The domestic benchmarks crashed over 3% on Monday as escalating Ukraine-Russia tensions, record rise in crude prices, and fear of aggressive policy stance by the U.S. Federal Reserve triggered sell-off in global equity markets. The Ukraine crisis prompted investors to go in the risk-off mode and shift focus to safe-haven assets. The sustained fund outflow by foreign institutional investors (FIIs) in the backdrop of rising U.S. bond yields also dented market sentiments.
Extending fall for the second session, the BSE Sensex closed 1,747 points, or 3%, lower at 56,406, and the NSE Nifty plunged 532 points, or 3.06%, to 16,843.
In a similar fashion, the broader markets also ended sharply lower. The S&P BSE Midcap index slumped 3.5%, and the S&P BSE Smallcap index plunged 4.15%.
The overall market breadth on the BSE was negative, with 3,099 shares falling out of a total of 3,935 traded stocks. Only 688 shares advanced and 148 were unchanged.
"Increased tension between the U.S. and Russia over Ukraine sent oil prices rising and forced investors to dump risky assets. Risk sentiment was further dampened ahead of the Fed’s emergency meeting which heightened fears of aggressive monetary tightening. On the domestic front, the annual WPI inflation eased marginally to 12.96% in January from 13.56% in December, but still high, amid moderation in the fuel and power prices," says Vinod Nair, head of research at Geojit Financial Services.
According to analysts at TrustPlutus Wealth, the sell-off in market is mirroring the fall in global markets last Friday and a possible weak opening for U.S. markets today. Global markets are worried about the fallout of political tensions between Russia and Ukraine, which could lead to major disruptions in global energy supply chains. This development will almost certainly precipitate stiff sanctions by the U.S. against Russia, which could further dampen sentiments. In addition, it is almost certain that the U.S. Fed will start raising rates as early as March, with up to seven rate hikes in 2022,” said Vineet Bagri, managing partner at TrustPlutus Wealth.
29 of 30 heavyweights end in red, only TCS in green
Out of top-30 shares on the BSE Sensex, barring Tata Consultancy Services (TCS), all index heavyweights ended in red. FMCG major ITC topped losers’ chart by falling 5.6% on the BSE. Some of the other top laggards include Tata Steel, Housing Development Finance Corporation, State Bank of India and ICICI Bank, which dropped up to 5.5%.
Reliance Industries dropped over 3% in line with broader market. The company in an exchange filing said it has formed a joint venture to deliver satellite-based broadband services in India. Jio Platforms, an arm of Reliance Industries, has teamed up with SES, a global satellite-based content connectivity solutions provider, to form a joint venture – Jio Space Technology – to deliver the next generation scalable and affordable broadband services in India leveraging satellite technology.
Meanwhile, IT major TCS was the biggest gainer, rising 1% after members of the company approved the buyback of shares worth up to ₹18,000 crore by passing a special resolution through postal ballot. “The members of the company have approved the buyback by passing a special resolution through postal ballot," the company said in a filing to the BSE.
All sectors closed lower
The market witnessed broad-based selling with all sectoral indices closing in negative terrain. The realty and metal indices were the top losers, while IT and Tech declined the least.
The BSE realty index was the worst performer with a 5.2% loss, led by Indiabulls Real Estate, DLF, Godrej Industries, Oberoi Realty, and Macrotech Developers (Lodha Group).
The BSE metal index also saw surge in selling activities by falling 5.05%. The top losers in metal space include APL Apollo Tubes, JSW Steel, Jindal Steel & Power, Tata Steel, and Steel Authority of India (SAIL).
Global equities slump on Ukrain-Russia tensions
The escalating geopolitical tensions between Ukraine and Russia triggered sell-off in the global equity market. As per media report, Russia has concentrated more than 1,00,000 troops near Ukraine's border and has sent troops to exercises in neighbouring Belarus. Meanwhile, NATO forces are also heading to the alliance's eastern borders to respond to a possible crisis in eastern Europe if Russia invades neighbouring Ukraine and fighting breaks out.
In the Asia-Pacific region, Japan’s Nikkei was the worst performer with a 2.23% loss, followed by Taiwan Weighted index, which dropped 1.7%. South Korea’s KOSPI fell 1.57%, Hong Kong’s Hang Seng shed 1.4%, and Thailand’s SET Composite slipped 0.23%.
In mainland China, the Shenzhen Component fell 0.76%, while the Shanghai Composite closed 0.98% lower.
In European market, Germany’s DAX crashed 3% in early deals, while France’s CAC index also fell over 3%. The U.K.’s FTSE 100 index tumbled 1.8%, while Spain’s IBEX index plunged 2.5%.
