Indian stock markets fell today amid a selloff in global stocks as investors around the world worried about escalating tensions between Russia and the West over Ukraine. The Sensex fell more than 1,500 points to the day’s low while Nifty fell below 17,000. Asian stocks were under heavy pressure today as crude oil extended gains amid geopolitical risks on Ukraine were spilling over into global financial markets, boosting demand for safe-haven assets. Gold prices hit an almost 3-month high on MCX today.
“Feelings have turned very negative in the short term with the heightened tension around the Ukraine crisis. Weakness in global markets is a direct consequence of the Ukraine crisis,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services.
The Indian rupee fell 20 paise to 75.56 against the US dollar today when trade opened on Monday, amid geopolitical tensions pushing investors towards the greenback’s safe-haven call.
The United States has warned that a Russian invasion of Ukraine could be imminent, while talks over the weekend between US President Joe Biden and Russian President Vladimir Putin have failed to break new ground. Meanwhile, the focus will be on German Chancellor Olaf Scholz’s visit to Ukraine today and Russia the next day for diplomatic talks.
Geopolitical tensions are another blow to risk asset markets, which are already jittery over high inflation and the prospect of aggressive interest rate hikes from the Federal Reserve.
However, while all of these are negative, a broadcast of the Ukraine crisis may trigger a sharp rebound in markets led by large-cap bluechips, said VK Vijayakumar, chief investment strategist at Geojit Financial Services.
Global oil prices today rose to their highest level in more than seven years on fears that a possible Russian invasion of Ukraine could trigger US and European sanctions that would disrupt exports from the world’s largest producer on a already tight market. Brent futures were at $95.56 a barrel.
Parth Nyati, Founder of Tradingo, said: “The geopolitical tension in Ukraine is causing crude oil prices to rise sharply, which is another headwind for Indian equity markets. Global markets were trying to digest record US inflation, but rising geopolitical tensions spoiled the mood.”
Retail inflation data is expected later today. “Crude at its highest level in eight years is another major macroeconomic concern for India. If Crude stays at $95 levels for an extended period, the RBI will be forced to revise its CPI inflation projection upwards by 4.5% for FY23. Continued accommodative monetary stance will be also difficult,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services.
Clever technical insights
“Nifty is trading near critical 17000-16800 demand area, and the ‘buy down’ texture will continue until Nifty is trading above the 16800 level, its 200-DMA, but there are several resistances at the upside to 17650 where 17300/17500 are immediate hurdles There are no worries until Nifty is trading above the 16800 level, but if Nifty slips below 16800 things could become ugly,” said Parth Nyati, founder of Tradingo.
Prashanth Tapse, VP (Research), Mehta Equities, said if Nifty slips below 16836, then there is a risk that the index will slide further to December 2021 lows at 16410.
The bank shares were under the radar after CBI filed a complaint against ABG Shipyard Ltd and its promoters accusing it of defrauding lenders. The Nifty banking index fell 2.8%, while the public sector banking index fell 3.5%.
“There is some sentimental impact from the ABG Group issue on banking stocks, but it has no material impact as it is already part of NPA,” said Parth Nyati, founder of Tradingo.
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