Markets crash in early deals after Russia orders military action in Ukraine

Indian equity benchmarks extended their previous session’s losses with gap-down opening on Thursday after Russian President Vladimir Putin announced a military operation in eastern Ukraine, claiming it’s intended to protect civilians. Putin says the action comes in response to threats coming from Ukraine. Markets soon extended their opening losses and are trading deeply in red with cut of around three and half a percent each in early deals. Rising oil prices also dented sentiments in markets. Oil prices soared and topped the $100 a barrel mark for the first time since 2014. Traders were concerned as India Ratings revised downwards its GDP growth forecast for 2021-22 to 8.6 per cent from the consensus 9.2 per cent projected earlier. Some pessimism also came as Foreign Institutional Investors (FII) remained net sellers of domestic stocks on Wednesday. FIIs sold Rs 3,417 crore worth equity.

Global sell-off weighted on the market sentiments. All the Asian markets are trading lower following the broadly negative cues overnight from Wall Street, amid the escalation of the Russia-Ukraine crisis, with Australia also joining Europe, the U.S. and U.K. with a first tranche of sanctions on Russia. Ukraine has declared a state of emergency and Moscow has begun evacuating its Kyiv embassy.

Back home, oil & gas industry stocks were in focus as the government data showed India's crude oil production fell to 2,511.66 thousand metric tonnes (TMT) in January 2022, which is 2.40 per cent lower than the output registered during the same month last year and 6.04 per cent lower than the official target for the month.

The BSE Sensex is currently trading at 55248.48, down by 1983.58 points or 3.47% after trading in a range of 55147.73 and 55996.09. All 30 stocks were declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 3.74%, while Small cap index was down by 4.24%.

The top losing sectoral indices on the BSE were Telecom down by 6.75%, Realty down by 4.99%, TECK down by 4.30%, Utilities down by 4.08%, IT down by 3.96%, while there was no gainer.

The top losers on the Sensex were Bharti Airtel down by 8.24%, Tech Mahindra down by 5.40%, Indusind Bank down by 5.14%, SBI down by 4.49% and ICICI Bank down by 4.26%.

Meanwhile, India Ratings in its latest report has revised downwards its Gross Domestic Product (GDP) growth forecast for 2021-22 to 8.6 per cent from the consensus 9.2 per cent projected earlier. The National Statistical Organisation (NSO), which has forecast 9.2 per cent real GDP growth for the year, will release the second advance estimate of national income on February 27. According to an India Ratings analysis, NSO is likely to peg the FY22 real gross domestic product growth at Rs 147.2 lakh crore.

This translates into a GDP growth rate of 8.6 per cent, down from 9.2 per cent forecast in the first advance estimate released on January 7, 2022. The agency said the major reason for the likely downward revision is the upward revision of FY21 GDP to Rs 135.6 lakh crore in the first revised estimate of national income for FY21, which was released on January 31, 2022. As a result, GDP for FY21 is improved to (-) 6.6 per cent from the provisional estimate of (-) 7.3 per cent released on May 31, 2021.

Besides this, the second revised estimate of national income for FY20 stood at 3.7 per cent compared to 4 per cent projected earlier while the third estimate retained FY19 growth at 6.5 per cent. The growth rates of GDP drivers from the demand side namely private final consumption expenditure, government’s final consumption expenditure, gross fixed capital formation have undergone a change due to these revisions, and quarterly GDP growth numbers are also expected to undergo a change this year.

The CNX Nifty is currently trading at 16480.60, down by 582.65 points or 3.41% after trading in a range of 16453.65 and 16705.25. All the 50 stocks were declining on the index.

The top losers on Nifty were Bharti Airtel down by 6.45%, Tata Motors down by 5.84%, Tech Mahindra down by 5.26%, Indusind Bank down by 5.22% and SBI down by 4.90%.

All the Asian markets are trading in red; Nikkei 225 plunged 614.94 points or 2.32% to 25,834.67, Straits Times declined 95.32 points or 2.81% to 3,297.68, Hang Seng slipped 734.68 points or 3.11% to 22,925.60, Taiwan Weighted dropped 345.34 points or 1.91% to 17,710.39, KOSPI fell 71.60 points or 2.63% to 2,647.93, Jakarta Composite lost 131.09 points or 1.89% to 6,788.97 and Shanghai Composite was down by 31.03 points or 0.89% to 3,458.12.