Markets on a crash course as global sell-off drags Nifty below crucial 17k

Markets on a crash course as global sell-off drags Nifty below crucial 17k

FPJ Web DeskUpdated: Monday, February 14, 2022, 05:36 PM IST
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At close, the Sensex was down 1,747.08 points or 3.00 percent at 56,405.84. / Representative image | File photo

The stock market indices crashed to its biggest fall in 10 months on February 14. Geo-political tension and the rising crude prices were weighing on investors' sentiments leading to a sharp rise in volatility. The benchmark index opened at gap-down note and continued the bearishness throughout the day amid weak global sentiments. The nifty50 slipped more than 3 percent while Bank Nifty declined by 4.1percent to settle at 36908.55 levels.The BSE Midcap and Smallcap indices lost 3-4 percent.

At close, the Sensex was down 1,747.08 points or 3.00 percent at 56,405.84. The broader Nifty was down 532 points or 3.06 percent at 16,842.80. About 574 shares have advanced, 2897 shares declined, and 108 shares are unchanged.

All the sectoral indices crashed badly. Nifty Metal, and Auto were the top laggards.A mong top Nifty losers were JSW Steel, HDFC Life, ITC, Tata Steel and Tata Motors. The lone gainer at the closing bell was TCS.

Nifty remains under pressure due to rising crude oil prices, the Russia Ukraine conflict, fear of fast rate hikes across the globe and subdued corporate results, said Deepak Jasani, Head-Retail Research, HDFC Securities. Advance decline ratio dipped sharply to much under 1:1 and came in at the lowest since January 24. In case the Nifty goes below 16,410 over the next three days, we can lock the recent high of 18,351 as an intermediate top and Nifty could keep facing selling pressure on rises. Any relief on the Russia Ukraine front could result in a temporary bounce which can be sold into, Jasani added.

Subdued IIP data impacts markets

On the domestic front, the market is reacting on subdued IIP data, along with that, the Indian inflation print is due today, which will further guide the direction for the market along with the global cues in the near term, said Naveen Kulkarni, Chief Investment Officer, Axis Securities.

Oil prices can shoot up further if ongoing tussle between Russia-Ukraine escalates or due to any retaliatory sanctions by the US. India will be adversely impacted if crude goes any higher, as India will see higher pressure on its BOP, as well as it will import higher inflation, said Aishvarya Dadheech, Fund Manager, Ambit Asset Management. Market is also anxious that with rising inflation (on crude strengthening), the Fed may act faster than expected on tapering as well as rate hike.

Santosh Meena, Head of Research, Swastika Investmart Ltd. said, "We are seeing continuous selling by FIIs while DIIs flows may also come down ahead of big LIC IPO. The inflation and rising interest rate environment in the US is still a concern for the market and this geopolitical tension is creating a double whammy situation for the global markets.

"Technically, Nifty is trading near its 200-DMA of 16800 which is a critical support level and if Nifty manages to hold this level then we can expect a bounceback otherwise further weakness can be expected towards 16,450/16,000 levels. On the upside, 17,100 will act as an immediate hurdle while 17,350-17,500 is a critical resistance zone. Short-term traders are advised to keep eye on the 16800 level while long-term investors should take the current fall as a buying opportunity because anecdotally any panic due to geopolitical tension creates good buying opportunities."

FIIs net buyers

Foreign institutional investors remained net buyers in the capital market on Friday as they purchased shares worth Rs 108.53 crore, as per stock exchange data.

Foreign funds desert Indian stocks

With mounting concerns over the prospects of a likely hike in US interest rates, foreign funds have been deserting Indian stocks at a brisk pace, which also caused Nifty to slip below the psychological 17,000 mark, said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd. Technically, the Nifty has formed a bearish gap down candlestick formation which suggests further weakness from the current levels. The Nifty is now trading near the 200 day SMA level and as long as the index is trading below 17050, there are chances that it could hit 16,750 and 16,550 levels.

Sachin Gupta, AVP, Research, Choice Broking said, "Technically, the index is trading below the Middle Band of Bollinger formation, which suggests downside movement in the counter. Moreover, the daily momentum indicator Stochastic as well MACD is also trading with negative crossover. However, Index has been trading with the support of 200 DMA, which points out immediate support in the counter. At present, the Index has support at 16,800/16,650 levels while resistance comes at 17,100 levels. On the other hand, Bank Nifty has support at 36,370 levels while resistance 37,600 at levels."

Crude prices spike

Global crude oil benchmark Brent futures spiked over 1 percent to $95.44 per barrel on Monday.

Global shares skid on fears Russia could invade Ukraine any time

World shares skidded on Monday as warnings that Russia could invade Ukraine at any time drove oil prices to seven-year peaks, belted the euro and sent investors scuttling back to the safe-haven government bonds they have been dumping all year, Reuters said. Europe's STOXX 600 share index tumbled 2.5 percent, Wall Street futures were down 0.6 percent, though it was Ukraine's government bonds that understandably showed the most alarm as they slumped 10 percent.

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