Post Market views - March 20, 2023 - Reliance Securities

Mr. Mitul Shah - Head of Research at Reliance Securities.

Indian equities started off the week on negative note. Nifty was down 0.7% on back of the turmoil in the global markets amid the ongoing banking crisis in US and Europe. Broader markets under-performed the main indices as Nifty Mid Cap and Nifty Small Cap lost 1% each. Majority of sectoral indices ended in red except Nifty FMCG (+0.8%) and Nifty Media (+0.1%). Nifty Metal was the major laggard, falling 2.4% followed by Nifty PSU Bank and Nifty IT which were down 1.7% and 1.4% respectively.

U.S. stocks fell as investors remained on edge about the risk of further bank failures, even after efforts to rescue First Republic Bank and Credit Suisse. The Dow Jones fell 1.2%. The S&P 500 dropped 1.1%. The technology-heavy Nasdaq declined 0.7%. Despite Friday's losses, the S&P and the Nasdaq ended the week with gains of 1.4% and 4.4%, respectively, while the Dow turned in a small weekly loss. Some investors are hopeful that the fallout from bank failures will lead the Federal Reserve to pause its recent flurry of interest-rate hikes at this week's meeting. In bond markets, the yield on the 10-year U.S. Treasury note fell to 3.36%, from 3.580% on Thursday on back of safe haven buying. UBS has reached an agreement to acquire Credit Suisse for $3.2bn in an effort to prevent further market disruptions in the global banking sector. However, $17.2bn worth of AT1 bonds of Credit Suisse will be written off impacting bondholders. Brent crude prices corrected further by 2.5%.

The markets will closely follow global cues and the developments in the US and European banking system. Domestically, CPI and WPI have cooled and trade deficit has narrowed. Brent crude prices have corrected 10% since the start of the US banking crisis which coupled with the cheaper crude from Russia and the fall in natural gas and coal prices is a huge tailwind for the Indian economy. All eyes will be on the US Fed monetary policy meeting this week.

Source : Equity Bulls

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