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Indian shares hit 5-mth low on worries over U.S. banking crisis

FILE PHOOT: A man walks past a newly launched Nifty Indices logo inside the National Stock Exchange building in Mumbai

By Sethuraman N R

BENGALURU (Reuters) - Indian shares hit a five-month low on Tuesday as the relentless selling continued for a fourth session over a U.S. banking crisis that sparked a global selloff among lenders.

The Nifty 50 index closed down 0.65% at 17,043.30, while the S&P BSE Sensex fell 0.6% to 57,900.19.

The Nifty 50 index has lost over 4% in four consecutive sessions as of Tuesday, taking losses to 5.9% thus far into the year. If the losses hold, this would be the worst quarter ending March 31 since 2020.

The fallout from the collapse of U.S. lenders Silicon Valley Bank and Signature Bank widened despite government efforts to shore up confidence, hitting bank shares globally. [MKTS/GLOB]

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There are concerns over public sector banks managing their treasuries after what happened in the U.S., which has led to a selloff, said Saurabh Jain, assistant vice-president, research, at SMC Global Securities.

Meanwhile, assurances from U.S. President Joe Biden and other policymakers did little to calm markets and prompted a rethink on the Federal Reserve's interest rate outlook.

Many Indian IT services companies have big exposure to the U.S. banking sector and with the current environment, many will resort to cost-saving measures, Jain said, adding that is impacting IT stocks.

Public sector lenders were among the top drags, falling 1.9%, even as analysts dispelled concerns saying Indian lenders were insulated from the U.S. banking crisis. IT stocks fell 1.7%, while autos dropped 0.9%.

Indian IT service provider Infosys Ltd hit a five-month low, while private lender Bandhan Bank Ltd slumped to a 3-year trough.

Investors will now focus on the U.S. inflation data, due later in the day, for cues on the rate hike trajectory amid bets of the Fed turning less hawkish amid the banking crisis.

($1 = 82.2350 Indian rupees)

(Reporting by Nallur Sethuraman in Bengaluru; Editing by Janane Venkatraman)