The bears are dancing their way down. Indian markets are set to open down as a fallout of the banking crisis that has now spread to Europe. Asian markets are trading lower while writing and SGX Nifty is trading 30 pts down. Today being weekly expiry day markets are expected to be volatile. In a late development Swiss regulators stepped in to calm the jittery financial markets. It has pledged to meet the capital requirements of systemically important banks. This statement came after a Major government put pressure on the Swiss government to act. Today it is Credit Suisse Group Ag yesterday it was Silicon Valley Bank. Banks are failing by the day. The vibes are similar to the 2008 Lehman crisis. The banking saga is far from abating and now spreading to Europe as Swiss Credit Suisse Group AG plummeted to close 24% down.
One of the largest investor Saudi National Bank refused emphatically to back Credit Suisse as they already own 9.8% in it and above 10% many regulatory regimes kick in and the bank is not ready for. People in the know fear that if Credit Suisse fails to raise capital, then it could be another Lehman crisis. European markets closed over 3% down. While the S&P 500 the benchmark the world watched was down 1.5% it recovered some ground post the Swiss regulator announcement and was down 0.70% at close. However, the volatility in the Wallstreet will continue as investor believe that any aggressive tightening would cause the banking system to breakdown. Emergency liquidity provided by the regulators are seen as insufficient and for the present the banking system has become fragile.
Local factors
Drop in oil prices augurs well for India. Brent and WTI crude were down 4% and trading at yearly lows.
Global financial major Jefferies in its analysis says Indian banks are well placed in terms of quality of deposits and also the possible impact of mark-to-market losses on held-to-maturity book.
Stocks to watch
Patanjali Foods promoter shareholding is frozen by both the NSE and the BSE for not complying the public shareholding requirements within the stipulated time.
Samvardhana Motherson International -Japanese promoter company Sumitomo Wiring Systems likely sell 3.4% stake in the company through a block deal on Thursday as per sources.
Vedanta Repays $100 million to Standard Chartered Bank through release of encumbrance on March 10. Indian Oil Corporation is targeting to increase its renewable energy portfolio to 200 gigawatts (GW) by 2050 from the current 239 megawatts, to help it achieve its 2046 net-zero goal.
The case for the bears
Any crisis creates panic a conducive environment for the bears. Unless the banking crisis is thoroughly addressed the bear party will continue. Easier said to address the crisis of this magnitude takes time. Till then markets will be volatile. To jump into a pull-back can be hazardous. Being a weekly expiry day Indian markets can be extremely volatile. Caution advised.
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