Domestic markets are likely to open on a stable note on Monday as global banking crisis is slowly settling down. Analysts said maket may consolidate at around the current levels if there is no fresh crisis.

SGX NIfty at 17,070 indicates a gap down opening of about 100 points, but analysts expect the market to remain stable and closely track global developments, especially the FOMC meeting.

Despite news of Credit Suisse being acquired by UBS, Asian stock are down in early deal on Monday. Most of them are trading down around 0.7 per cent though the Chinese markets are up marginally.

“Despite all the resolution measures, the banking crisis in US and Europe seems to have left behind a sour taste and a feeling among market participants that ‘higher for longer’ is not sustainable..”

Eyes on FOMC meeting

Analysts expect market to remain volatile ahead of US Fed meeting.

Pravesh Gour, Senior Technical Analyst, Swastika Investmart Ltd, said investors’ confidence was negatively impacted by the turbulence in the US banking industry caused by Silicon Valley Bank’s (SVB) bankruptcy and the closure of New York’s Signature Bank.

“Global markets are in brittle mode because everyone is eyeing the outcome of the upcoming US FOMC meeting, which is scheduled for March 22, 2023. US 2-year bond yields are also cooling off, from 5.08 per cent to 3.84 per cent. Apart from this, the Japanese inflation rate for February will be announced on March 24, 2023,” he added..

It may be recalled that despite banking crisis, last week, European central bank hiked the rate by 50 basis points.

IFA Global Research said Given the systemic stability concerns, there was anticipation that the Fed and the ECB would slow down the pace of tightening. The ECB, however, hiked by 50bps, saying there was no trade off between systemic stability concerns and price stability and that inflation was still extremely elevated.

“If the Fed follows a similar playbook, it would hike by 25bps as well in its policy on March 22. It seems, therefore, that central banks would continue to pursue their inflation mandates and if something breaks in the process, they would invoke their ‘lender of last resort’ function and throw liquidity lifelines,” it said..

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