Local equities markets have succumbed to selling pressure and the benchmark indices plunged over 2 percent, dragging the Sensex and Nifty below critical levels of 53,000 and 15,900, respectively. The markets continued with their southward journey on the back of intense geopolitical tension where boiling crude oil prices is spooking the investors' sentiment in India.
Banknifty fell down by 4 percent to settle at 32871.25 levels. On the sectoral front, Nifty Realty, PSU Bank and Auto were the prime laggards, dragged more than 4 percent in a day. Nifty Metal was only the leading sector and contributed 2 percent gains in a day.
The benchmark indices closed deep in the red but trimmed some of the losses. Sensex ended 1,402.74 points or 2.58 percent lower at 52931.07. The broad-based Nifty shed 366.10 points or 2.25 percent at 15,879.30. About 837 shares have advanced, 2543 shares declined, and 129 shares are unchanged.
There was heavy selling pressure in banking and financial stocks. IndusInd Bank crashed 7.63 percent to Rs 834.10. Axis Bank tumbled 6.70 percent to Rs 662.25. Bajaj Finance slumped 6.37 percent to Rs 6122.55 and Bajaj Finserv dipped 6.27 percent to Rs 14368.20. State Bank of India slumped 4.68 percent to Rs 440.35.
Stocks like ONGC, Hindalco, Coal India were the top gainers while IndusInd, Britannia, Maruti were the top losers for the day. Maruti Suzuki crashed 6.56 percent to Rs 6769. Mahindra & Mahindra slumped 5.85 percent to Rs 689.30. The index heavyweight Reliance Industries slumped 3.67 percent to Rs 2,239.95.
Only four of the 30 scrips that are part of the Sensex closed in the positive. Bharti Airtel soared 3.46 percent to Rs 675.60. HCL Technologies rose 1.38 percent to Rs 1153.70. Tata Steel and Infosys were other Sensex gainers.
Brent crude trading at multi-year high
Brent crude is trading near $130 per barrel which is a multi-year high level. Higher crude oil prices are leading to weakness in the rupee whereas relentless selling by FIIs is also causing pressure in our market. FIIs' selling has reached above their selling during the global financial crisis. Higher commodity prices are fueling inflation fear and that may lead RBI to increase interest rates faster than anticipation.
Geopolitical uncertainty is still one of the biggest issues otherwise we are in a structural bull market where we are seeing the first meaningful correction that will provide great buying opportunities for long-term investors,said Parth Nyati, Founder, Tradingo on today's market fall. Technically, the overall structure is weak however 15,500 is a sacrosanct support level where we can expect a bounceback while below 15,500, we can expect levels of 15,000 while 14,000 is a worst-case scenario. On the upside, 16,300-16,500 will be the first resistance area while bulls get confidence only at a decisive move above the 17,000 level.
Investors should focus on the domestic economy facing sectors like capital goods, infrastructure, real estate, banking, etc. IT sector may continue to do well where ongoing correction is an opportunity to add some quality stocks. The auto sector is also providing favorable risk-reward opportunities after a period of underperformance. Our top picks in this correction are Thermax, KNR Construction, LT, SBI, ICICI Bank, Infosys, KPIT, Tata Power, Tata Motors, Minda Industries, SBI Life insurance, Bajaj Finserv, Canfin homes, Sobha, Brigade Enterprises, Kajaria Ceramics, and Reliance.
Prolonged war, crude price hike to hurt growth prospects
The world is hoping for a solution to the Russia-Ukraine conflict, but more than that it's impact on surging crude oil and other commodity prices is hurting the sentiment, said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd. The consequences will be bigger as a prolonged war will hurt the growth prospects and push up inflation. Technically, after a meaningful price correction, Nifty has formed a Hammer candlestick formation which is broadly positive. In addition, the momentum indicators are also indicating a strong possibility of a quick pull back rally, if the Nifty succeeds to trade above 16,000 and above the same the index could rally up to 16,200-16,300 levels. On the flip side, 15,700 would be the immediate support zone, and below the same the chances of hitting 15,600 and 15,550 remains bright.
