D-Street Recap: STT Hike for F&O, Banking Crisis, Fed Policy, Benchmarks

By Malvika Gurung

Invetsing.com -- The domestic market ended with losses on Friday and extended sell-offs to the third consecutive week with benchmark indices falling up to 1% each. The volatility in the past week was mostly centred around movements and developments regarding the global banking industry amid the banking crisis.

Headline indices Nifty50 fell 0.77% on Friday to close the week at 16,945.05 points and Sensex shed 398.18 points or 0.69% in the previous session.

Further, a surprise hike in securities transaction tax (STT) on F&O trade by the Government announced in the Finance Bill 2023 on Friday soured the market sentiment.

In a note sent to Investing.com, Vinod Nair, Head of Research at Geojit Financial Services stated that the contagion in the global banking system kept investors focused on the outcome of the Fed policy meeting this week.

The meeting was significant because investors wanted to know the Fed's plan to balance the rout in the US banking system and aggressive policy, he said. The Fed became marginally less hawkish in its statement hinting at an intention to pause rate hikes soon.

However, weak signals from the European market did not allow bulls to lead as European banking stocks fell following rate hikes by the central bank and rising CDS spreads.

Besides the banking sector, IT stocks too witnessed selling on fears of muted deal wins from the BFSI segment in the western markets, last week.

“The volatility in the market is expected to continue in the short term as the global banking system is yet to fully recover from the crisis, especially in Europe,” Nair added.

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