Bengaluru: Indian shares hit a fresh five-month low on Tuesday as domestic lenders tracked losses in global peers on the back of a U.S. banking crisis that sparked a global sell-off in the sector.
The Nifty 50 index was down 0.4% at 17,084, while the S&P BSE Sensex dropped 0.3% to 58,041 as of 10:31 a.m. IST.
The fallout from the collapse of U.S. lenders Silicon Valley Bank and Signature Bank widened overnight despite government efforts to shore up confidence, hitting bank shares globally. [MKTS/GLOB]
Investors are cautious in the current global scenario, Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services, said.
“There is some hope that the Fed (Federal Reserve) may not be as aggressive with the rate hikes after the SVB collapse, which could be offering support to the market,” Khemka added.
The Nifty 50 index has lost nearly 3.5% in the last three sessions, taking losses to 5.3% thus far into the year. If the losses hold, this would be the worst quarter ending March 31 since 2020.
Meanwhile, assurances from U.S. President Joe Biden and other policymakers did little to calm markets and prompted a rethink on the Fed interest rate outlook.
Domestic banks as well as public sector lenders were among the top drags, falling 0.4% and 1.5%, respectively, even as analysts dispelled concerns saying Indian lenders were insulated from the U.S. banking crisis.
Meanwhile, India’s annual retail inflation rate eased to 6.44% in February from 6.52% in January but stayed above the Reserve Bank of India’s targeted level for a second straight month.
Investors will now focus on the U.S. inflation data, due later in the day, for cues on the rate hike trajectory amid bets of the Fed turning less hawkish amid the banking crisis.
($1 = 82.2350 Indian rupees)
(Reporting by Nishit Navin in Bengaluru; Editing by Eileen Soreng, Janane Venkatraman and Dhanya Ann Thoppil)
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