Sensex closes 446 points up as financials rally on easing banking crisis fears

More sustained USD losses, Scotiabank

BENGALURU: In response to a slew of temporary relief provided by moves to stabilise the global banking sector, financials stocks rose, and Indian markets ended the day higher.
The S&P BSE Sensex increased 0.77% to 58,074.68 while the Nifty 50 index closed 0.70% higher at 17,107.50, marking their largest single-day advances since the failure of Silicon Valley Bank on March 10.
The high-weighted financials index, which comprises nine out of the 13 key sectoral indices, rose by roughly 1.5%.
The increase in domestic shares coincides with a surge in international markets as anxieties about the banking crisis subsided following UBS’ state-backed acquisition of Credit Suisse, analysts said. But, concerns about global banking contagion persist.

Five banks have failed so far, from Credit Suisse to Silvergate, according to Aishvarya Dadheech, fund manager of Ambit Asset Management. “More worms to come out,” he predicts.
On concerns that tighter tech spending could result from the banking problems in developed nations, shares of information technology (IT) companies declined by over 1%.

The U.S. Federal Reserve’s policy decision on Wednesday is another item on the agenda. The probability of a 25 bps increase is currently 51%, while the probability of the status quo is 49%. The likelihood of an increase dropped from as high as 80% last week to 41% on Monday.

Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services, said, “The Fed has an unenviable job to manage inflation with rate hikes while simultaneously controlling the implications of its rate hikes.

Reliance Industries outperformed all other equities by more than 3%. The stock is currently trading at a “bargain,” according to brokerage firm CLSA.

After receiving significant orders, engineering and construction firm Larsen & Toubro saw its share price increase by 1.42%.

BofA Global Research predicts that the Nifty will end the year at 18,000 points, which is about flat with end-2022 but 5.5% higher than present levels.