Dalal Street seems to be fully gripped by fear of an abrupt end to the economic recovery, with inflation worries boiling over after oil prices skyrocketed due to the escalating tensions between Russia and Ukraine. As a result, the advance-decline ratio and also the upper/lower circuit ratio were largely in the hands of bears on Thursday, February 24, the expiry day for monthly futures and options contracts.
The BSE Sensex tanked 2,702 points or 4.72 percent to 54,530, and the Nifty50 plunged 815 points or 4.8 percent to 16,248. It was the biggest single-day fall since March 16, 2020.
“While the escalated war situation between Russia/Ukraine has led to sharp cuts in key equities across the globe, we believe the crude trajectory will be the key to watch out for going ahead. We don’t expect major sanctions which may drive a big spike in crude, equally harming Europe and the US, or even in terms of aggressive rate hikes leading to slower economic growth,” said Vijay Chandok, managing director and CEO, ICICI Securities.
The fall was so severe that every Sensex stock was beaten down. IndusInd Bank, Mahindra and Mahindra, Maruti Suzuki, Tech Mahindra, Wipro, Asian Paints, Bajaj Finance, HCL Technologies, Tata Steel, UltraTech Cement, Bajaj Finserv, Axis Bank, Bharti Airtel, HDFC Bank, and Tata Consultancy Services corrected in the range of 4-6 percent.
Fourteen shares declined for every advancing share on the BSE.
Further, more than 10 stocks hit their lower circuits on the BSE on Thursday, against every scrip at the upper limit, i.e., 1,043 stocks hit the lower limit while 94 stocks hit the upper circuit.
But the point to note here is that most of the stocks that hit the lower circuit are from other than the ‘A’ group. Only Dhani Services, which comes under the ‘A’ group, is locked in at the 10 percent lower circuit as per data available on the BSE.
More than 100 stocks are from the ‘B’ group including CG Power, 20 Microns, Imagicaa, Nagarjuna Fertilizers, CL Educate, Noida Toll, GG Engineering, RS Software, Askh Optifibre, Somi Conveyor, Arshiya, Eros International, Indo Tech Transformers, KPI Global Infrastructure, Kirloskar Electric, BL Kashyap, Shah Alloys, Signet Industries, Archidply Industries, 3i Infotech, Nitco, A2Z Infra, MBL Infra, and Shivam Auto.
More than Rs 13 lakh crore of investors’ wealth was eroded in a single day and since the record high, the wealth erosion is more than Rs 32 lakh crore in a span of four months.
On Thursday, the BSE market capitalisation dropped to Rs 242 lakh crore, down from Rs 255.6 lakh crore in the previous session.
With Thursday’s fall, the market corrected nearly 13 percent from its record high of October 19, 2021, but experts expect stability to come with a bottoming out in the near term and they advise using this fall to bet on quality stocks.
“We believe that market stabilisation is likely in the short term. Nonetheless, the medium- to long-term thesis on Indian equities remains intact amid economic recovery as reflected by key macroeconomic indicators, strong capex spends and robust corporate earnings (Nifty earnings growth likely at 21.5 percent compound annual growth rate over FY21-24),” said Chandok.
“We continue to see this correction as an opportunity for investors to add companies with sustainable growth visibility,” he added.
On the global front, European markets plummeted as Russian forceszinvaded Ukraine. Germany’s DAX and France’s CAC fell 3.6 percent each, while Britain’s FTSE declined 2.5 percent. Asian markets corrected in the range of 1.7-3.2 percent.
The price of crude oil, a major cause of concern for India, jumped to $104 a barrel on Thursday, up 7 percent from the previous session, and climbing 46 percent in the last two months.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.