On February 22, major stock markets around the world experienced a sell-off due to ongoing concerns about central bank rate hikes and their impact on global economic growth. Investors’ concerns have been heightened by recent geopolitical developments. Following US President Joe Biden’s surprise visit to Ukraine’s capital Kyiv, the situation on the Russia-Ukraine war front may deteriorate further.
On February 21, Russian President Vladimir Putin suspended a bilateral nuclear arms control treaty and warned that Moscow could resume nuclear tests. Despite a slew of headwinds, investors avoided riskier equities. The Sensex and Nifty, the domestic market benchmarks, suffered significant losses, mirroring the prevailing pessimism in major global peers.
“Global shares traded around their lowest levels in more than a month on Wednesday, and US Treasury yields remained near their highest since November, as fresh fears about inflation and interest rates weighed on market sentiment,” according to the report. Overnight, Wall Street posted its worst performance of the year; the Nasdaq fell 2.50 percent, while the Dow Jones and S and P 500 both fell less than 2%.
On February 22, major European markets such as the UK’s FTSE, France’s CAC, and Germany’s DAX fell up to a percent in trade. The Sensex fell 991 points in intraday trade to 59,681.55, before closing 928 points, or 1.53 percent, lower at 59,744.98. The Nifty50 ended the day at 17,554.30, down 272 points, or 1.53%. The selloff was widespread, with the BSE Midcap index falling 1.16 percent and the Smallcap index falling 1.09 percent.
Investors lost nearly ₹3.9 lakh crore in a single session as the overall market capitalization 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 fell for the third consecutive session on fears that the US Federal Reserve will continue to raise interest rates, putting pressure on global economic growth and fuel demand. Brent Crude was trading near $82 per barrel. The rupee fell 6 paise to 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.
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.
According to Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities, the overnight slump in US markets shook Indian stocks badly, with the Sensex falling nearly 1,000 points and falling below the crucial 60,000 mark.
Technical views on markets
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), indicating weakness, according to Jatin Gedia, Technical Research Analyst at Sharekhan by BNP Paribas.
“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.