Monday turned out to be a roller coaster ride for the global stock markets. The scare over the default risk of one of Switzerland’s largest banks UBS AG reaching a 11-year high led to a fall in the global markets. But the news later during the day that the probability of Russia halting its war with Ukraine had risen, saw all the global markets recover sharply from their days low levels.

India’s Nifty index recovered more than 125 points from the days low to close above its crucial support level. At the close Sensex was down 0.62 percent or 360 points at 57628. The Nifty index fell 0.65 percent or 111 points at 16,988.  Global investors will also be eyeing the commentary by the US Federal Reserve chief who will be speaking this week. 

FPI selling

Relentless selling by the foreign portfolio investors continued. Provisional data showed that FPIs sold stocks worth ₹2,545 crore in the cash markets on Monday. “The FIIs have record short positions in the index futures with 90 per cent positions on the short side, and their short covering (whenever happens) will be the trigger for the pullback. So one should keep a close tab on this data and look for cues for the near term directional move,” said Ruchit Jain, Lead Research, 5paisa.com:

On the US exchange, the futures price of Credit Suisse had crashed by 60 per cent early on Monday. Also, the share price of UBS AG in Europe had declined by 11 per cent before recovering half way. Swiss authorities said they helped to facilitate the deal to stem the risk of contagion to the global banking system as Credit Suisse teetered on the brink.

Global cues

At the fag end of Indian markets’ closing, news reports suggested that Chinese President Xi Jinping was in Russia to meet President Vladimir Putin to insist on halting the war. There was a sharp recovery in the global markets as reports also suggested that Russia was considering halting the war. Post the news, stock markets in Europe and the US futures had fully recovered and were trading nearly half a percentage higher from the previous day’s close.

“The markets will closely follow global cues and the developments in the US and European banking system. Domestically, CPI and WPI have cooled and trade deficit has narrowed. Brent crude prices have corrected 10 per cent since the start of the US banking crisis which, coupled with the cheaper crude from Russia and the fall in natural gas and coal prices, is a huge tailwind for the Indian economy. All eyes will be on the US Fed monetary policy meeting this week,” said Mitul Shah - Head of Research at Reliance Securities.

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