Benchmark Sensex and Nifty fell on Monday as a result of subpar global cues and ongoing worries about contagion risk in the global banking system, despite UBS Group’s acquisition of troubled Credit Suisse. The Nifty 50 dropped under 17,000 while the BSE Sensex was down over 800 points at 57,177.
According to economists, investors are attempting to grasp how fast the economy can slow down and whether the banking sector problems would be a ‘rapid slow down’.
“An immediate response from governments and central banks appears to have significantly reduced concerns about a financial crisis stemming from the banking crises in the US and Europe. There is no sign of a panic like there was in 2008 with the volatility index in the US hovering around 25. Investors might, however, exercise caution and wait for stability. A decrease in the trade imbalance and a significant drop in Brent crude to $73 have a beneficial impact on India’s macroeconomics “He referred to Dr. VK Vijayakumar, the chief investment strategist at Geojit Financial. Services.
The release of information about how banks borrowed $165 billion from the Federal Reserve last week and the bankruptcy filing of SVB Financial Group caused US equities to teeter downward on Friday. These events raised concerns about the viability of the banking sector. Despite coordinated attempts by global central banks to ease the impending banking crisis, the majority of Asian markets fell.
In a deal approved by Swiss authorities, UBS said over the weekend that it will acquire Credit Suisse for 3 billion francs ($3.2 billion) and take on losses of up to $5.4 billion. Investors are cautious about a variety of risks, including contagion, the flimsy condition of American regional banks, and moral hazard, according to experts.
“Traders anticipate that the banking crisis could result in significant interest rate reductions next year, which could put markets in a precarious position ahead of this week’s Federal Reserve meeting. Investors are being warned about possible restrictions in a quick increase. Market turmoil could result from the US Fed meeting’s unexpected outcome, according to Deepak Jasani, head of retail research at HDFC Securities.
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