Oil rises above $105 after Russia attacks Ukraine
Oil prices jumped on Thursday, with Brent rising above $105 a barrel for the first time since 2014, after Russia's attack on Ukraine exacerbated concerns about disruptions to global energy supply.
Russia launched an all-out invasion of Ukraine by land, air and sea in the biggest attack by one state against another in Europe since World War Two.
The United States and Europe have promised the toughest sanctions on Russia in response.
Brent crude rose $8.24, or 8.5%, to $105.08 a barrel at 1045 GMT. U.S. West Texas Intermediate (WTI) crude jumped $7.78, or 8.5%, to $99.88.
Brent and WTI hit their highest since August and July 2014 respectively.
Ajit Mishra, VP - Research, Religare Broking:
Markets witnessed a sharp sell-off and lost nearly 5% as escalating tensions between Russia and Ukraine spooked sentiments. Investors chose to move out of risky assets and preferred safe haven like gold.
The Nifty index drifted gradually lower and finally settled around the day’s low to close at 16,247 levels. In line with the benchmark, all the sectoral indices and broader indices ended with deep cuts.
Markets are rattled with the news of Russia’s attack on Ukraine and it may cascade further citing the further news updates. This fall has resulted in the breakdown of the consolidation range in the Nifty index and it might find support around the 15900-16,000 zone.
Traders should align their position accordingly and prefer trading through options strategies.
Vinod Nair, Head of Research at Geojit Financial Services:
It was a big surprise for the world market as it was not anticipating a war. It was expecting a diplomatic meet between Biden & Putin.
Markets around the globe plunged deep in red as the Ukraine crisis intensified with Russia’s invasion into Eastern Ukraine. Crude oil prices crossed USD 100 per barrel and elevated inflation risk.
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities:
Investors turned jittery and pressed the panic button after reports emerged that Russia has taken military action against Ukraine. As the mood was sombre across the global equity markets, traders back home also followed suit and pressed the sell button, resulting in across-the-board selling. Also, the F&O expiry pressure also gave investors the reason to cut their position further due to escalating geo-politicial tensions.
Technically, after a long time, benchmark Nifty closed below the 200-day SMA and has also formed a long bearish candle on daily charts, which suggests further weakness from the current levels.
Considering the uncertainties hovering around, the index may trade lower between the highs of 16800 and 16,000. The market is in corrective mode and it would complete its corrective pattern between 16200 and 16000. For the traders, 16400 and 16500 could act as intraday resistance while 16100-16000 could be the immediate support zone.
Sahaj Agrawal, Head of Research- Derivatives at Kotak Securities:
Nifty has broken significant support level 16600 and witnessed significant selling pressure in line with global markets. We believe volatility will remain elevated on account of an external shock and expect March series to witness further negative bias.
Though the bias is negative, we await derivatives data to establish objective levels before taking a strong positional stance from here on. Investors can use further deep corrections to buy/average and traders to define risk in uncertain times.
Shivam Bajaj, Founder & CEO at Avener Capital:
Prolonged Geo-political tensions between Russia - Ukraine could lead to further inflationary pressure, compelling policy makers globally to accelerate raising interest rates at the cost of economic growth. From an Indian economy standpoint, the economic impact is likely to be more short term in nature as its economy will continue to be driven by its long-term fundamental growth prospects.
In 2020, India imported only $7.3 billion of all products from Russia (less than 2% of India’s total imports) and exported $3.9 billion of all products from Russia (less than 2% of India’s total exports).
S Ranganathan, Head of Research at LKP securities:
With Brent crude breaching the USD 100 mark for the first time in 7 years post the Russian military operation in Ukraine, both the benchmark Indices wilted with a 5% cut as the volatility index rose 30% today with all sectoral indices ending deeply in the red wiping out over Rs 10 lakh crores of investor wealth.
A peep into the advance-decline ratio said it all as the carnage together with the volatility witnessed today was painful for both investors and traders.
Market Close
Indian benchmark indices registered seventh straight session fall on February 24 with Nifty breaching 16,300 amid escalating Russia-Ukraine crisis.
At close, the Sensex was down 2,702.15 points or 4.72% at 54,529.91, and the Nifty was down 815.30 points or 4.78% at 16,248.00. About 240 shares have advanced, 3084 shares declined, and 69 shares are unchanged.
All stocks on Nifty50 ended in the red with Tata Motors, IndusInd Bank, UPL, Grasim Indusries and Adani Ports were the biggest losers.
All the sectoral indices ended with a loss of 3-8 percent, while BSE midcap and smallcap indices shed over 5 percent each.
