Post Session: Quick Review

Indian equity indices commenced the week on a sluggish note as the benchmarks showcased an unenthusiastic performance on Monday and settled with cuts of over a percent. Traders sold off riskier assets from their portfolio over the fallout of the collapse of the Silicon Valley Bank in the US. Also, there could be more regional banks in US in trouble. Intense selling pressure in stocks belonging from Banking counters, mainly pressurized the sentiment at D-street on Monday. Besides, investors turned their attention towards India’s Consumer Price Index (CPI) data to be out later in the day. Post opening of European market, Indian markets showed largely negative trend. The broader indices, the BSE Mid cap index and Small cap index also witnessed heavy selling pressure during the day. Traders were cautious ahead of important events like United States Inflation Rate, India WPI Manufacturing data.

After making cautious start, indices traded with limited gains, as traders got some support with report that India's industrial production growth perked up slightly to 5.2 per cent in January 2023 from 4.7 per cent in December 2022 in line with good performance of the power, mining and manufacturing sectors. There was an improvement on an annual as well as sequential basis. However, markets failed to hold their position above neutral line, as sentiments turned cautious with a private report that India’s retail inflation probably breached the central bank’s target for a second straight month in February, prompting the monetary authority to possibly hike borrowing costs to the highest level in seven years. In late afternoon session, markets traded deep in red, as Silicon Valley Bank crisis continued hit investors sentiments.

On the global front, European markets were trading lower as the collapse of startup-focused Silicon Valley Bank continued to batter markets, while U.S. large banks failed to hold onto a brief premarket rally after authorities moved to stem the contagion. Asian markets ended mostly in green, as regulators from across the world moved to assuage investor concerns of a global ripple effect coming from the United States. Back home, India and Australia have expressed their commitment for concluding the negotiations for expanding the scope of existing free trade agreement (FTA) by the end of this year with an aim to push the bilateral trade to $100 billion.

The BSE Sensex ended at 58,237.85, down by 897.28 points or 1.52% after trading in a range of 58,094.55 and 59,510.92. There was 1 stock advancing against 29 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index declined 1.82%, while Small cap index was down by 2.08%. (Provisional)

The top losing sectoral indices on the BSE were Bankex down by 2.24%, Telecom down by 2.08%, Auto down by 2.00%, Realty down by 1.98% and PSU was down by 1.81%, while there were no gaining indices on BSE. (Provisional)

The sole gainer on the Sensex was Tech Mahindra up by 6.79%. On the flip side, Indusind Bank down by 7.39%, SBI down by 3.11%, Tata Motors down by 2.74%, Mahindra & Mahindra down by 2.45% and Bajaj Finserv down by 2.24% were the top losers. (Provisional)

Meanwhile, the Reserve Bank of India (RBI) -- Monetary Policy Committee (MPC) member Ashima Goyal has said inflation is expected to come down over the year. She asserted ‘Government supply-side action coordinated with a flexible inflation targeting regime has kept Indian inflation rates lower than other countries and our own past averages even in this period of major adverse external supply shocks’.

She said that India has successfully dealt with 'pluri-shocks' over the past three years, showing considerable resilience. She noted ‘Since nominal policy rates rise with inflation to maintain an expected real positive rate under inflation targeting this prevents demand over-heating and anchors inflation expectations.’

She said policy rates had been cut steeply during the pandemic, so they had to be raised fast after recovery was established. But, she emphasised policy rates must not rise too much at present because of slowing external demand. Domestic demand must be allowed to compensate. According to Goyal, as long as the expected future real policy rate does not rise much above unity, RBI is not over-tightening.

The CNX Nifty ended at 17,154.30, down by 258.60 points or 1.49% after trading in a range of 17,113.45 and 17,529.90. There were 2 stocks advancing against 47 stocks declining on the index, while 1 stock remained unchanged. (Provisional)

The top gainers on Nifty were Tech Mahindra up by 6.84% and Apollo Hospital up by 0.64%. On the flip side, Indusind Bank down by 7.40%, SBI down by 3.17%, Tata Motors down by 3.09%, Mahindra & Mahindra down by 2.71% and Eicher Motors down by 2.65% were the top losers. (Provisional)

European markets were trading lower, UK’s FTSE 100 decreased 189.63 points or 2.51% to 7,558.72, France’s CAC fell 220.93 points or 3.16% to 6,999.74 and Germany’s DAX was down by 500.23 points or 3.35% to 14,927.74.

Asian markets settled mostly higher on Monday with optimism that the US Federal Reserve might moderate its rate hikes, with private report saying they no longer expect the US Federal Reserve to hike interest rates at its March 22, 2023 meeting. Chinese shares surged after the Beijing government surprisingly kept the head of the central bank and the finance minister in their posts on Sunday. However, Japanese shares declined by tracking weakness in Wall Street shares last Friday on worries of financial contagion from the collapse of Silicon Valley Bank.