Concerns about the Russia-Ukraine conflict, as well as rising crude oil prices, drove the markets lower, said Mohit Nigam, Head-PMS, Hem Securities. Oil prices increased by more than 6 percent, reaching their highest level since 2008, as the US and its European allies consider imposing a Russian oil import ban, while delays in the prospective return of Iranian petroleum to global markets exacerbated supply concerns. Foreign portfolio investors (FPIs) withdrew a total of Rs 17,537 crore from Indian markets in just three trading days in March. All Asian markets were trading down on the global front, reflecting a drop in global equity markets amid increasing commodity prices and a worsening Russia-Ukraine crisis. During the continuous market turmoil, inflation fears prompted a rush for safe-haven assets, pushing the global gold price to $2,000 per ounce today.
On the technical front, immediate support and resistance in Nifty 50 are 15,700 and 16,200 respectively. Bank Nifty immediate support and resistance are 32,400 and 35,000 respectively, Nigam added.
Technically, the Nifty index has formed a Doji candlestick on the daily time frame that suggests indecisiveness among the trades, said Sachin Gupta, AVP-Research, Choice Broking. However, the index has closed below the Lower Bollinger Band formation and psychological levels of 16,000. An indicator RSI & Stochastic is trading near the oversold territory. At present, Nifty has immediate support around 15,700 levels while on upside the resistance comes around 16,000 levels. On the other hand, Bank nifty has support at 32,100 levels while resistance at 34,000 levels.
Spiking crude oil prices above the $130 barrel sends the benchmarks deep down with Nifty cracking by 2.35 percent. Also, FIIs selling has reached above their selling during the global financial crisis. Prashanth Tapse, Vice President (Research), Mehta Equities Ltd said, Higher commodity prices are fuelling inflation fear and that may lead RBI to increase interest rates faster than anticipation. Rising USD/INR to 77.20 is a concern for equity investors. Nifty bears are gearing up to regain the downside towards the benchmarks biggest support at 15,400 and close below this we can witness waterfall selloff and 14,251 can be seen.
Exit polls results may bring end to market uncertainty
Nifty is now close to the supports of 15700-15900, said Deepak Jasani, Head-Retail Research, HDFC Securities. It has seen buying support from this band twice during the day. However advance decline ratio remains down at 450:1873. The state assembly elections exit polls result expected today evening (March 7) could bring an end to one uncertainty faced by the markets. Unless the outcome is severely against the BJP, we think that the markets could bounce up in the next few sessions not getting too perturbed by the developments in Europe, said Jasani.
European stocks in red
European stocks opened in the red as the war in Ukraine continues to hit commodity markets after the threat of a potential ban on Russian oil imports helped spur a surge in prices. Asian stocks were down as the prices of crude oil rose as the specter of sanctions on Russian oil exports loom large.
Europe's benchmark STOXX index fell 2.82 percent to a year-long low, as Germany's DAX looked set to confirm a bear market after suffering a 20 percent decline since its January high. . Asian markets were a sea of red. Japan's Nikkei sank 3.4 percent to a 15-month low, while MSCI's broadest index of Asia-Pacific shares outside Japan lost 2.4 percent. Chinese blue chips shed 2.3 percent.
Oil prices soared and shares sank in frantic trading on Monday as the risk of a US and European ban on imports from Russia and delays in Iran's renewed nuclear talks boosted commodities and threatened a stagflationary shock for world markets.
Brent was last quoted $9.95 higher at $128.06, while US crude rose $8.94 to $124.66.
That jump - which follows a 21 percent surge in Brent crude last week - will be costly for consumers and leave them with less money to spend on other things, a threat to global economic growth. Worries about growth saw S&P 500 stock futures drop 1.5 percent, while Nasdaq futures shed 1.7 percent. US 10-year bond yields also dropped to their lowest since early January.
(With inputs from Reuters)