There are no worries until Nifty trades above the 16,800 level, but if Nifty falls below 16,800, things can get ugly.
Domestic stocks slumped in the aftermath of Monday's global meltdown as tensions flared between Ukraine and Russia. The geopolitical collapse between the two nations has also affected oil prices, which are now above $95 a barrel.
In early trading, the benchmark S&P BSE Sensex index tumbled 1,541 points, while the Nifty50 slipped below the 16,950 mark to 16,916.5. This was the lowest level of the index in 3 weeks.
Heavyweights like Tata Steel, HDFC Twins, Reliance Industries, ICICI Bank, SBI, Kotak Bank, Bajaj Duo, Bharti Airtel, Maruti Suzuki, ITC and Axis Bank all lost 2-4 percent.
All sector indices bled out, with the Nifty PSU Bank Index falling around 4 per cent, followed by the Nifty Bank, Financial Services and Metal Indices (2.8 per cent each), and the Nifty FMCG, Auto and Private Indices. Bank. ).
The breadth of the market was terribly bearish with six stocks falling versus one stock rising in BSE. In the SES, the ratio between progress and decline was 1:9. Meanwhile, the volatility index, India VIX, rose more than 17 percent.
“Crude oil at an eight-year high is a huge macro concern. If it stays at $95 levels for an extended period, the RBI will be forced to revise upwards its FY23 CPI inflation forecast from 4.5 percent. Continuous adaptation. The monetary stance will also be difficult," said VK Vijayakumar, chief investment strategist at Geojit Financial Services.
Let's look at the reasons for the current market decline:
Russia's attempt to thwart Ukraine's NATO entry takes a nasty turn as countries like the US and UK signal a "possible war".
As Russia denies any plans to invade Ukraine despite deploying some 130,000 troops along Ukraine's borders, Western nations have warned that Russia is preparing for military action, with the United States saying Moscow could launch airstrikes." anytime".
Amid this, more than a dozen countries, including Australia, Italy, Israel, the Netherlands, South Korea and Japan, have urged their citizens to leave Ukraine.
Oil on the boil
Tensions between the two nations also pushed oil prices to their highest levels in more than seven years amid fears that a possible Russian invasion of Ukraine could trigger US and European sanctions and disrupt energy exports from the world's biggest producer. .
Brent crude futures were at $95.57 a barrel, up $1.13, or 1.2 percent, at 9:50 a.m. m. after hitting an intraday high of $95.91 earlier.
US West Texas Intermediate (WTI) crude rose 1.6 percent to $94.4 a barrel, near a session high of $94.92.
“We expect crude oil prices to remain volatile this week amid dollar index volatility and tensions between Russia and Ukraine. WTI could maintain $88 a barrel and Brent $90 a barrel in international markets. Crude oil has support at $92.00-$90.50 and resistance lies at $95.50-$96.80 in today's session," said Prashanth Tapse, Vice President (Research) at Mehta Equities.
Rising oil prices to $100 a barrel for the first time since 2014 threatens to further damage growth prospects and push up inflation. It's a worrying combination for global central banks, as they try to contain the strongest price pressures in decades without hurting a recovery from the pandemic.
Analysts warn that much of the world will be hit as businesses and consumers find their bills soar and their spending power eroded by more expensive food, transportation and heating.
India is due to release its retail and wholesale inflation data for January later in the day.
Foreign investors are selling Indian stocks as interest rate hikes in developed markets combined with high inflation, rising oil prices and profit booking after a one-sided rally weigh on the outlook for Indians. emerging markets.
So far in the current calendar year, FPIs have sold Indian securities worth Rs 43,461 crore, including Rs 43,383 crore worth of shares.