What's pulling down the stocks? Here's a look at the five key drags

Stock Market Today:

Indian markets opened over a percent lower from their previous close and extended losses as the session progressed on March 2, with concerns mounting over the worsening Ukraine crisis and surging crude.

Global markets, too, continued to feel the heat of the Russia-Ukraine war that entered its seventh day. With Russia stepping up the offensive and the West punishing Moscow with stringent sanctions, oil and gas prices touched $110 a barrel.

The US and German treasury yields declined and with no resolution in sight, global markets are in for an elongated period of volatility.

In India, the 30-pack BSE Sensex ended 778 points lower at 55,469. The Nifty, too, ended with a loss of 188 points, or 1.1 percent, from its previous close at 16,606.

The Russian invasion of Ukraine has been the main reason for the decline in global markets. Even as the West upped its ante by slapping sanctions that have led to an economic crisis for Russia, they seem to have done little to pause Europe’s worst conflict since World War II.

Western allies ramped up efforts to punish Russia with new sanctions, including cutting off some of its banks from the SWIFT financial network, limiting Moscow's ability to deploy its $630-billion foreign reserves and shuttering their airspace to Russian aircraft.

For the latest on the Russia-Ukraine war, follow over live blog

Several companies have also set into motion divestment plans.

The Russian troops have made significant inroads into Ukraine territory and its capital Kiev. With civilian deaths mounting, it is getting difficult to for an amicable resolution. The first round of talks between the two nations ended in a deadlock and the second round is expected later in the day, reports have said.

Experts are of the opinion, that the uncertainty about the war will keep the volatility index high in the near term.

Also read: Russia-Ukraine War: Russia faces barrage of sanctions – an overview

2 Crude on fire

Investor sentiment was hit after the energy supply fears pushed the brent crude to $110 a barrel despite the US and allies agreeing to release 60 million barrels of crude from strategic reserves to support demand.

Higher crude prices will fuel already burgeoning inflation across economies. India meets it 80 percent of its oil requirement through imports and rising prices will not only fan inflation but will also result in a worsening of current and fiscal deficit.

The margins of Indian companies are already under pressure due to high raw material prices. Pricier crude will make the matters worse and impact earnings.

3 Bond yields and rate hikes

US treasuries rallied on a flight to safety. The yield on the US 10-year bonds dropped 15 bps to 1.75 percent. Germany’s 10-year yield declined 21 basis points to 0.07 percent, while Britain’s 10-year yield declined 28 basis points to 1.13 percent.

“Markets that few sessions back were pricing in a 50 percent chance of a 50bps hike by the Fed in the March policy are now pricing in less than 100 percent chance of 25bps hike,” said a note from IFA Global Research.

The focus will be on US Federal Reserve chairman Jerome Powell's testimony before the House Financial Services Committee later in the day.

4 Weak GDP

India's Q3 gross domestic product(GDP) growth slowed to 5.4 percent YoY against the expectation of a 5.9 percent print on lower-than-expected government consumption and gross fixed capital formation. Net exports continued to be a drag on growth.

With declining US Treasury yields and swelling crude prices, Indian bond markets will also reacted to finance minister Nirmala Sitharaman’s comments of a possible delay in LIC IPO due to poor market conditions.

“Lower-than-expected GDP growth may compel the RBI to stay on hold for longer,” the note from IFA Global Research added.

The RBI’s accommodative stance to support growth by maintaining a loose monetary policy may be overlooking inflation arising out of the war. These factors will lead to further FII outflows in March and have a negative impact on the Indian rupee.

5 Weak global cues

All the major US indices ended in a loss on March 1 while Indian markets remained closed on account of Mahashivratri.

The S&P 500 fell 1.5 percent as of 4 pm New York time. Tech heavy Nasdaq 100 was down 1.6 percent, the Dow Jones Industrial Average fell 1.8 percent and the MSCI World index declined 1.4 percent.

The European markets also had a Terrible Tuesday, as German DAX was down 3.85 percent and FTSE lost 1.72 percent.

Among the Asian peers, except Korean KOSPI, all other Asian indices were in the red with Nikkie down 1.6 percent and Hang Sang down 1.1 percent.