrel), also failed to soothe investors’ nerves.
The pain was deeper in the broader market with the BSE MidCap and SmallCap indices sliding 1 per cent each. Volatility index, India VIX, too surged 8 per cent today.
Meanwhile, the broad-based selling hurt metal and PSU banks the most with their respective indices on the NSE dropping over 2 per cent, and 1.7 per cent, respectively. The Nifty FMCG index was the only gainer, up 0.8 per cent.
Adani nterprises, Bajaj Finserv, Hindalco, Bajaj Finance, Tata Steel, Wipro, Tata Motors, SBI, Adani Ports, IndusInd Bank, Tech M, HCL Tech, Maruti Suzuki, Reliance, L&T, Infosys, Power Grid, HDFC Bank, HDFC Life, UPL, and Apollo Hospitals declined in the range of 1 per cent and 4 per cent.
On the upside, HUL, BPCL, ITC, Nestle India, Grasim, Titan, Divis Lab, Kotak Bank, Axis bank, ICICI Bank, SBI Life, and Sun Pharma were the only large-cap gainers, gaining up to 2.6 per cent.
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said: “The fears of financial contagion rising from the banking crisis in US and Europe appear to be largely contained by the quick response of the governments and central banks. The big learning from the global financial crisis of 2008 is that failure of large financial institutions will lead to systemic issues leading to financial contagion and ultimately to recession. Learning from this crisis, this time there has been a concerted global action – the latest being the buyout of Credit Suisse by UBS – to contain the crisis. The volatility index in the US at around 25 doesn’t indicate any panic like in 2008. However, investors may remain cautious and wait for stability. The boost to India’s macros arising from reduction in trade deficit and big decline in Brent crude to $73 are positives from the market perspective.”
Global Cues
Asian stocks steadied and US futures rose on Monday in relief at a weekend rescue deal for Credit Suisse and a concerted effort from central banks to shore up the mood, though trade was tense and volatile as contagion fears stalked financial shares.
Wall Street closed lower on Friday, marking the end of a tumultuous week dominated by an unfolding crisis in the banking sector and the gathering storm clouds of possible recession. All three indexes ended the session deep in negative territory, with financial stocks down the most among the major sectors of the S&P 500.
Oil prices rose on Monday after suffering their biggest weekly loss in months as UBS struck a deal to buy Credit Suisse and some of the world’s largest central banks sought to reassure and stabilise global financial markets.
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