SVB collapse weighs heavy on markets

The equity indices tumbled on Monday, with the Sensex falling 897.28 points, or 1.52%, to 58,237.85 ― its lowest in five months since closing at 57,919.97 on October 14, 2022. The benchmark has been in a free fall, having lost 2,110 points, or 3.54%, in the last three sessions.

The broader Nifty50 slumped 258.60, or 1.49%, to 17,154.30. The Bank Nifty nosedived 920.75 points, or 2.27%, to 39,564.70.

All bank stocks closed in the red. AU Bank slumped over 4.5%, while SBI and PNB shed over 3%.

“Emerging uncertainty around several mid- and small-sized banks (Silvergate Bank, Sillicon Valley Bank, Signature Bank and First Republic Bank) has created nervousness among global investors about the health of the US banking sector. The US Fed’s emergency meeting to control the damage would be crucial for the markets,” said Siddhartha Khemka, head (retail research), Motilal Oswal Financial Services.

The Nifty PSU and private bank indices were down 2.87% and 2.44%, respectively. The auto index tumbled 2.24% while financial services slumped 1.63%.

Tech Mahindra, however, surged 6.86% on the company’s announcement that Infosys-veteran Mohit Joshi would succeed CP Gurnani as the MD and CEO, after the latter’s term ends in December.

Among Sensex components, Tech Mahindra was the only one to end in the green. Besides IndusInd Bank, other big laggards were SBI and Tata Motors, shedding over 3%. Axis Bank lost over 2%, while ICICI Bank, Kotak Bank and the HDFC twins lost over 1%.

Monday’s session saw a Rs 4.39-trillion erosion in investor wealth, with the last three sessions having witnessed a loss of Rs 7.68 trillion, showed exchange data.

“India is less affected by events in the US. The fears are more around the asset quality taking a knock, especially in the retail segment. There are concerns regarding further rate hikes and their impact,” said Gaurav Jani, analyst (BFSI) at Prabhudas Lilladher.

The market breadth was negative, with just 695 stocks advancing on the BSE and 2,915 declining.

The BSE midcap and smallcap skid 1.83% and 2.08%, respectively, while the largecap was down 1.42%. All sectoral indices closed in the red, with the bankex losing 2.24% and the telecom and auto indices shedding over 2%.

While DIIs were net buyers to the tune of Rs 1,418.58 crore, FIIs continued their flight, pulling out Rs 1,546.86 crore.

On Sunday, US regulators ― the Federal Reserve, Federal Deposit Insurance Corporation or the FDIC and the Treasury ― stepped in to assuage fears and assured depositors of SVB and Signature Bank, a New-York-based lender popular for funding cryptocurrency entities, that they would have access to all their money.  

In a separate development, First Republic Bank secured funding from JPMorgan Chase & Co, giving it access to $70 billion in unused liquidity. Trading in shares of the bank were halted on Friday after it slumped more than 50%.

Asian indices were, however, a mixed bag. Hong Kong’s Hang Seng rose 1.95%, China’s Shanghai Composite gained 1.2% and South Korea’s KOSPI edged up 0.67%. Singapore’s STI fell 1.42% and Japan’s Nikkei shed 1.11%. Australia’s ASX200 slipped 0.5%.