Indian market declines amid fall in US Tech Bank stock

Foreign portfolio investors (FPIs) did temporary selling 2,062 crore worth of shares, with benchmark indices Nifty and Sensex falling one per cent each to 17,412.9 and 59,135.13.

Most of the FPI selling was in shares of financial institutions, with HDFC Bank shedding 2.6% each and Housing Development Finance Corp and IndusInd Bank each falling 2% each.

Citing developments at the Silicon Valley bank, Kotak Mahindra Bank CEO Uday Kotak said in a tweet, “Overnight developments in US banking: Markets, analysts, investors underestimate importance of financial stability to bank balance sheets. When Interest rates go up 500 bps from zero in a year, so there was a crash waiting to happen somewhere.” The fed funds rate has been raised from near zero to 4.5-4.7%, and another hike is expected next week.

The rupee declined marginally by 6 paise to close at 82.05 against the dollar, while the 10-year bond yield ended unchanged at 7.41 per cent.

FPIs are selling emerging markets (EM) stocks, especially banks, on concerns of a stronger dollar as the US Fed is set to hike rates by 50 bps more than expected at its meeting next week. The tight labor market and their upward pressure on inflation could compel the Fed to raise the fed funds rate higher or at a faster pace.

“This translates into a stronger dollar and weaker EM currencies as FPIs sell riskier assets for the safety of the dollar,” said Rajesh Palavia, head of technical at Axis Securities. FPI is selling.

Analysts like Palvia expect high volatility and correction in Indian stocks.

“A further 4-5 per cent downside correction in Nifty from current levels cannot be ruled out due to higher outflows from FPIs,” he added.

FPIs have sold shares so far this year 20,153 crore, excluding Friday’s provisional figure, at the top The CDSL data shows that they have sales of 1.21 trillion in 2022.

Sentiment was hurt by the recent US Fed statement that a higher rate hike is on the cards to keep inflation under control, allaying fears of a recession, said Amol Athawale, vice-president, technical research, Kotak Securities Ltd. Can

“For positional traders, 17550 will act as a medium-term resistance zone, and below this, the index may slip till 17150. Meanwhile, Bank Nifty also crossed the important support level of 41000 or 20-day SMA (Simple Moving Average). , which is largely negative. Below this, Bank Nifty may retest 40,000-39,800 levels,” Athawale said.

Fear gauge India VIX rose 5.4% to close at 13.41, the highest in two months.

Vicks still shows the market mood as complacent by staying below the 14-mark.

The average VIX level over the past year has been 17.97, shows NSE data. Just as a level below 14 indicates complacency, a level above 22 indicates fear. However, not all market analysts are cautious.

Jatin Gedia, a technical analyst at Sharekhan by BNP Paribas, believes that as long as the Nifty sustains above its 200-day moving average of 17434, it will trade in the 17,200-17,800 range amid sector rotation and stock-specific action.