The cloud of Silicon Valley Bank failure hangs over Indian equity markets today

13 Mar 2023 , 08:52 AM

The aggressive hawkishness of US Federal Reserve has taken its another toll in the form of failure of Silicon Valley Bank (SVB). It is America’s 16^th largest bank. This failure is likely to cause another day of red in Indian equity markets today. Stocks of Indian banks and financial service companies may see selling pressure today. These banks too are seeing losses on their bond portfolio because of successive interest rate hikes by Reserve Bank of India.

US markets saw another day of weakness on Friday. Fear dominated the street over the failure of SVB bank. The failure happened because of the losses that the bank incurred on its bond portfolio. These losses happened because of the aggressive increase in interest rates by US Federal Reserve.  Higher interest rates are seeing their 1st major casualty. Dow Jones closed, down by over 340 points. Nasdaq closed, down by 199 points. Bond yields fell over 22 basis points. US dollar index fell over $1 to 104.

Asian markets have opened in the red today. Japanese ‘Nikkei’ is down by 454 points. Weakness is being seen in the stock of SoftBank group. Most other Asian indices are trading in the red too. The fear from the failure of SVB is looming large over Asian markets too. This despite the US FDIC reassuring that money of depositors of SVB was safe and withdrawals will be allowed from Monday morning.

Nifty saw a day of weakness on Friday. Global chaos due to the SVB collapse saw banks leading the sell off. Nifty 50 closed, down by 170 points. Bank Nifty was down over 770 points. Adani Enterprises, HDFC twins and Apollo Hospital led the losers. Tata Motors, NTPC and Maruti led the gainers. Nifty Next 100 was down nearly 0.89%. Sell off across the board happened as foreign investors sold due to the rising risk in US.

Technical View: Nifty is likely to find support at around 17250. 17850 is likely to act as resistance. Bank Nifty is likely to find support at around 40000. 41000 is likely to act as resistance on the upside.

Trading call:(1-14 days): BUY TECH M March future @ 1058-1063. Stop loss : 1038. Target: 1083.

Derivative call-time period: (1 months): BUY Tata Consumer March future @705-710. Stop loss: 692.15. Target: 722.