Markets witness bloodbath in early deals; Sensex slips below 52,700 mark

Indian equity benchmarks continued their bearish trend with gap-down opening on Monday as Brent Crude surged to hit the $130 per barrel-mark in early trade, highest since 2008, amid the risk of a US and European ban on Russian oil. Markets witnessed bloodbath in early deals and are trading lower with cut of around 3% each. Sentiments got hit as Jayanth R Varma, who is a member of the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI), has said the Russia-Ukraine conflict is likely to have adverse effects on both economic growth as well as inflation and policy makers must remain alert and ready to respond rapidly to the emerging situation. Traders were concerned as a private report lowered India’s economy growth forecast to 7.8 per cent for 2022 due to the nation’s exports being impacted by the Russia-Ukraine war and spiking oil prices causing ripple effects. It said rupee is likely to further depreciate against US dollar while soaring commodity prices will push inflation up. Some cautiousness came in as overseas investors withdrew as much as Rs 17,537 crore from the Indian markets in just three trading sessions of March as investors’ sentiment was dented by the uncertainty caused by the Russia-Ukraine war and rising crude oil prices. Meanwhile, a private report stated that investors faced an issue with data feeds from stock exchange NSE. Many traders complained of equity prices not getting updated on NSE.

On the global front, all the Asian markets are trading deeply in red following the broadly negative cues from Wall Street on Friday, as concerns about slowing economic growth and inflationary pressures are hurting market sentiment amid the escalation of the Russian-Ukraine crisis over the weekend, resulting in more sanctions and threats of nuclear deployment. Back home, metal stocks were in limelight as domestic steel makers have hiked the prices of hot-rolled coil (HRC) and TMT bars by up to Rs 5,000 per tonne as supply chain is being impacted amid ongoing Russia-Ukraine conflict.

The BSE Sensex is currently trading at 52647.06, down by 1686.75 points or 3.10% after trading in a range of 52597.83 and 53172.51. There were 1 stock advancing against 29 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index lost 3.26%, while Small cap index was down by 3.10%.

The only gaining sectoral index on the BSE was Metal up by 0.61%, while Auto down by 4.86%, Bankex down by 4.54%, Realty down by 4.10%, Capital Goods down by 4.04%, Industrials down by 3.92% were the top losing indices on BSE.

The sole gainer on the Sensex was Tata Steel up by 0.13%. On the flip side, Maruti Suzuki down by 6.66%, Mahindra & Mahindra down by 5.19%, ICICI Bank down by 4.98%, Bajaj Finserv down by 4.89% and Larsen & Toubro down by 4.85% were the top losers.

Meanwhile, Reserve Bank of India (RBI) Governor Shaktikanta Das has said ‘monetary policy is an art of managing expectations’ as he emphasised the need for an effective communication strategy amid concerns over rising inflation fuelled by geopolitical developments. He said the conduct of monetary policy has undergone notable changes in India and across the world as economies and markets evolved and policymakers gained greater insights into how economic agents interact in a complex economic system.

He noted that ‘As monetary policy is an art of managing expectations, central banks have to make continual efforts to shape and anchor market expectations, not just through pronouncements and actions but also through a constant refinement of their communication strategies to ensure the desired societal outcomes’. He added the communication works both ways -- while too much communication can confuse the market, too little may keep it guessing about the central bank's policy intent. The central bank also recognises that communication needs to be backed by commensurate actions to build credibility and instil wider confidence in policies.

He said the Reserve Bank of India (RBI) has actively used communication through a variety of tools -- the MPC resolutions and minutes, exhaustive post-policy statements together with a statement on developmental and regulatory measures, press conferences, speeches and other publications, especially the biannual Monetary Policy Report (MPR) -- to anchor expectations. The governor informed that price stability under the statute has been defined numerically by a target of 4 per cent for headline Consumer Price Index (CPI) with a tolerance band of +/- 2 per cent around it. The flexibility in the FIT (flexible-inflation targeting) regime comes from provisions to accommodate or see-through transitory supply-side shocks to inflation.

The CNX Nifty is currently trading at 15797.35, down by 448.00 points or 2.76% after trading in a range of 15789.50 and 15906.25. There were 3 stocks advancing against 47 stocks declining on the index.

The few gainers on Nifty were ONGC up by 3.57%, Hindalco up by 2.31% and Coal India up by 1.19%. On the flip side, Maruti Suzuki down by 6.29%, Tata Motors down by 6.11%, Eicher Motors down by 5.92%, Mahindra & Mahindra down by 5.28% and Larsen & Toubro down by 4.99% were the top losers.

All the Asian markets are trading in red; Nikkei 225 slipped 896.52 points or 3.45% to 25,088.95, Straits Times fell 21.92 points or 0.68% to 3,204.86, Hang Seng plunged 733.01 points or 3.35% to 21,172.28, Taiwan Weighted dropped 551.55 points or 3.11% to 17,184.97, KOSPI lost 60.76 points or 2.24% to 2,652.67, Jakarta Composite declined 56.50 points or 0.82% to 6,871.83 and Shanghai Composite was down by 50.92 points or 1.48% to 3,396.73.