Norbert Rücker, Head of Economics & Next Generation Research, Julius Baer
The Ukraine crisis seems to have escalated to crucial tipping points and appears at the brink of turning from a sentiment to an economic shock. Oil and gas prices are the crisis fear barometer given their supplies vulnerability to sanctions or damage.
Today’s situation involves lots of noise and uncertainty, bringing a new level of dynamics. Given all these uncertainties, we revise our price targets. That said, oil prices are at economically burdensome levels already, and this usually meant lower prices longer term.
The war drums are pounding ever louder in Europe. The Ukraine crisis seems to have escalated to crucial tipping points. This brings the economy and markets to the brink of a worst-case scenario, where the crisis begins to turn into an economic shock, not only a sentiment shock.
Center stage of such an outcome are energy markets, where oil and natural gas prices have become the crisis’ fear barometer. Any disruption of flows between Russia and Europe, due to damage or sanctions, would drastically add to the already present supply scarcity. Situations as today’s entail lots of noise and uncertainty, and things could shift into different types of new dynamics.
BSE Power index fell over 5 percent dragged by the Adani Power, BHEL, Tata Power
Ashoka Buildcon gets Letter Of Acceptance for a project worth Rs 692 crore
Ashoka Buildcon has received Letter of Acceptance for the Project viz. 'Electrification of Railway Lines in the State of Assam.
The accepted offer of the project is Rs 692.50 crore and the contract period is 900 days.
Ashoka Buildcon was quoting at Rs 80.95, down Rs 11.15, or 12.11 percent on the BSE.
Vijay Chandok - MD & CEO, ICICI Securities:
While the escalated war situation between Russia/Ukraine has led to sharp cut in key equities across the globe, we believe crude trajectory will the key to watch out for going ahead.
We don’t expect major sanctions which may drive big spike in crude, equally harming Europe and US, or even in terms of aggressive rate hike leading to slower economic growth. We, thus, believe that market stabilization is likely in the short term. Nonetheless, medium to long term thesis on Indian equities remain intact amid economic recovery as reflected by key macroeconomic indicators, strong capex spends and robust corporate earnings (Nifty earnings growth likely at 21.5 % CAGR over FY21-24).
We continue to see this correction as an opportunity for the investors to add on the companies with sustainable growth visibility.
Nifty Pharma index shed 3.7 percent dragged by the Strides Pharma Science, Cadila Healthcare, Granules India
Market at 3 PM
Indian benchmark indices extended the selling in the final hour of trading with Nifty breaches 16400 and Sensex down over 2400 points.
The Sensex was down 2,413.67 points or 4.22% at 54818.39, and the Nifty was down 733.80 points or 4.30% at 16329.50. About 212 shares have advanced, 3002 shares declined, and 51 shares are unchanged.
Cadila Healthcare is now Zydus Lifesciences
The Zydus group announced its new brand identity with the listed entity of the group Cadila Healthcare Ltd. to be known as Zydus Lifesciences Ltd.
“We have always believed in evolving and transforming ourselves in the ongoing quest to bring patient-centric solutions driven by science and innovation. With differentiated approaches, we have been addressing healthcare challenges globally, creating healthier communities. Reaffirming this commitment, we will continue to unlock new possibilities that can impact lives and empower people with life-changing discoveries,” said Pankaj R. Patel, Chairman, Zydus Lifesciences.
Cadila Healthcare touched a 52-week low of Rs 345.35 and was quoting at Rs 345.60, down Rs 26.00, or 7.00 percent on the BSE.
BSE Oil & Gas index shed nearly 5 percent dragged by the Indraprastha Gas, Gujarat Gas, BPCL
Sugandha Sachdeva, Vice President - Commodity and Currency Research, Religare Broking:
The Indian rupee has rolled on the steep downhill path and reeling under pressure in tandem with other emerging market currencies amid the crisis unfolding in Ukraine.
Risk sentiments have soured as a comprehensive military assault by Russia is underway in Ukraine. This has led to steep gains in the safe-haven greenback and crude oil prices owing to supply worries while dragging down the domestic equities.
Looking ahead, the Indian rupee is likely to trade with a depreciation bias as geo-political tensions aggravate, where it can test levels of close to the 76.10 mark.
Bitcoin dives to lowest in a month after Russia invades Ukraine
Bitcoin tumbled to its lowest in a month on Thursday after Russian forces fired missiles at several cities in Ukraine and landed troops on its coast, sparking a sell-off of riskier assets.
Bitcoin slumped as much as 7.9% to $34,324, its lowest since Jan. 24, and was last trading down 5.3%. Smaller coins that typically move in tandem with bitcoin also fell, with ether losing as much as 10.8%.
