Sensex tanks 1,500 points amid Ukraine crisis. 5 things retail investors should watch out for

Indian stock markets tumbled today amid a selloff in global equities as investors globally fretted over escalating tensions between Russia and the West over Ukraine. Global equities were under strong pressure today while crude oil extended gains as geopolitical risks over Ukraine rippled through global financial markets, spurring demand for safe-haven assets. Gold prices today hit a near 3-month high on MCX. 

The NSE Nifty 50 index ended 3.06% lower at 16,842.80, while the S&P BSE Sensex dropped 3% to 56,405.84, both marking their worst day since mid-April 2021. 

“Sentiments have turned very negative for the short-term with the heightened tension over the Ukraine crisis. Weakness in global markets is the direct fallout of the Ukraine crisis,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

The Indian rupee today declined 20 paise to 75.56 against the US dollar in opening trade on Monday, amid geopolitical tensions pushing investors to the safe-haven appeal of the greenback.

Ukraine Crisis

The US has warned that a Russia invasion into Ukraine invasion could be imminent while weekend talks between US President Joe Biden and Russian President Vladimir Putin failed to break any new ground. Meanwhile, the focus will be on German Chancellor Olaf Scholz visit to Ukraine today and to Russia on the next day for diplomatic talks.

The geopolitical tensions is another blow to risk assets markets that are already skittish about high inflation and the prospect of aggressive Federal Reserve interest-rate hikes.

However, while all these are negatives, a diffusion of the Ukraine crisis can trigger a sharp rebound in markets led by large-cap bluechips, said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Oil Prices

Global oil prices today hit their highest in more than seven years on fears that a possible invasion of Ukraine by Russia could trigger U.S. and European sanctions that would disrupt exports from the world's top producer in an already tight market. Brent crude futures was at $95.56 a barrel.

Parth Nyati, founder of Tradingo, said:  “The Ukraine geopolitical tension is leading to a sharp rise in crude oil prices which is another headwind for Indian equity markets. World markets were trying to digest record inflation in the US but the surge in geopolitical tension spoiled the mood."

Inflation data

The retail inflation data is scheduled to be announced later today. “Crude at an eight-year high is another major macro concern for India. If crude remains at levels of $95 for an extended period of time, the RBI will be forced to revise upwards its 4.5% CPI inflation projection for FY23. Continuation of the accommodative monetary stance too will be difficult,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Nifty technical outlook

“Nifty is trading near-critical demand zone of 17000-16800, and the 'buy on dip' texture will be continued till Nifty trades above 16800 level its 200-DMA however there are multiple resistances on the upside till 17650 where 17300/17500 are immediate hurdles. There are no worries till Nifty trades above the 16800 level but if Nifty slips below 16800 then things may become ugly,” said Parth Nyati, founder of Tradingo.

Prashanth Tapse, Vice President (Research), Mehta Equities, said if Nifty slides below 16836 mark and then there is risk of the index sliding further to December 2021 lows of 16410.

Bank Nifty

Banking stocks were under radar after CBI filed a complaint against ABG Shipyard Ltd and its promoters accusing it of defrauding lenders. The Nifty banking index fell 2.8%, while the public sector banking index dropped 3.5%.

“There is some sentimental impact of the issue of ABG group on banking stocks but it doesn't have a material impact as it is already part of NPA,” said Parth Nyati, founder of Tradingo.