Stock Market: Global banking rout sweeps through Asia
Photo credit SVB
By S Jha
New Delhi, March 10: Anther Friday bloodbath struck the equity market, tracking the global rout on the bank of the financial distress in a California-based financial institution. Following the Thursday banking rout in the US equity markets, the Indian indices nosedived amid rising fear that the unabated rate hikes could lead to a collapse of the financial institutions.
Bank Nifty closed with a cut of 771 points after marginally recovering from the deep fall during the day of almost 900 points. Nifty dived by a whopping 176 points, which also recovered marginally from over 260 points crash in the first half of the session. Sensex closed with a loss of 671 points. The rout in the Indian equity market was led by the banking stocks, with all the costituents of the Bank Nifty coming under bear attack.
The index heavyweight HDFC Bank cracked by 2.5 per cent on Friday. The SBI, IndusInd Bank, Axis Bank and others too tanked. Nifty also gave up the psychological vele of 17500 to close at 17412. The technical levels, as per the chartists, have become irrelevant amid the indices reacting sharply to the global cues. In the last crash a few days ago, Nifty had taken support from 17350 level to stage a smart recover to touch 17800, before again wilting to the relentless selling pressure.
The SVB Financial institution, which is based out of California, reported unprecedented withdrawal of deposits. The institution has to take a sharp hair cut in meeting its obligations on bonds. The collapse of the SVB on the bourses spread over to the financial behemoths, including JP Morgan and Citibank, which reported massive erosion of valuation after the investors rushed to dup their shares.
The US Federal Reserve barring a few discordant voices remains hawkish, warning that aggressive rate hikes will remain the norms to deal with the heated inflation, which has defied all attempts of the Central bank to check its rise. With Central banks across the world following in suit to match the actions of the US Fed to defend their respective currencies, the banking institutions are reported to be under stress to protect their margins, with gap between deposits and lending becoming narrow.
The housing lending institutions have been under sever stress with the likes of Home First, LIC Housing Finance and others having become the favourite of the bears. This is also the case with the realty stocks.
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