Bears on rampage

Nifty50: 17,154 ▼ 258 (-1.4%)
Sensex: 58,237 ▼ 897 (-1.5%)

Hello dear reader,

India ‘RRRoared’ at the Oscars this year!
Not one but two Indian films got the world's most prestigious movie awards.
RRR’s ‘Naatu Naatu’ won the Oscar for best original song and ‘The Elephant Whisperers’ bagged the best documentary short film award.
And the icing on the cake? ‘Naatu’ was performed live at the ceremony by Indian artists and was introduced by none other than Deepika Padukone.
But in the markets, no wins for the investors today as well. Let’s get you all the details.

• The markets declined amid weak global cues.
• Of the Nifty50 pack, 45 stocks declined.
• The retail inflation in February stood at 6.4% – above the RBI’s target.

All the Nifty sectoral indices ended in the red with PSU Bank (-2.8%) and Media (-2.5%) being the top losers.

What’s trending

⭐ SVB crisis impacts Nazara Tech
Shares of the gaming company (-0.06%) witnessed volatility today after it said that its two subsidiaries have deposits in crisis-hit Silicon Valley Bank (SVB) in the US. The company said its subsidiaries – Kiddopia Inc and Mediawrkz Inc – collectively have ₹64 crore exposure to SVB. Nazara Tech’s management added that its subsidiaries are well capitalised and the SVB crisis won’t have any impact on daily business operations.

⭐ Adani Group shares shine
Four Adani Group companies, Adani Transmission, Adani Total Gas, Adani Green Energy, Adani Power were in the upper circuit today in a weak market. This comes after the Adani Group completed full prepayment of its margin-linked share-backed loans worth $2.1 billion.

⭐ Yes Bank plunges as lock-in ends
Shares of the private lender (-4.8%) declined as the three-year lock-in period for a group of lenders ended. In March 2020, a consortium of eight lenders, including SBI and HDFC, had invested ₹10,000 crore in Yes Bank to save it from bankruptcy. The RBI had imposed a three-year lock-in period on this investment.

⭐ HAL wins aircraft order
The aircraft maker (-1.6%) has signed a new contract to supply six Domier-228 aircrafts to the Indian Air Force. The deal is worth ₹667 crore. The company currently has an order book of ₹84,000 crore and another ₹50,000 crore worth of orders are in the pipeline.

In Focus

SVB crisis and its impact

The 40-year-old Silicon Valley Bank (SVB), which is a key lender to startups in the US, imploded on Friday, sending shockwaves across the global financial system. The ripple effects of the SVB crisis are spreading rapidly. Following SVB’s collapse, New York-based Signature Bank had to be shut down yesterday after its customers started withdrawing deposits. The US regulators have taken control of both these banks and assured depositors that their money is safe.

So, let’s take a look at what is SVB crisis and it is impact:

What is the SVB crisis?

On 10 March 2023, SVB became the second largest bank to fail since the 2008 financial crisis. ICYDK, it provides banking services to some of the top tech companies and over 2,500 venture capital firms.

So, how did this crisis start? Like any other bank, SVB took deposits – in its case, from startups. It invested some of these deposits in government bonds and kept some part of them in cash.

In the wake of rising inflation, the US Fed had to increase rates rapidly. This meant that the new bonds in the market were fetching higher interest rates. And SVB was stuck with low yielding and loss making bonds. Hence, to cover up its losses, the bank had to sell some of its investments including a share sale.

At the same time, the startup funding has been waning off. So, the depositors (startups) of the bank began withdrawing money for their businesses. To meet its customers’ requirements, the bank was forced to sell its investments or bonds at a discount or lower price. The deposit withdrawals further accelerated last week after it came to fore that the bank was suffering heavy losses.

What’s the impact?

The rub off effect of this was felt on the financial systems across the world including India. After the news of SVB collapse broke, the Indian markets, especially the bank stocks, have been facing the heat. The benchmark indices – Nifty50 and Sensex – have fallen 2.5% and 2.6% over the last two trading sessions. The Nifty Bank Index also dropped more than 4% in the same period.

However, analysts have highlighted that the Indian banks are well placed to withstand the SVB-like crisis. Domestic banks stand out as they have the cushion of sticky retail deposits.

Meanwhile, the Indian government is also holding a meeting with domestic startups to assess the impact of the SVB crisis.

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