Stock Market: Yellen pep talk helps bourses; bulls ride banks back in game

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By S Jha

New Delhi, March 21: Bulls had a sigh of relief after the heavyweight banks pulled them away from the deep bear hugs on Tuesday. The US Treasury Secretary Jennet Yellen also pepped up the American bourses with her bullish remarks to protect the depositors in the vulnerable banks.

The US Federal Reserve facing all round attack for taking the American financial institutions to brink of collapse is set to announce the rate decision on Wednesday. The global bourses even after gaining grounds may stay edgy until Jerome Powell unveils the Fed decision and also enlighten the global investors with his accompanying commentary.

The Reserve Bank of India has also facing brickbats for failing to tame inflation, with consumer price index set to stay above six per cent, beyond the target of 5.7 per cent, even for March. The RBI monetary policy meeting (MPC) is still two weeks away, but the Fed action may set the direction of the global equity markets.

Vietnam and China have broken ranks with the Central banks of several countries by easing the cash reserve norms for the banks to help businesses in their countries compete in the challenging economic situations. Other nations may also take cues from Vietnam to decouple with the US Federal Reserve in the next few days.

Banks have on several occasions helped the bulls gain re-entry in the markets. This is proving to be true for the American market where the First Republic rose by over 30 per cent on Tuesday. The private banks brought cheers to the investors in the Indian equity market, as the likes of Axis Bank, ICICI bank and HDFC Bank strongly rallied to lift the overall market. Advance decline ratio favoured the bulls with 3:2.

Domestic institutional investors once more overwhelmed the selling by their foreign counterparts by ensuring a net institutional contribution in the cash market of Rs 491 crores. Robust DII action appears to indicate the retailers’ interest coming back to the equity market to lap positions at lower valuations.

Also the fact that the crude oil has slumped to almost $70 per barrel is bringing relief, as any cut in the retail prices of petrol and diesel may automatically help the RBI to come into the comfort zone on inflation management. The indices were also helped by Reliance Industries rising by almost three per cent, which gave a strong stability to the broader market.