MUMBAI: A global selloff on Monday sent the Sensex down 897 points or 1.5% to 58,238 – a five-month low – as weak global cues affected sentiment on Dalal Street. Although the US government backstopped the collapsed deposits of Silicon Valley banks, investors here were still cautious on banks and financial stocks, leading to poor sentiment and strong selling.
The SVB crisis is prompting forecasters to believe that the US Federal Reserve may go slow on rate hikes as it prioritizes financial stability over inflation. Goldman Sachs said that banking stress means they are not forecasting a rate hike by the Fed next week. US stock indices opened in the red on Monday as SVB’s collapse halted trading at several banks. The Cboe Volatility Index, a gauge of the cost of options tied to the S&P 500 known as the VIX, rose above 30 on Monday for the first time since last October.
Oil tumbled from the collapse of the biggest US bank since 2008, as investors fled riskier assets and sought refuge in government bonds and gold. Brent crude futures were down 76 cents, or 0.9%, at $82 a barrel in New York midday. The global benchmark had earlier fallen to a session low of $78, its lowest since early January. Gold rose and copper fell on Monday even as crypto markets cooled following bitcoin’s highest rally in nearly a month.
The MSCI World Equity Index, which tracks shares in 49 countries, dropped 0.6%, while Europe’s bank index fell more than 6%. The Nifty closed at 17,154, down 259 points or 1.5%. The Sensex opened marginally weak but climbed nearly 400 points in early trade but bears soon took over the trade and dragged stocks across almost all sectors till the close. As a result, 29 out of 30 Sensex stocks closed in the red. Investors went short by Rs 4.2 lakh crore against BSE’s market cap of Rs 261.7 lakh crore.
Selling here was led by foreign funds with a net outflow of Rs 1,547 crore, BSE data showed. On the other hand, domestic funds were net buyers to the tune of Rs 1,419 crore. This was the third consecutive session at Sensex’s lower levels, during which the index lost 2,110 points, or 3.5%.
SVB’s influence continued to spread Monday, with shares of First Republic Bank plunging 76.6% as news of the new financing failed to reassure investors, while Western Alliance Bancorp and PacWest Bancorp plunged 82.5% and 53%, respectively.
“Investors once again dumped financial stocks out of concern that the collapse of SVB could worsen the overall mood already on the back of rising interest rates and slowing global growth,” said Shrikant Chauhan of Kotak Securities. Initially, US banking regulators stated that all deposits with SVB were safe but appointed a new management.
The SVB crisis is prompting forecasters to believe that the US Federal Reserve may go slow on rate hikes as it prioritizes financial stability over inflation. Goldman Sachs said that banking stress means they are not forecasting a rate hike by the Fed next week. US stock indices opened in the red on Monday as SVB’s collapse halted trading at several banks. The Cboe Volatility Index, a gauge of the cost of options tied to the S&P 500 known as the VIX, rose above 30 on Monday for the first time since last October.
Oil tumbled from the collapse of the biggest US bank since 2008, as investors fled riskier assets and sought refuge in government bonds and gold. Brent crude futures were down 76 cents, or 0.9%, at $82 a barrel in New York midday. The global benchmark had earlier fallen to a session low of $78, its lowest since early January. Gold rose and copper fell on Monday even as crypto markets cooled following bitcoin’s highest rally in nearly a month.
The MSCI World Equity Index, which tracks shares in 49 countries, dropped 0.6%, while Europe’s bank index fell more than 6%. The Nifty closed at 17,154, down 259 points or 1.5%. The Sensex opened marginally weak but climbed nearly 400 points in early trade but bears soon took over the trade and dragged stocks across almost all sectors till the close. As a result, 29 out of 30 Sensex stocks closed in the red. Investors went short by Rs 4.2 lakh crore against BSE’s market cap of Rs 261.7 lakh crore.
Selling here was led by foreign funds with a net outflow of Rs 1,547 crore, BSE data showed. On the other hand, domestic funds were net buyers to the tune of Rs 1,419 crore. This was the third consecutive session at Sensex’s lower levels, during which the index lost 2,110 points, or 3.5%.
SVB’s influence continued to spread Monday, with shares of First Republic Bank plunging 76.6% as news of the new financing failed to reassure investors, while Western Alliance Bancorp and PacWest Bancorp plunged 82.5% and 53%, respectively.
“Investors once again dumped financial stocks out of concern that the collapse of SVB could worsen the overall mood already on the back of rising interest rates and slowing global growth,” said Shrikant Chauhan of Kotak Securities. Initially, US banking regulators stated that all deposits with SVB were safe but appointed a new management.
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