It turned out to be yet another disappointing week of trade at the Indian bourses with frontline gauges shaving off around a percentage point as worries over banking contagion in the developed world continued to hurt sentiments, prompted by the crisis at Silicon Valley Bank (SVB).
Selling in the later part of the week mainly played spoilsports for major indices and dragged them lower for a third straight week as the US Federal Reserve went ahead with its further monetary policy tightening to bring down inflation to its target even as volatility in the banking system continued due to recent collapse of some banks. The Bank of England (BoE) also hiked its key interest rate.
These signals led the BSE Sensex to decline 463 points, or 0.8 per cent, at 57,527.1 during the week ended March 24, while the Nifty slumped 155 points, or 0.9 per cent, to 16945.
Commenting on the market performance, Vinod Nair, Head of Research at Geojit Financial Services, said: “The worries of contagion in the global banking system kept investors focused on the outcome of the Fed policy meeting, this week. The meeting was significant because investors wanted to know the Fed’s plan to balance the rout in the US banking system and aggressive policy. Although the Fed’s decision was in line with expectations, rates were increased by 25 basis points. The Fed became marginally less hawkish in its statement hinting at an intention to pause rate hikes soon. However, weak signals from the European market did not allow bulls to lead as European banking stocks fell following rate hikes by the central bank and rising CDS spreads.” he said.
Besides, Nair said “The volatility in the market is expected to continue in the short term as the global banking system is yet to fully recover from the crisis, especially in Europe. In addition to the banking sector, IT stocks also witnessed selling on fears of muted deal wins from the BFSI segment in the western markets,” he added.
Foreign Investments: Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said “Till March 25, FPIs have invested Rs 6192 crores (NSDL) inclusive of the block deals. They have been buyers in autos and auto components, financial services, metals and mining and power. FPIs sold heavily in IT. During the month, FPIs have been sellers in most emerging markets except China which continues to witness inflows due to the opening-up trade.”
Vijaykumar added “FPIs are likely to be cautious in the near-term since there is a risk-off in equity markets globally due to the stress in the US banking system and crash in banking stocks. In India, inflows will be mainly targeted at domestic economy-facing sectors like banking, capital goods and autos. A contrarian trend in favour of IT and pharmaceuticals is likely in the near term since the valuations of these segments have turned attractive after the recent corrections.
As many as 19 stocks in the Nifty 50 index delivered a positive return for investors in the week ending March 24. With a gain of 4.5 per cent, HDFC Life Insurance emerged as the top gainer in the index. It was followed by SBI Life Insurance (up 3.9 per cent), ICICI Bank (up 1.9 per cent), Sun Pharmaceutical Industries (up 1.6 per cent), and Ultratech Cement (up 1.5 per cent). Titan Company, Shree Cement, and Hindustan Unilever also advanced over one per cent. On the other hand, Coal India, Adani Ports, and HCL Technologies declined 6.3 per cent, 6.2 per cent, and 5.1 per cent, respectively.
Sector-wise, the BSE Power index gained the most (0.6 per cent) during the week gone by. Power along with BSE FMCG (up 0.3 per cent) and BSE Healthcare indices (up 0.1 per cent) are the only indices that were closed in green. While BSE Realty, BSE Metal, and BSE Information Technology indices have registered a weekly decline of 4.8 per cent, 4.1 per cent, and 2.8 per cent, respectively.
Bank Nifty technical outlook for the next week: Kunal Shah, Senior Technical Analyst at LKP Securities, said: “The Bank Nifty bears took over the control on the last day of the week and the index ended on a negative note. The index as long as does not surpass the level of 40000 remains in a sell-on-rise mode. The immediate support on the downside is at 39000 and a breach below this will lead to a sharp decline. The momentum indicator RSI trading in the bearish zone confirms the weakness in the index.”
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