For the first time since the crash in March 2020, the domestic benchmark equity indices fell into correction territory. On February 24, Russian President Vladimir Putin said that Russian troops would be sent to Eastern Ukraine.
Source : IPOINFO
The Nifty 50 and Sensex have now dropped more than 10% from their recent highs, even though they briefly rose in January. They were both at their lowest levels since mid-December.
During a live TV address, the Russian President said that his country will start special military operations in the east of Ukraine. Following a speech by Putin, Russia has taken this step. It recognises the independence of two separatist regions in the east of Ukraine as their own.
“Global stock markets are now in correction mode because of the growing worry about the Ukraine crisis. In the long run, investors should wait to see how the situation changes before making big decisions “Chief Investment Strategist V K Vijayakumar said this.
It was down 2.4%, or 414.5 points, at 9:30 am. The Nifty 50 index was at 16,651 then. The BSE-Sensex was down 1,726 points, or 2.6%, to 55,867 points at the end of the day.
Let’s look at the main reasons why investors are afraid of taking risks:
Russia makes its move
Putin’s speech about special military action in Eastern Ukraine came to an end before Russian forces were said to have bombarded some Ukrainian cities. Russia’s actions could be the worst thing for investors. If North Atlantic Treaty Organization reacts to Russia in a different way, that could change things.
Crude oil at $100
To make things even worse for India, the global risk aversion is made worse by the fact that global crude oil prices haven’t hit $100 a barrel since 2014. This is because of the Russia-Ukraine crisis. Traders are worry that Russia could get sanctions that would make it hard for it to get oil out of the country, which would make things even worse.
Expiry of F&O series
There is a crisis in Ukraine at the worst possible time for traders, because the February derivatives series is about to come to an end. When derivative contracts come to an end, there will be even more volatility on top of what is already cause by geopolitical risks. There was a big jump in the India VIX index. It hit 30 points, up 22% in its biggest move in a long time.
Nifty Midcap 100 and Nifty Smallcap 100 both fell 2.6% and 2.9%, respectively, in the broader market. This was more than large cap indices.
Real estate, metals, state-owned banks, media stocks, and information technology stocks were the worst-hit sectors. Banks and information technology stocks were the next two to fall. The Nifty Bank index fell 2.9%, which was a lot more than the Nifty 50. This caused most of the Nifty to go down.
Aircraft companies, tyre companies, and paint companies saw their shares fall because crude oil prices went up even more, which made their costs rise even more.
Russia Invasion | As a whole, the market was weak. On the National Stock Exchange, 19 stocks fell for every one stock that rose.