According to Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services, investors are cautious in the current global environment.

“There is some hope that the Fed (Federal Reserve) may be less aggressive with rate hikes following the SVB collapse, which could help the market,” Khemka noted.

The Nifty 50 index has dropped roughly 3.5% in the last three days, pushing losses to 5.3% thus far into the year. If the losses continue, the March 31 quarter will be the worst since 2020.

Nevertheless, assurances from US President Joe Biden and other politicians did little to soothe markets and forced the Fed to reconsider its interest rate forecast.

Domestic banks and public sector lenders were among the biggest drags, falling 0.4% and 1.5%, respectively, despite experts dismissing concerns that Indian institutions were immune to the US banking crisis.

Conversely, annual retail inflation in India fell to 6.44% in February from 6.52% in January but remained above the Central Bank of India’s target range for the second month in a row.

Investors will now look to the United States inflation data, which is due later in the day, for clues on the Fed’s rate hike trajectory, as bets on the Fed becoming less hawkish during the banking crisis.