Indian equity markets likely to see another day of red

14 Mar 2023 , 08:57 AM

The failure of SVB and Signature Banks in US will continue to have its adverse impact on Indian stock markets too. Banking stocks may feel further selling pressure.

US markets continued to feel the heat of SVB and Signature Bank failures yesterday. An auction done for SVB by US Federal Deposit Insurance Corporation found no buyers. Bank stocks got hammered badly. The stock price of First Republic Bank fell by a whopping 62% in one day. Bond yields fell another 23 basis points to 3.50%. This indicates that the Federal Reserve may go for 25 basis point hike on 22nd March. US dollar index fell further to 103.5. The dollar is likely to see extended weakness if the dollar index breaches the 102 level.

Asian markets have opened in the red today. Japanese ‘Nikkei’ is down by over 500 points. Banking stocks that have venture capital firms as their customers are getting hammered. Weakness in US dollar is extending treasury losses on dollar assets because of the stronger yen. Most Asian indices are trading weak. Collateral damage from the US banking crisis is hurting stocks of Asian start-ups that have funding from these banks.

Nifty saw a day of weakness further extend for another day, yesterday. Fear and near term capitulation dominated the scene. The index fell over 250 points after being up by over 110 points in early trade. Bank Nifty was the main culprit. It was down another 900 points. Foreign investors sold banking stocks to compensate for the risk in US banking stocks. Tech Mahindra, Apollo Hospital and Britannia led the gainers. IndusInd, SBI and Tata motors led the losers. Nifty small cap 100 index was down over 2%. Mid-cap stocks saw weakness extend.

Technical View: Nifty is likely to find support at around 17050. 17650 is likely to act as resistance. Bank Nifty is likely to find support at around 39300. 40500 is likely to act as resistance on the upside.

Trading call:(1-14 days) : BUY Tata Steel March future @ 107-107.5. Stop loss: 105.1. Target: 109.5.

Derivative call-time period: (1 months): BUY PNB March future @ 48-48.5. Stop loss: 47.25. Target: 49.5.