Highlights:
- The Indian markets got off to a shaky start on Monday, with the Sensex falling by almost 1,800 points and the Nifty falling below 17,000 points in the opening session.
- The massive losses were caused by the rise of geopolitical tensions between Russia and Ukraine.
- Crude oil prices are also rising amid concerns that Russia would soon invade Ukraine and establish a pretext for an attack.
Indian stock markets dipped today as global equities plunged as investors globally concerned about rising tensions between Russia and the West over Ukraine. The Sensex plunged almost 1800 points at the day’s low, while the Nifty fell below 17,000 points. Asian equities were under pressure today, but crude oil extended gains as geopolitical concerns about Ukraine rippled through global financial markets, boosting demand for safe-haven assets. On the MCX, gold prices today reached a near three-month high.
According to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, “Sentiments have turned very negative for the short-term with the heightened tension over the Ukraine crisis. Weakness in global markets is the direct fallout of the Ukraine crisis.”
The Indian rupee fell 20 paise to 75.56 against the US dollar in opening trade on Monday, as geopolitical concerns pushed investors to the safe-haven appeal of the greenback.
Ukraine Crisis
The United States has warned that a Russian invasion into Ukraine is possible, as weekend discussions between US President Joe Biden and Russian President Vladimir Putin failed to break new ground. Meanwhile, German Chancellor Olaf Scholz will visit Ukraine today and Russia the next day for diplomatic discussions.
Geopolitical concerns are a major setback to risk asset markets, which are already wary of rising inflation and the potential of aggressive Federal Reserve interest-rate rises.
While all of this is unfavourable, a solution of the Ukraine crisis might spark a sharp rebound in markets headed by large-cap bluechips, according to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Oil Prices
Global oil prices today to their highest in more than seven years, on concerns that a Russian invasion of Ukraine would spark U.S. and European sanctions, disrupting exports from the world’s top producer in an already tight market. Brent crude futures was at $95.56 a barrel.
“The Ukraine geopolitical tension is causing a rapid spike in crude oil prices, which is another headwind for Indian equity markets,” said Parth Nyati, founder of Tradingo. ” World markets were digesting record inflation in the United States, but a spike in geopolitical tension spoiled the mood.”
Inflation data
The retail inflation data will be released later today. “Crude at an eight-year high is another major macro concern for India. If crude remains at levels of $95 for an extended period of time, the RBI will be forced to revise upwards its 4.5% CPI inflation projection for FY23. Continuation of the accommodative monetary stance too will be difficult,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Nifty Technical Outlook
“Nifty is trading near-critical demand zone of 17000-16800, and the ‘buy on dip’ texture will be continued till Nifty trades above 16800 level its 200-DMA however there are multiple resistances on the upside till 17650 where 17300/17500 are immediate hurdles. There are no worries till Nifty trades above the 16800 level but if Nifty slips below 16800 then things may become ugly,” stated Parth Nyati, founder of Tradingo.
According to Prashanth Tapse, Vice President (Research), Mehta Equities, if the Nifty falls below 16836, then there is risk of the index sliding further to December 2021 lows of 16410.
The Bank Nifty
Banking stocks came under scrutiny after the CBI filed a complaint against ABG Shipyard Ltd and its promoters, accusing them of defrauding lenders. The Nifty banking index dropped 2.8 percent, while the public sector banking index fell 3.5 percent.
“There is some sentimental impact of the issue of ABG group on banking stocks but it doesn’t have a material impact as it is already part of NPA,” Parth Nyati, founder of Tradingo, said.
