Markets snap 2-days gaining spree as relief from UBS-Credit Suisse deal short-lived, metal stocks worst hit
4 min read 20 Mar 2023, 05:15 PM ISTPushed by Swiss regulators UBS and Credit Suisse agreed on a merger deal. UBS will be the surviving entity. The Zurich-headquartered bank will acquire Credit Suisse for CHF 3 billion (approximately $3.25 billion).Also, markets focused on the upcoming Fed policy.
PremiumFrom contagion fear in banks and economic uncertainties to sliding commodities prices, investors are struggling to keep faith in the equities market globally. This sour mood also impacted the Indian market as well in the start of this week. The merger deal between two Swiss lenders could not keep bulls in equities. Sensex struggled below 57,800 and Nifty 50 erased its psychological mark of 17,100. Both benchmarks slipped nearly 1.6% each during the trading session. Except for FMCG, all other sectoral indices were in red with metal stocks seeing a steep selloff.
Sensex and Nifty 50 erased two consecutive days of a buying spree.
On Monday, Sensex closed at 57,628.95 down by 360.95 points or 0.62%. While Nifty 50 plunged by 111.65 points or 0.65% to end at 16,988.40.
In the trading hours, Sensex dipped as much as 905 points or 1.6%, and the Nifty 50 dipped by at least 272 points or 1.6%.
FMCG stocks were top gainers. On Sensex, HUL stock was in the lead with an upside of 2.5% followed by ITC surging by 0.80%. Other stocks such as Kotak Bank, Sun Pharma, Nestle, and Titan were also in the green.
The top losers were Bajaj twins --- Bajaj Finserv down 4.3% and Bajaj Finance tumbling by 3.2%. Wipro and Tata Steel dived by 2.5% and 2.4% respectively. While stocks like SBI, Tata Motors, IndusInd Bank, Tech Mahindra, and HCL Tech plummetted by 1.5-2%.
In terms of sectoral indices, on BSE, the Metal index nosedived by 422.5 points or 2.2%. While Capital Goods and IT index shed nearly 366 points each. BANKEX and Auto index slipped by 221.5 points and 246 points.
In the broader market, both BSE Midcap and Smallcap index shed around 270 points and 268 points respectively.
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities said, "pessimist mood prevailing across the global markets triggered a major sell-off in the domestic market, as investors are battling a slew of negative news from turmoil in large global banks to macro-economic concerns and falling commodity prices."
On Sunday, both UBS and Credit Suisse announced the takeover deal. UBS will be the surviving entity. The Zurich-headquartered bank will acquire Credit Suisse for CHF 3 billion (approximately $3.25 billion).
He added that traders are also cutting down their equity bets ahead of the US Federal Reserve meeting on interest rates this week, as any aggressive hike in interest rates could spell more trouble for equity markets worldwide.
Meanwhile, at the interbank forex market rupee depreciated further against the US dollar as the relief sentiment which was fuelled by Credit Suisse and UBS merger was shortlived ---owing to investors offloading shares on fears of contagion in the banking and financial sector. The local unit closed at 82.6350 per dollar, compared to the previous print of 82.5525. Also, the rupee tracked the downside in Asian peers.
On the rupee, Jateen Trivedi, VP Research Analyst at LKP Securities said, "Rupee traded weak below 82.60, after opening positive above 82.50 rupee started drifting lower traded lower towards 82.60 with losing the morning gains after opening positive. FIIs selling continued which kept rupee weak once positive opening on back of strong dollar."
Also, investors focused on upcoming Fed policy.
Trivedi said, "rupee going ahead will keep volatility high as the important FED INTEREST DECISION due on Wednesday 22MAR23 shall keep rupee in momentum. Till then range for the rupee is seen between 82.35-82.7.5."
For stock market, Ajit Mishra, VP - of Technical Research, at Religare Broking said, "mixed global cues are keeping the participants on the edge and it might continue in near future, in absence of any major domestic event. Amid all, we are expecting some respite in the Nifty index however the view would negate if it fails to hold 16,800 levels. Meanwhile, the focus should be more on risk management."
On Nifty 50, Rupak De, Senior Technical Analyst at LKP Securities said, "Nifty formed a hammer-like pattern on the daily chart, suggesting a reversal in the prevailing trend. On the daily chart, it fell below 16950 only to close a bit higher. The momentum indicator remained in a bearish crossover with a reading below 40. On the hourly chart, the index has moved higher following a consolidation. The RSI on the smaller timeframe has entered a bullish crossover. On the higher end, the index may move up towards 17250. On the lower end, closing basis support remains intact at 16950."
Furthermore, on Bank Nifty, Kunal Shah, Senior Technical & Derivatives Analyst at LKP Securities said, the BANK NIFTY bulls managed to hold the support of 39,000 and formed a hammer pattern on the daily chart. The index remains in buy mode as long as it holds the support of 39,000 on a closing basis. The immediate upside hurdle is visible at the 39,700 - 39,800 zone and a break above this will lead to further short covering on the upside.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
