Indian stocks fell on Monday on lingering concerns about contagion risks in the global banking system despite UBS Group’s historic acquisition of troubled Credit Suisse offering some relief. The Nifty 50 was down 1.15% at 16,905.25, while the S&P BSE Sensex was down 1.12% at 57,339.90 at 10:32 IST.
The biggest decline in nifty ever:
All 13 major sectoral indices fell, with financials and information technology (IT) down more than 1.2% and 1.7% respectively. The Nifty 50 fell nearly 2% last week, its biggest decline in nearly a month.
At the weekend, UBS said it would buy Credit Suisse for 3 billion francs ($3.2 billion) and absorb up to $5.4 billion in losses, in a deal proposed by Swiss authorities.
Soon after the announcement, global central banks came out with statements to calm markets. However, investor sentiment remained fragile. At least two major banks in Europe are exploring contagion scenarios, two senior executives familiar with the matter.
Anita Gandhi, director of Arihant Capital Markets says “Concerns about the global banking system have hurt investor sentiment, the only downside is that Indian lenders are in good health. While Credit Suisse’s takeover of UBS offers temporary relief, the real variable is how the Fed has dealt with concerns in the financial sector”.
Tata Consumer Products fell
Forty-four of the Nifty 50 constituents posted losses. Most Adani shares fell on news that the group had suspended work on a $4.2 billion petrochemical project in Mundra, Gujarat. Among individual stocks, Tata Consumer Products fell more than 2% after the company dropped acquisition talks with Bisleri.
Cochin Shipyard advanced more than 6% after winning a 5.50 billion rupee contract for emission-free feeder container vessels from Samskip Group.
Volatility in domestic markets and foreign outflows will continue until there is clarity in the banking sector, two analysts said. The volatility index rose to 16.50, the highest since February 1, the day of the EU budget.
Written by: Vaishali Verma
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