Russia's President Vladimir Putin authorised what he called a special military operation in the east. The United States and its allies will impose "severe sanctions" on Russia after the attacks, U.S. President Joe Biden meanwhile said.
Gaurav Garg, Head of Research, Capitalvia Global Research:
As traders assess the implications of the Russia-Ukraine situation, bears continued to outnumber bulls on Dalal Street, with frontline indexes falling below important Nifty 50 levels of 16,800.
Russia has initiated a military operation against Ukraine's military infrastructure, which might lead to a larger-scale invasion of Ukraine, with the potential of the United States and Europe becoming militarily involved as well.
After the price of oil crossed the $100 per barrel level, fueling inflation fears in oil-importing countries like India, sentiments have remained shattered. Traders in India dismissed claims that Moody's Investors Service has boosted India's growth prediction to 9.5 percent for the calendar year 2022 and 8.4 percent for the fiscal year starting April 1, citing high oil prices and supply disruptions as a drag on growth.
European Markets Updates
Uncertainties remain around India's medium-term debt trajectory: Fitch
Fitch Ratings on Thursday said India’s economy is rapidly recovering from the pandemic but uncertainties remain around its medium-term debt trajectory. In its report 'What Investors Want to Know: Indian Sovereign and Financial Institutions in 2022', it said financial institutions face an uneven recovery due to lingering asset-quality risks and capital limitations.
Fitch projects India’s real GDP growth at a robust 8.4 per cent in 2021-22 and 10.3 per cent in next fiscal year, as the economy rebounds from its sharp pandemic-induced slowdown in 2020-21.
Vijay Chandok - MD & CEO, ICICI Securities on market fall
While the escalated war situation between Russia/Ukraine has led to sharp cut in key equities across the globe, we believe crude trajectory will the key to watch out for going ahead. We don’t expect major sanctions which may drive big spike in crude, equally harming Europe and US, or even in terms of aggressive rate hike leading to slower economic growth. We, thus, believe that market stabilization is likely in the short term. Nonetheless, medium to long term thesis on Indian equities remain intact amid economic recovery as reflected by key macroeconomic indicators, strong capex spends and robust corporate earnings (Nifty earnings growth likely at 21.5 % CAGR over FY21-24). We continue to see this correction as an opportunity for the investors to add on the companies with sustainable growth visibility.
Two-wheeler sales volume to fall for third straight year: Crisil
Two-wheeler volume is seen dropping 8-10% this fiscal under the impact of a number of inclement factors, including sluggish rural demand, low festive-season sales, higher prices, and deferred purchases as consumers eye electric vehicles (EVs). The decline in volume1 is expected on an already-low base after two consecutive years of decline, at 13% in fiscal 2021 and 18% in fiscal 2020 (see chart in annexure). This is also the first time in over a decade, where two-wheeler sales are declining for three successive fiscals.
Credit profiles of two-wheeler makers, however, will remain healthy, given large cash surpluses and strong balance sheets. A CRISIL Ratings study of three manufacturers, which account for ~70% of the sales volume of the sector, indicates as much. Segment-wise, motorcycle volume, which account for two-third of overall two-wheeler volumes, will see a drop of about 8-9% this fiscal. As such, 65-70% of these motorcycles are sold in rural areas, whereas scooter is a predominantly urban product.
“The second, third covid waves and delayed harvest impacted rural demand for two wheelers this fiscal. Besides higher vehicle and fuel prices also affected rural demand this fiscal, unlike last fiscal, when rural India was less impacted by the first covid wave. Consequently, sales of rural-focused economy motorcycles (~52% to two-wheeler sales), are expected to fall 5-6% this fiscal," said Anuj Sethi, Senior Director, CRISIL Ratings.
Market Update at 2 PM: Sensex is down 1,853.88 points or 3.24% at 55378.18, and the Nifty crashed 567.20 points or 3.32% at 16496.10.
Naveen Kulkarni, Chief Investment Officer, Axis Securities:
Geopolitical events often come up with short-term reactions in the market as the dominant news flow leads to market volatility. The current Russia-Ukraine crisis would lead to a rise in oil prices, higher than the current levels. High crude prices could delay the cool-off in inflation, which was expected to go moderate by the second half of 2022.
We believe the present macroeconomic developments are leading to volatility in all major asset classes, including equity and debt. The volatility is here to stay for some time before we conclude a market direction.
Investors should focus on asset allocation and use this volatility to build long-term positions in quality large and mid-cap stocks as they become attractive after the recent correction and provide a good entry point.
