Indian equity markets took a sharp ‘U-turn’ on Monday as benchmark indices sank into deep red on Monday, despite a positive opening.. Bears were back as jittered global sentiments weighed on the feeble investor sentiments, pushing the markets further lower.
BSE Sensex dropped over 1,200 points from day’s high to 58,297.86, whereas Nifty 50 dropped about 350 points to 17,169 during the session. Weakness prevailed in the broader market as well as BSE Mid-cap and Small-cap indices plunged up to 2 per cent each.
Investors at Dalal Street went poorer by another Rs 3.04 lakh crore as combined market capitalization of all BSE listed companies dropped to Rs 259.90 lakh crore, which ended at Rs 262.94 lakh crore on March 10, 2023. Here are the top factors that are weighing on market sentiments:
SVB Bank Crisis: The fallout of startup lender Silicon Valley Bank is weighing on the market sentiments. Traders across the globe are sensing the ‘Deja-Vu’ of 2008, when investment bank Lehmon Brothers went bankrupt, leading to a global recession. However, US authorities have moved to shore up deposits and stem any wider fallout from the sudden collapse of the tech startup lender.
The SVB issue is unlikely to rattle markets for long. The quick joint statement by the US Treasury, the Fed and the Federal Deposit Insurance Corporation that all the depositor’s money will be safe is enough to calm the markets, said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
US Inflation data: Investors across the globe will be looking at US inflation numbers, scheduled for Tuesday, March 14 for the cues for interest rate hike path ahead of its FOMC meeting next week.
FII flows: Global institutional investors have been pulling out money from the Indian markets. On Friday, FPIs sold domestic shares worth 2,061.47 crore. However, FPIs have net invested Rs 13,586 crore through exchanges in the Indian market through March 10, but a bulk of this has gone into Adani stocks by GQG Partners.
India’s inflation numbers: India will announce its retail inflation numbers for February on Monday, after the market hours, whereas WPI inflation numbers are slated for Tuesday, March 14. The market will closely watch both data points as it is expected to decide the next course of action by the Reserve Bank of India in its next policy meeting scheduled in the first week of April.
Technical outlook
The index on the weekly chart is consolidating for the past many weeks and prices are gradually shifting their base lower indicating a bearish to sideways momentum, said Rohan Patil, technical analyst, Samco Securities.
“The overall trend remains in a bearish mode where selling on the rise is advisable. The support for the Nifty is placed at around 17,250-17,200 levels and resistance is capped at 17,650-17,800 levels. In case the Nifty breaches below 17,200 levels, then 17,000 will be the next support zone. A strong break above 17,650 will indicate a strength to move higher,” he said.
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