Sensex, Nifty50 drop 1% dragged down by banking, financial services and realty stocks

• Seven financial stocks were amongst the top ten losers on the Nifty50 index, while the overall sentiment was negative with 35 out of 50 stocks in the index ending in red.
• All sectoral indices were in the red except FMCG – PSU Banks, financial service and realty were among top losers.
• Adani Enterprises continued to fall after CARE Ratings on Thursday downgraded the outlook on the company to negative from stable amid the ongoing regulatory and legal scrutiny.

India’s benchmark indices Sensex and Nifty50 slumped lower for second consecutive session with 1% each on Friday led by a heavy sell-off in banking, financial services and realty stocks. The HDFC twins were amongst the top five losers.

The fall in the Indian indices comes ahead of crucial US jobs data set to be released later today. Investor worries have risen following hawkish comments by the US Federal Reserve chairman Jerome Powell this week. The jobs data will be one of the key deciding factors for future rate hikes.

All sectoral indices were in the red in the Indian markets except FMCG – PSU Banks, financial service and realty were among top losers.

The 30-stock Sensex closed 1.12% or 671 points lower at 59,135, while the 50-stock Nifty50 ended 1% or 177 points lower at 17,413. On Thursday, the Sensex and the Nifty50 had closed 0.9% lower.

“The global market's cautious attitude towards the probability of a sharper rate hike was exacerbated by further negative signs from the US market. Selling intensified as the market awaited the release of US unemployment and non-farm payroll data, which will have a significant impact on the upcoming Fed meeting,” said Vinod Nair, head of research at Geojit Financial Services.

Adani Enterprises continued with its losses after CARE Ratings on Thursday downgraded the outlook on the company to negative from stable amid the ongoing regulatory and legal scrutiny. The stock was the top loser on the 50-stock index with a 3% fall.

Seven financial stocks were amongst the top ten losers on the Nifty50 index, while the overall sentiment was negative with 35 out of 50 stocks in the index ending in the red.


Source: NSE, March 10, 2023

Crude oil prices fell for the fourth consecutive session on worries over potential interest rate hike in the US hitting fuel demand. Brent crude oil price fell 0.63% to $81.11 per barrel.

Foreign institutional investors sold Indian equities worth ₹2,061 crore on Friday while domestic institutional investors bought equities worth ₹1,350 crore.

“While markets are down sharply today, one should not be surprised since the current markets are grappling with questions around various aspects including interest rates and expected economic slowdown, to which there are no clear answers. In such a scenario there will be events that have the potential to cause spiralling damage. These need to be watched for stabilisation. Some panic is therefore understood, adding to a sell-off, which happened today,” said Nitin Rao, CEO at InCred Wealth.


All the markets in Asia were in the red too on Friday on rate hike worries. The Hang Seng fell the most at 3.04%. The Nikkei 225 was down 1.67%, Taiwan Weighted closed down 1.55%, the Shanghai Composite was down 1.40% and KOSPI down 1.01%.

US’ Silicon Valley Bank’s plunge to have limited impact on Indian banking stocks

Meanwhile in the US, shares of Silicon Valley Bank, a prominent US bank that caters to nearly half of the venture capital-funded startups in the US, plummeted on Thursday amid mounting concerns about the bank’s health. Its stock sank over 60% on Thursday, and over the last one year, it is down over 80%.

This has spooked investors as there are worries of a ripple effect. The Dow Jones Industrial Average fell 1.66% while the S&P 500 was down 1.85%. The tech-heavy Nasdaq was down 2.05%.

However, this is likely to have limited impact on Indian banking stocks, say analysts.

“This is a US-specific issue and will not have an impact on Indian banking stocks. But the sentiment impact can be negative,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services.

The origins of Silicon Valley Bank’s crises trace back to 2021, when flush with deposits worth $189 billion at the end of 2021, the bank invested over $80 billion in mortgage backed securities (MBS). Most of these instruments have a 10-year maturity and a yield of 1.56% – much higher than the 0.25% yield on treasury bills.

By mid-2022, the US Fed embarked on an aggressive rate hike path to tame inflation. Fast-forward to 2023, the bank is now in a crisis with venture capitalists like Peter Thiel asking startups to withdraw their money from the bank.

“Overnight developments in US banking: markets, analysts, investors underestimate the importance of financial stability for the balance sheet of a bank. When interest rates move up 500 bps from zero in a year, an accident was waiting to happen somewhere,” said Uday Kotak, CEO, Kotak Mahindra Bank.

$NIFTYBANK.NSE Bank Nifty analysis and trade plan: Bank Nifty is sideways to bearish in daily time frame, forming a double top, and if we see in 75 Minute time frame, a clear formation of “M” pattern is visible, and zone between 41193 and 41071 will be an important support zone, below this range we may expect a huge fall in Bank nifty in coming days. And above this zone there is a possibility of upside reversal. Initially in case of Nifty below 41193 we may plan a bearish trade with very limited quantity. and after nifty crossing 41071, we may go with complete lots. And from 41193 and 41071, we may expect upside reversal. So Bank nifty above this zone, we may plan for bullish trades, 41429, 41569, 41677 will be the resistance levels. Below support zone, 40911, 40708, 40482 will be the levels of concern in downside. Will not consider OI data today. Strictly a personal opinion, not at all a trade advice

— (@MarketViewPlus) March 09, 2023

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