Indices dip for fifth session as Credit Suisse woes weigh on investor minds

The benchmark indices declined for the fifth consecutive day after staying in the green for most part of Wednesday. The Sensex ended the session at 57,556 points, a decline of 344 points or 0.6 per cent. The Nifty50, on the other hand, ended the session at 16,972 points, lower by 71 points or 0.4 per cent. From the high it made in December, the Nifty50 has declined 9.8 per cent.

Nifty is closing below the 17,000 level for the first time since October 11. In the last five sessions Nifty has declined 4.4 per cent and Sensex by 4.6 per cent.

The latest trigger was fear amongst investors emanating from a fresh turmoil at the Credit Suisse Group as a top shareholder refused additional financial assistance. As a result, shares of the lender fell 26 per cent.

Lately, fresh troubles in the finance sector in the western world have complicated the task of monetary policymakers who are already grappling with inflation pressures. In the past few days, the collapse of Silvergate Bank, Silicon Valley Bank, and Signature Bank have gripped the markets, even as the US government moved to stabilise the financial system which led to speculations that the US Federal Reserve might go slow on rate hikes.

Analysts said central bankers will be more cautious in hiking rates as they have to balance inflation and financial stability risks. There are also concerns that the European Central bank (ECB) may hike rate by 50 basis points even though an ECB official said that it should either pare back or delay hikes to avoid a policy error.

The only relief for investors on Wednesday was a rise in retail sales in China while factory output was fractionally lower than projected.

"Markets extended the negative tone for yet another session and lost nearly half a per cent. Mixed global cues are currently weighing on the sentiment in absence of any major trigger from the domestic front,' said Ajit Mishra, vice president, research, Religare Broking.

Ruchit Jain, research lead, 5paisa.com said that with the momentum changing, the price-wise corrective phase is over for the market and it should now be seen as a ‘buy on dips’ market where declines should be used as a buying opportunity.

The broader market was weak, with 2,011 stocks declining and 1,518 advancing.

More than two-thirds of the Sensex constituents declined. Reliance Industries fell 1.7 per cent and contributed the most to the 30-share index losses. HDFC Bank -- which fell 1.5 per cent -- and HDFC -- which fell 1.2 per cent -- were the other big contributors to the decline. Foreign portfolio investors were net sellers to the tune of Rs 1,271 crore, showed provisional data from exchanges.

“On the index front, the Nifty50 has the next crucial support at the 16,800 mark while 17,200-17,300 would act as a hurdle in case of a rebound. We reiterate our negative view and suggest continuing with “sell on the rise” until we see some sign of reversal,’ said Mishra.