Markets at 5-mth low as US banking crisis spreads

Mumbai: Benchmark stock indices Sensex and Nifty declined for a third day on the trot to close at five-month low levels on Monday due to a massive sell-off in banking, finance and auto stocks triggered by fears of potential contagion from the biggest bank failure in the US since 2008.

Unabated flight of foreign capital and a weak domestic currency amid global rate hike fears added to the gloom, traders said.

Falling for the third straight session, the 30-share BSE Sensex plunged 897.28 points or 1.52 per cent to settle at 58,237.85, the lowest closing level in five months. Only one Sensex stock ended higher, while the rest 29 dropped. The index opened higher and later rose by 375 points to touch a high of 59,510.92 in early trade amid positive Asian markets. However, bears gripped the markets and the index tanked over 1,400 points from the day's high to 58,094.55. The NSE Nifty tanked 258.60 points or 1.49 per cent to end at a five-month low of 17,154.30, with 45 of its scrips ending in the red.

"Jitters over the largest US bank failure since the 2008 financial crisis, driving investors to the safe-haven asset," said Navneet Damani, senior V-P (commodity research) at Motilal Oswal Financial Services.

"Bloodbath was seen in the global market as the fallout of Silicon Valley Bank was followed by turmoil at Signature Bank, keeping investors worried about the strength of the US banking system. Importantly, the Fed's decision in the upcoming meeting will have a crucial impact on the market sell-off, as the consensus is reversing to no rate hike trajectory. Also, the US inflation data due on Tuesday will have a vital impact in the short-term as the market anticipates a cool down from January levels," Vinod Nair, head (research) at Geojit Financial Services.

The selling pressure was widespread wherein banking, auto and IT majors were beaten down badly. The broader indices too plunged sharply lower and lost nearly 2 per cent each.

Foreign portfolio investors (FPIs) offloaded shares worth Rs2,061.47 crore on Friday, according to exchange data.

In the broader market, the BSE smallcap gauge dipped 2.08 per cent and the midcap index declined 1.82 per cent. All the sectoral indices closed in red. Bankex declined 2.24 per cent, Telecommunication slipped 2.08 per cent, auto dipped 2 per cent, realty (1.98 per cent), financial (1.93 per cent) and tech (1.49 per cent).IndusInd Bank was the biggest loser in the Sensex pack, shedding 7.46 per cent, followed by SBI, Tata Motors, M&M, Bajaj Finserv, Axis Bank and Infosys.