Reversing the two-session gaining streak, the equity benchmarks plunged on Wednesday as the Russia-Ukraine war hammered the investor confidence and roiled financial markets globally. A weak rupee, Brent crude surging past $113 a barrel and worries over inflation added to the gloom.
The Sensex recovered from a 1,227-point plunge in early trade to close at 55,468.90 points, down 778 points or 1.4% on Wednesday. The Nifty50 closed down by 187.95 points or 1.12% at 16,605.95. The fall in the broader market was relatively less compared to bluechips as the BSE Midcap and Smallcap indices slid 0.17% and 0.12%, respectively. “Advance decline ratio is now even suggesting that selling is concentrated in large cap stocks,” said Deepak Jasani, head of retail research at HDFC Securities.
Rising oil prices will have a negative impact on the input costs of companies, and thereby, put pressure on their margins. Analysts expect oil prices to rise further in near term. “The biggest headwind for emerging markets like India has been boiling crude oil prices, as the Street is expecting oil prices to hit $120-125 a barrel sooner than later,” said Prashanth Tapse, vice president (research) at Mehta Equities. Long-term charts for the Nifty50 are still painting a bearish picture, with downside inter-month risk seen at 14,271 mark. Tapse added.
According to Bloomberg, India’s oil imports account for 25.6% of the total import bill, while the same for South Korea stands at 22.3%. Not surprisingly, equity benchmarks of these countries have done badly so far in 2022. While the South Korea’s Kospi has declined 10.4% between January and now, the Sensex has come off 6.5%. Even FPIs dumped more stocks from these countries than any other emerging markets, barring Taiwan. While India has witnessed an outflow of $9.8 billion since January, $3.1 billion worth of South Korean shares were sold by FPIs during the same period. Taiwan recorded an outflow of $8,2 billion, Bloomberg data showed.
Maruti Suzuki fell the most on the Sensex as lower sales in February and surge in oil prices dented the investor sentiment. Of the 3,458 stocks traded on the BSE, 1,606 stocks advanced, 1,741 scrip ended in the red and 111 stocks closed at the previous level. Among sectoral indices, metals and power rose the most while realty, banks, auto and telecom declined.
