Persisting concerns over rate hikes by the central banks and their impact on global economic growth created a rout in major stock markets across the globe on February 22.
The fresh geopolitical developments have also added to the concerns of investors.
Following the surprise visit of US President Joe Biden to Ukraine’s capital Kyiv, the situation on the Russia-Ukraine war front may deteriorate further.
Russian President Vladimir Putin on February 21 suspended a bilateral nuclear arms control treaty and warned that Moscow could resume nuclear tests.
Investors avoided riskier equities amid a plethora of headwinds.
Domestic market benchmarks the Sensex and the Nifty suffered deep losses, mirroring prevailing pessimism in major global peers.
"Global shares traded around their lowest levels in more than a month on Wednesday and US Treasury yields stuck to around their highest since November, as fresh fears about inflation and interest rates weighed on market sentiment," reported Reuters.
Overnight, Wall Street posted its worst performance of the year so far; Nasdaq plunged 2.50 percent while Dow Jones and S&P 500 cracked 2 percent each.
Major European markets, such as UK's FTSE, France's CAC and Germany's DAX fell up to a percent in trade on February 22.
Domestic equity benchmark the Sensex fell about 991 points to 59,681.55 in intraday trade before ending 928 points, or 1.53 percent, lower at 59,744.98. The Nifty50 closed at 17,554.30, down 272 points, or 1.53 percent.
The selloff was broad-based as the BSE Midcap index fell 1.16 percent while the Smallcap index also declined 1.09 percent.
Investors lost nearly ₹3.9 lakh crore in a single session as the overall market capitalisation of the firms listed on BSE dropped to ₹261.3 lakh crore from ₹265.2 lakh crore in the previous session.
As many as 266 stocks, including Adani Green Energy, Adani Transmission, Adani Total Gas, Britannia Industries, Biocon, Godrej Properties, Ipca Labs and Laurus Labs, hit their 52-week lows in intraday trade on BSE.
Crude oil prices traded lower for the third consecutive session on concerns that the US Fed may continue with its rate hike stance which will hit global economic growth and demand for fuel.
Brent Crude traded near the $82 per barrel mark. Rupee ended 6 paise lower at 82.86 per dollar.
Top Nifty gainers: Only two stocks - ITC (up 0.50 percent) and Bajaj Auto (up 0.26 percent) - could end in the green in the Nifty index. While 47 stocks ended in the red, one Cipla stock ended flat.
Top Nifty losers: Shares of Adani Enterprises (down 11.05 percent), Adani Ports (down 7.24 percent) and Grasim Industries (down 3.44 percent) ended as the top losers in the Nifty50 pack.
Adani stocks continue to suffer
Adani Group stocks suffered in the market selloff. Shares of Adani Enterprises (down 11.05 percent), Adani Ports (down 7.24 percent), Adani Green Energy (down 5 percent), Adani Transmission (down 5 percent), Adani Power (down 5 percent), Adani Wilmar (down 5 percent) and Adani Total Gas (down 5 percent), ended with deep cuts.
Sectoral indices' performance
All sectoral indices ended with losses, with Nifty Metal (down 2.64 percent), Media (down 1.93 percent) and PSU Bank (down 1.91 percent) falling the most.
Nifty Bank, Private Bank, Financial Services, Auto, IT, Realty and Oil & Gas fell over a percent each.
Experts' views on markets
"The resurgence of the cold war between the US & Russia has brought apprehension in the market. Although it should be a short-term effect, the fear of sanctions against Russia and its degree of implication on the economy, especially on food and oil exports, is adding to the anxiety," said Vinod Nair, Head of Research at Geojit Financial Services.
"The market is just recovering from the pandemic, and high interest and inflation are the headwinds in the background. It is presumed that this war will be fought on an economic front, limiting its effect on strong economies like the US and India. Awaiting the release of Fed and RBI minutes are the other major elements that kept investors on the sidelines," said Nair.
Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities said the overnight slump in the US markets shook the Indian stocks badly as heavy selling across the board saw Sensex crash nearly 1,000 points and plunge below the crucial 60,000 mark.
"Markets were already rangebound with a negative bias in the last few sessions and today's sharp fall could further accentuate the pressing concerns of rising interest rates going ahead, higher inflation, and slowing global growth," said Chouhan.
Technical views on markets
Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas pointed out that on the daily charts, the Nifty closed decisively below the 61.82 percent Fibonacci retracement level (17,650) and is currently trading below the 40-week moving average (17,594) which is a sign of weakness.
"The daily momentum indicator has triggered a negative crossover from the equilibrium line which is a sell signal. Thus, both price and momentum indicators suggest a further decline in the coming trading session," said Gedia.
"On the way down, we expect Nifty to retest the recent swing low of 17,350 which coincides with the 200-day simple moving average and the recent swing low it touched on the day of Budget. On the upside, the hourly moving averages and the gap area formed today in the range 17,775 - 17,820 shall act as a stiff resistance," said Gedia.
Key market data
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of MintGenie.
