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, a market expert said.
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.