Bharat Forge to acquire JS Auto Cast Foundry India
Bharat Forge has entered into a definitive agreement to acquire JS Autocast Foundry India Private Limited, company said in its release.
"We are delighted to welcome the JS Auto team to Bharat Forge family and will look to leverage their capabilities, highly talented technical team and strong customer connect to aggressively grow our presence in the industrial casting space, said Amit Kalyani, Deputy Managing Director, Bharat Forge.
Bharat Forge was quoting at Rs 665.65, down Rs 38.60, or 5.48 percent on the BSE.
Geojit view on Bata India:
We believe, Bata India has capability to revive its revenue growth trajectory when the economy is back to normal. The demand outlook is positive given ongoing vaccination, re-opening of markets and the strong thrust of the GoI to revive the economy.
Bata India has a strong brand recall & distribution reach and strong balance sheet. We maintain our Accumulate rating with a revised Target of Rs 2,135 (Rs 2,290 earlier) by valuing at 52x on FY24E EPS, factoring strong sales recovery in the quarter.
Bata India was quoting at Rs 1,788.35, down Rs 79.45, or 4.25 percent on the BSE.
Commodities Updates:
No consideration to postpone the LIC IPO: Government Sources
As of now there is no consideration to postpone the LIC IPO, said Government Sources.
Department of Investment and Public Asset Management (DIPAM) is closely watching the situation and as situation evolves will take decision accordingly.
Government has time till March first week to take any decision on LIC IPO, quoting CNBC Awaaz.
Market at 1 PM
Benchmark indices were trading lower with Nifty around 16500 amid selling seen across the sectors.
The Sensex was down 1,720.76 points or 3.01% at 55511.30, and the Nifty was down 529.10 points or 3.10% at 16534.20. About 219 shares have advanced, 2926 shares declined, and 68 shares are unchanged.
Russia's MOEX now down 24%
Russia-Ukraine Tensions
: Brent crude gains past USD 103/bbl and trading at highest level Since August 2014.
Amit Pabari, MD at CR Forex Advisors:
Russia Ukraine standoff has come to a critical phase as Russian President Vladimir Putin has announced the military operation in eastern Ukraine. Putin warned that any foreign attempt to interfere with Russian action would lead to ‘consequences they have never seen.
The fragile sentiments makes it evident that equities are going to bleed, Dollar Index to move higher above 96.50 levels, Gold to get stronger and all EM currencies including India rupee is supposed to get weaker.
RBI will play an active role in managing the rupee levels, but we don’t expect RBI to intervene before 75.75 or 76.00 levels, any negative news on Russia and Ukraine will take the pair towards 75.50 to 76.00 levels. Any dips should be taken as an opportunity to buy dollars.
Nifty IT index shed dragged by the Coforge, Mindtree, HCL Technologies
Moscow stock exchange to resume operations shortly:
After suspending trading in Moscow Stock Exchange on Thursday amid Ukraine-Russia tensions, the exchange has informed that they are going to resume operations shortly.
Parth Nyati, Founder, Tradingo:
We are seeing the first meaningful correction in the market after a strong performance in 2021. A correction was due where geopolitical tension has become an excuse for this correction. Inflation and rising interest rates are the major concerns for equity markets and geopolitical tension is increasing the risk of inflation as energy prices are rising.
Anecdotally, such kinds of geopolitical issues provide a good buying opportunity for the long-term investors and we are in a structural bull run that is likely to continue for the next couple of years where intermediate corrections will be part of this journey. Long-term investors should not panic and look for buying opportunities from lower levels where the domestic economy facing sectors like capital goods, infrastructure, real estate, financials should be on investors' radar.
Technically, Nifty has slipped below its 200-DMA which may lead to further weakness towards the 16000 level while 16400 is an intermediate support level. We can expect a bounceback from the 16000 level but confidence will back only if Nifty manages to cross the 17200 level. If Nifty breaks the 16000 level then the worst-case scenario could be 14000 but still we will remain in a long-term bull market.
Bank Nifty has also slipped below its 200-DMA where 35500 is the next important support level while 34000 is the next major support. On the upside, it has to cross the 37500 level to gain any strength.
Market at 12 PM
Market erased some of the intraday losses but still trading lower with Nifty below 16,600.
The Sensex was down 1,693.85 points or 2.96% at 55538.21, and the Nifty was down 505 points or 2.96% at 16558.30. About 264 shares have advanced, 2834 shares declined, and 70 shares are unchanged.
Mohit Ralhan, Managing Partner at TIW Capital Group:
The market has gone down as investors weigh the impact of Russia Ukraine crisis. Russia has launched a military action targeting the military infrastructure of Ukraine and it may lead to a larger scale invasion of Ukraine with the risk of USA and Europe getting embroiled militarily as well.
