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Equity markets continued with its weakness amid sharp surge in crude prices and escalation of Russia-Ukraine war, despite reassuring comments from the Fed. Brent crude prices surged to 9-year high of $120/bbl as fresh sanctions are imposed on Russia. Nifty thus opened positive but could not sustain at higher zone and witnessed selling pressure throughout the session. It ended 108 points (-0.7%) lower at 16498 levels. Broader market again was a mixed bag today with Midcap100 down -0.4% while Smallcap100 was up 0.4%. Among sectors, Auto was the major drag – down -2.3%, on fear of hit on demand due to sharp spike in oil prices. It was followed by Banks which was down -1.2%. FMCG and Consumer durables were too down ~1% on fear of sharp rise in raw material prices led by higher oil and commodity prices. Apart from this paints, cement and ceramic stocks saw the brunt. On the positive side, oil & gas and metals were major gainers – up more than 1%, as brent crude and other commodity prices surge to multi-year high. IT too gained more than 1% benefitting from depreciating rupee. Thus ONGC was top gainer among Nifty stocks while Asian Paints and Ultratech were among  the major losers.

Weakness in market is expected to continue in near term given escalating Russia-Ukraine conflict and surging crude and commodity prices. Upcoming state election results and US Fed meeting over next two weeks would further add to the volatility. If the crude and commodity prices continue to surge or remain high for longer, it may impact margins and earnings of various sectors. Thus sectors benefitting from high commodity prices are likely to stay in flavor. While sectors heavily impacted from high prices are expected to remain under pressure. Thus, till the prices don’t cool off, one can look at sectors such as oil & gas and metals while IT can be looked at from defensive perspective as it benefits from depreciating rupee.

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