Markets suffer deep losses in late afternoon session

Key benchmark indices suffered deep losses in late afternoon session after Russian President Vladimir Putin announced a military operation in Ukraine. All sectors were trading in the red. The broader indices, the BSE Mid cap index and Small cap index were also trading in deep red. The overall breadth of the market was also extremely negative with 3167 declines against 209 advancing stocks on the BSE. Weakness also persisted in the markets ahead of the expiry of monthly F&O contracts due later in the day. Traders took note that after Fitch Ratings said India's economy is rapidly recovering from the pandemic but uncertainties remain around its medium-term debt trajectory. It stated ‘The medium-term debt trajectory remains core to our sovereign assessment and fiscal consolidation may be slower than we previously expected based on the February 1, 2022 budget.’ It added financial institutions face an uneven recovery due to lingering asset-quality risks and capital limitations.

On the global front, all Asian markets and European markets were trading lower after President Vladimir Putin launched a military attack on Ukraine, drawing condemnation from the West and making punishing sanctions all but certain.

The BSE Sensex is currently trading at 55232.68, down by 1999.38 points or 3.49% after trading in a range of 55116.00 and 55996.09. There were 0 stocks advancing against 30 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 4.60%, while Small cap index was down by 5.09%.

The top losing sectoral indices on the BSE were Realty down by 6.03%, Telecom down by 5.66%, Auto down by 5.27%, Industrials down by 4.75% and Basic Materials was down by 4.62%, while there were no gainers on sectoral indices on the BSE.

The top losers on the Sensex were Indusind Bank down by 6.18%, Mahindra & Mahindra down by 5.51%, Maruti Suzuki down by 5.14%, Tech Mahindra down by 5.12% and Asian Paints down by 4.88%.

Meanwhile, Moody’s Investors Service in its latest report has said that Global oil and liquified natural gas (LNG) prices are expected to see a sharp rise in the event of a Russia-Ukraine conflict, which will be positive for the relatively few exporters in the Asia Pacific region and negative for the substantially greater number of net energy importers.

The report stated that trade effects are likely to arise from import diversion and diversification, although there may be opportunities for commodities producers in Central Asia to increase supply to China. It said supply chain bottlenecks will also be aggravated, adding to inflation pressures in the region. However, it said a mitigating factor is that several Asian economies have long-term supply contracts in place for LNG, which will limit the impact of fluctuations in the spot price. It noted that Global crude oil benchmark Brent neared the $100 per barrel on Feb 23, 2022 amid the rising threat of invasion in Ukraine and fears of sanctions on Russia, the largest exporter of natural gas and second-largest oil exporter.

According to the report, India imports about 85 percent of its crude oil needs and about half of its natural gas requirement. While the imported crude oil is turned into fuels such as petrol and diesel, gas is used as CNG in automobiles and fuel in factories. It said its rated issuers in the Asia-Pacific have limited direct exposure to Russian or Ukrainian entities. Nonetheless, issuers in APAC may not be immune to the second-round effects of a conflict. Among the possible transmission, channels are commodities prices, trade effects, and financial market disruption.

The CNX Nifty is currently trading at 16464.00, down by 599.25 points or 3.51% after trading in a range of 16413.75 and 16705.25. There were 1 stocks advancing against 49 stocks declining on the index.

The only gainer on Nifty were Hindalco up by 0.34%. On the flip side, Tata Motors down by 8.25%, UPL down by 7.22%, Hero MotoCorp down by 6.78%, Grasim Industries down by 6.20% and JSW Steel down by 5.82% were the top losers.

All Asian markets were trading lower; Hang Seng decreased 758.72 points or 3.21% to 22,901.56, Nikkei 225 slipped 478.79 points or 1.81% to 25,970.82, Taiwan Weighted dropped 461.18 points or 2.55% to 17,594.55, Straits Times trembled 119.44 points or 3.52% to 3,273.56, Jakarta Composite lost 102.24 points or 1.48% to 6,817.82, KOSPI fell 70.73 points or 2.6% to 2,648.80 and Shanghai Composite was down by 59.19 points or 1.7% to 3,429.96.

European markets were trading lower, UK’s FTSE 100 decreased 184.49 points or 2.46% to 7,313.69, France’s CAC decreased 212.02 points or 3.13% to 6,568.65 and Germany’s DAX decreased 527.07 points or 3.6% to 14,104.29.