Sensex Slumps 1,700 Pts as Oil Surges, Nifty Below 15,800; Maruti Slips 6%

The Hang Seng and the Shanghai Composite are trading down by 3.4% and 1.1%, respectively. The Nikkei plunged 3.2%.

In US stock markets, Wall Street indices ended lower on Friday as the war in Ukraine overshadowed an acceleration in US jobs growth last month that pointed to strength in the economy.

Major sector indexes declined, with financials as investors worried about how the west's sanctions against Moscow may affect the international financial system.

The Dow Jones Industrial Average fell 0.5%, while the S&P 500 lost 0.8%. The Nasdaq Composite dropped 1.7%.

Back home, Indian share markets are trading deep in the red.

In line with soured global sentiment on geopolitical worries, benchmark indices started on a weak note.

Investors lost over ₹6 lakh crore in early trade today amid mounting calls for harsher sanctions against Russia.

The BSE Sensex is trading down by 1,496 points. Meanwhile, the NSE Nifty is trading lower by 460 points.

ONGC and Hindalco are among the top gainers today. Maruti Suzuki and Eicher Motors, on the other hand, are among the top losers today.

Broader markets fell in line. The BSE Mid Cap index is down 3% while the BSE Small Cap index tanked 2.7%.

Sectoral indices are trading mixed with stocks in the banking sector, finance sector and realty sector witnessing most of the selling.

Metal stocks and IT stocks on the other hand, are bucking the trend and are trading in green.

Shares of Ultracab India and Brookfield India REIT their 52-week highs today.

The rupee is trading at 76.84 against the US$.

Crude oil prices soared to their highest since 2008 due to delays in the potential return of Iranian crude to global markets and as US and European allies consider banning imports of Russian oil.

Gold prices are trading up by 1.9% at ₹53,555 per 10 grams.

Meanwhile, silver prices are trading up by 2.3% at ₹70,720 per kg.

In global markets, gold hit the key level of US$2,000 per ounce while palladium jumped to a record high as concerns over Russia-Ukraine conflict pushed investors towards safe-haven assets.

Holdings of the world's largest gold-backed exchange-traded fund (ETF), SPDR Gold Trust, rose 0.4% to 1,054.3 tonnes on Friday - their highest since mid-March 2021.

Last week, rising gold prices put off buyers in top hubs as others waited on the sidelines with a close eye on the Russia-Ukraine conflict, while Hong Kong's Covid-19 curbs further dampened appetite.

Speaking of the precious yellow metal, how lucrative has gold been as a long-term investment in India?

The chart below shows the annual returns on gold over the last 15 years...

As you can see, barring just two years - 2013 and 2015, gold has delivered positive returns in 13 of the last 15 years.

In news from the mutual funds space, Indian fund managers haven't sold off equity positions despite the war in Ukraine or the threat of a lift-off in global rates. 

Data from the markets regulator showed that they invested ₹284.4 bn into growth assets in February, or double the average for the past year.

This captures all equity-related investments by local fund managers through equity funds, balanced funds, index funds and ETFs.

The strength of underlying local fund deployment can be gauged from the fact that there are only three instances when MF net investments in equities exceeded ₹250 bn in a single month since data became available on the regulator's website.

Note that Indian mutual funds have been net buyers in equities for twelve months consecutively, and monthly inflows have exceeded ₹180 bn for four months in a row.

This has offset record high redemption by foreign investors that sold stock worth ₹892.7 bn in the same period. 

The intense selling by FIIs resulted in Indian share markets entering a technical correction phase, with an over 10% fall from the recent peak. Even quality stocks like HDFC among others, which are FII favourites, have not been spared.

At a time when FIIs are selling, domestic institutions have put faith and have added to the support.

We will keep you updated on the latest developments from this space. Stay tuned.

Moving on to stock specific news…

PVR is among the top buzzing stocks today.

India's leading multiplex chain PVR and the local unit of Mexican company Cinepolis are in advanced merger talks, potentially reshaping India’s film exhibition industry that witnessed its first phase of consolidation over the past decade and a half.

As per an article in The Economic Times, the deal is "moving quickly toward fruition" and will result in the combined behemoth owning more than 1,200 screens. 

The number of screens run by the next biggest entity, Inox Leisure, is just about half of what the merged company would operate.

People aware of the developments said that the finer details are being worked upon. Cinepolis will be the largest shareholder in the merged company, with around a 20% stake.

PVR promoters will own between 10% and 14%, but Ajay Bijli (CMD of PVR) will have complete management control for at least three years.

Reports are indicating that the merger could be announced by the end of March.

Note that the first phase of consolidation in India's film exhibition industry began in the new millennium when a large number of single-screen facilities failed to match up to well-capitalised corporates that ran multiple screens - and films - at the same physical facility. 

Hundreds of single-screen facilities have since quit the industry that is now dominated by organised exhibitors such as PVR or Inox.

PVR's earlier acquisition of DT Cinemas from DLF had to undergo public scrutiny by the competition watchdog.

PVR share price is currently trading down by 2.3%.

This article is syndicated from Equitymaster.com