Sensex yo-yos over 1k points on war fears - Times of India

Sensex yo-yos over 1k points on war fears – Times of India

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MUMBAI: Escalation of geopolitical tensions on the Ukraine-Russia border impacted investor sentiment on Dalal Street on Tuesday with the sensex opening more than 1,200 points lower. But the index witnessed a slow recovery as there were news of global efforts to avoid a war in Europe. As a result of the de-escalation initiatives, some global indices like the FTSE index in the UK remained flat, but crude prices inched closer to the $100-per-barrel mark and rupee weakened by about 36 paise, or 0.5%, to close at 74.88 per dollar.
The sensex opened the day’s session at 56,439 points, down 1,245 from its Monday close. But it gained ground through the session to touch its intraday high at 57,506 before finally settling at 57,301 — down 383 points, or 0.7%. TCS, SBI and HDFC Bank accounted for most of the day’s slide, while buying in HDFC, Kotak Bank and a few other stocks partially cushioned the fall, BSE data showed.
According to MOFSL MD & CEO Motilal Oswal, it’s been observed historically that markets tend to overreact to geopolitical events. In the current scenario, it’s the commodities which could be impacted more than the financials, meaning stocks. “After the Iraqi invasion of Kuwait, for example, the global markets fell but later regained their levels within the next six months,” he said. In the present situation, the key transmission mechanism is not via economic or financial contagion but through commodities. “We believe central banks would not change policy unless the rise in commodity prices were to cause a sharp downturn in global growth,” Oswal said.
In late evening trades in the US market, gold price was flirting with the psychologically important level of $1,900 per ounce, while Brent crude was up more than 4% and inching closer to the $100-per-barrel mark. In the domestic market, as the day’s session witnessed high volatility, the NSE’s India VIX — the volatility index, which is also called a gauge of fear by marketmen — jumped over 20% to above 27. This is near its one-year high figure of 28 recorded on February 26, 2021, according to NSE data.
Like in the past few weeks, Tuesday’s domestic stock trades were led by foreign funds which recorded a net outflow of Rs 3,246 crore from the market. This took the month’s net selling figure to over Rs 22,400 crore, data from BSE and CDSL showed. The day’s selling also left investors poorer by Rs 2.7 lakh crore with the BSE’s market capitalisation now at Rs 258.2 lakh crore, official data showed.
Despite the geopolitics-led tensions among investors in most markets, the government securities (G-secs) market behaved slightly different than was expected. In times of uncertainty and volatility, usually the G-sec market witnesses strong buying as investors rush towards the safety of gilts. However, on Tuesday the weakness in the G-sec market in India continued. As a result, the benchmark 10-year gilt yield hardened to 6.75%, up from 6.69% on Monday, RBI data showed.
Moving ahead, the market’s trajectory is expected to be decided by the developments in Europe. According to Religare Broking VP (research) Ajit Mishra, the escalation of tension between Russia and Ukraine has severely dented sentiment globally as participants were hoping for resolution through talks. “They are now eyeing how Ukraine would retaliate and the reaction of the global markets…if the US imposes sanctions on Russia as stated before.” On the technical front, a decisive break down below 16,800 points in the NSE Nifty could result in a fresh fall. Else, choppiness would continue in a range, Mishra said. On Tuesday, the Nifty closed the session at 17,092 points though the day’s low was at 16,844.



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