Additionally, the price of oil crossed USD 100 per barrel mark stoking inflation fears in oil importing countries like India. The economies around the world are still recovering from COVID pandemic and can’t afford the consequences of this war. This is also the reason; we believe that the world leaders would work towards deescalating the situation and avoid a full-blown war through diplomatic channels.
But definitely, the risks have gone up, since the military situation typically unfolds very fast. The India VIX has already crossed 30 as the market is expected to swing wildly on both sides reacting to all incoming news. It’s time to be extremely cautious in the markets and the best possible action seems to wait & watch for a clearer picture to emerge.
BSE Metal index slipped 1 percent dragged by the SAIL, Jindal Steel, Hindustan Zinc
Wyth Financial goes live with Intellect Contextual Banking Experience – Retail
Intellect Design Arena and Wyth Financial, one of Canada’s leading mid-market digital banks, announced that the bank has gone live with Intellect Contextual Banking Experience - Retail (CBX-R) deployed on Microsoft Azure to offer fully digital directto-customer bank offering to its customers.
Intellect Design Arena was quoting at Rs 636.50, down Rs 29.70, or 4.46 percent.
Russia-Ukraine Conflict Updates:
British Prime Minister Boris Johnson condemned on Thursday the "horrific events in Ukraine", saying Russia's President Vladimir Putin "has chosen a path of bloodshed and destruction by launching this unprovoked attack".
"The UK and our allies will respond decisively," he tweeted, adding he had spoken to Ukraine's President Volodymyr Zelensky.
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services:
The growing concern surrounding the deteriorating Ukraine crisis has pushed global stock markets into correction mode. The near 20% decline from the peak in NASDAQ is a clear indication of the correction that has set in.
Also, the safe haven gold shooting to USD 1913 is a reflection of the risks arising from the crisis. Investors should wait and watch the unfolding situation before taking any major commitments. Buying should be confined to stocks/ segments which are fairly valued or have good earnings visibility.
IT, though highly valued, is a sector whose prospects are steadily improving. There are instances of promoters buying stocks of IT companies. This is an indication of better-than-expected results from the sector. Investors can use sharp market corrections to slowly accumulate high quality stocks in IT.
Gaurav Garg, Head of Research, Capitalvia Global Research
:
Indian markets on February 23 extended their losing streak to a sixth session as the Ukraine situation continued to dampen investor morale. The Russian invasion of Ukraine has triggered a war, which has exacerbated the situation. Separatist territories in Donetsk and Luhansk have sought Russia for military aid to counter Ukraine's invasion. Traders would be concerned after India Ratings cut its GDP growth prediction for 2021-22 to 8.6% from the consensus of 9.2% previously expected. On Monday, the National Statistical Organisation (NSO), which predicts 9.2% real GDP growth for the year, will release the second advance estimate of national income.
The US stock market finished lower on Wednesday, continuing its recent slide, as Ukraine declared a state of emergency. As tensions between Russia and Ukraine escalate, Asian markets are trading in the negative on Thursday, with investors avoiding risk.
Global yield falls post Russia Ukraine tensions
. The yield on 10-year US notes dropped as much as 13 basis points to 1.86%. Yields on 10-year Australian securities tumbled as much as 12 basis points to 2.15%. The rate on similar-maturity New Zealand debt fell three basis point to 2.76%.
Market Alert
Ukraine President - Russia has launched a new military operation against our state. This is an unjustified false and cynical invasion. We are imposing martial law throughout Ukraine. There are strikes on military and other important defence facilities. Situation in Donbass has degraded. Civilian citizens of Ukraine should stay at home.
Market Update at 11 AM: Sensex is down 1,638.95 points or 2.86% at 55593.11, and the Nifty shed 487.60 points or 2.86% at 16575.70.
Oil and gas stocks tumble
Stock markets across the world are feeling the heat as Russian President Vladimir Putin announced military operation in Ukraine to defend separatists in the east of the country. He also vowed retaliation against those who interfere with Russian Ukraine operation.
Among the sectors, the oil and gas index has dipped over 3 percent as crude oil hit the $100 mark since 2014 as traders feared further sanctions that could hit Russia’s crude oil export. Global oil prices have jumped over 30 percent since November on a sharp increase in demand due to the reopening of global economies as COVID-19 pandemic subsided on higher vaccination rates.
BSE oil and gas fell over 2 percent dragged by Indraprastha Gas which was down over 4 percent followed by Reliance Industries, Petronet LNG, Gujarat Gas, BPCL and GAIL India which were down over 3 percent each.
