Indian stock indices fall sharply over selloff in banking and financials

Stock indices in India declined sharply to start the fresh week, pulled down by a sharp dip in banking and financial stocks following the collapse of two US banks in a matter of two-to-three days.

Initially, the indices started Monday's trade on a positive note but soon erased them. Sensex closes at 58,237.85 points, down 897.28 points or 1.52 per cent, whereas Nifty closed at 17,154.30 points, down 258.60 points or 1.49 per cent. All Nifty indices declined today with banking and financials losing the most, data showed.

"Downward spiral continued in a highly volatile charged trading session due to weakness in the US and European markets. Investors once again exited financial stocks onworries that the collapse of US-based SVB could worsen the overall mood alreadyreeling under rising interest rates and slowing global growth," said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.

"Banking and financials were acting as saviors earlier but the tone has changed completely now, which is further adding to their worries. We reiterate our negative view and eyeing the 17,000 level as immediate support in Nifty. Traders should align their positions accordingly," said Ajit Mishra, VP - of Technical Research, Religare Broking.

US-based Silicon Valley Bank collapsed on Friday. The crisis-hit Silicon Valley Bank's shares tumbled over 60 per cent, data showed.

Following the Silicon Valley Bank, New York-based Signature Bank was closed by the state regulators on Sunday (local time), becoming the second US bank to have collapsed.

Right after two US-based banks collapsed in a matter of two-to-three days, the US government and regulators on Sunday (local time) said the actions taken so far demonstrate their commitment to ensuring that depositors' savings remain safe.

Meanwhile, US President Joe Biden on Monday morning (local time) will deliver remarks on how his government will maintain a resilient banking system after two US-based banks collapsed and were closed by regulators.

Biden assured the American people and American businesses to have confidence that their bank deposits will be there when they need them.

As these banks collapse, the Federal Deposit Insurance Corporation (FDIC) was appointed as a receiver, which typically means it will liquidate the bank's assets to pay back its customers, including depositors, and others.

Further, the Federal Reserve Board on Sunday announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors.

( With inputs from ANI )