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Indian equity benchmarks continued their weak trend for fifth consecutive session and settled lower with over half a percent cut on Tuesday as investors turned cautious after Russian President Vladimir Putin recognized two breakaway regions in eastern Ukraine, increasing concerns about a major war. Markets made gap-down opening to trade around cut of 2% in early deals after Russian President Vladimir Putin recognized the independence of two Russian-backed breakaway republics in the east of Ukraine. Moreover, as per a private report, some Ukrainian civilians have been killed in frontline shelling over the night. Meanwhile, voicing ‘deep concern’ over the escalation of tension along the Russia-Ukraine border, India has told the UN Security Council that the immediate priority is de-escalation of tensions, taking into account the ‘legitimate’ security interests of all countries. Adding more cautiousness, provisional data available on the NSE showed that foreign institutional investors (FIIs) have net sold Rs 2,261.90 crore worth of shares.

Lackluster trade continued in afternoon deals. However, markets managed to trim most of their losses in dying hours of trade as fag-end buying emerged in HDFC, M&M, Infosys, Kotak Bank, and Bajaj Finserv. Some support also came in with NITI Aayog CEO Amitabh Kant’s statement that Indian economy growing at 9.2%, among fastest-growing large economies. He added the Indian economy is expected to grow at similar rates in the coming years. Traders took note of report that Union Minister for Finance & Corporate Affairs Nirmala Sitharaman asked the industry leaders to explore ways to further strengthen their sector and help in the post-pandemic revival of economy. Sitharaman urged the market participants to strive for efficiency and transparency to help to channelize the resource for productive investment in the most effective manner. But, benchmark indices failed to gain its green terrain and ended below neutral lines, as anxiety still persist over Russia- Ukraine geopolitical concern which sent oil prices to seven-year high.  Meanwhile, the United States and its European allies are poised to announce harsh new sanctions against Russia after Putin formally recognised the breakaway regions in eastern Ukraine, escalating a security crisis on the continent.

On the global front, Asian markets ended lower amid developments in the Russia-Ukraine crisis. European markets hit seven-month lows pressured by the prospect of harsh sanctions against Russia, which has ordered troops into two breakaway regions of eastern Ukraine. The German DAX, seen as more vulnerable than other regional indices due to the country’s heavy reliance on Russian gas supplies and lack of energy companies. Though, markets recouped their losses to trade in green at point of trade. Back home, infrastructure industry stocks remained in focus as Union Minister Nitin Gadkari reportedly said the government has sanctioned four road infrastructure projects worth Rs 4,518.04 crore under the Bharatmala Pariyojana scheme.

Finally, the BSE Sensex declined 382.91 points or 0.66% to 57,300.68 and the CNX Nifty was down by 114.45 points or 0.67% to 17,092.20.

The BSE Sensex touched high and low of 57,505.85 and 56,394.85, respectively. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.70%, while Small cap index was down by 1.62%.

The only gaining sectoral indices on the BSE were Power up by 0.32% and Utilities up by 0.09%, while Realty down by 3.01%, Telecom down by 1.47%, Industrials down by 1.44%, PSU down by 1.35%, Metal down by 1.29% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Finserv up by 1.36%, Mahindra & Mahindra up by 1.34%, Kotak Mahindra Bank up by 0.85%, HDFC up by 0.62% and Sun Pharma up by 0.37%. On the flip side, Tata Steel down by 3.64%, TCS down by 3.59%, SBI down by 2.67%, Dr. Reddy's Lab down by 2.02% and ITC down by 1.44% were the top losers.

Meanwhile, India Ratings and Research in its latest report has said that facing intense competition from banks, gold loan Non-Banking Financial Companies (NBFCs) are likely to adopt aggressive strategies to maintain and expand their gold loan franchise. It mentioned many banks, both private and public, have become fairly active in the gold loan space, enticed by high yield and liquid security. For example, gold loan portfolio across banks has jumped by more than 89 per cent year-on-year to Rs 60,700 crore in FY21 and Rs 70,900 crore in the first nine months of FY22.

Further, it said the gold loan auctions by NBFCs rose in April-December period of FY22, perhaps the highest since FY14 when gold saw larger volatility in its prices. NBFCs offering gold loans faced higher auction pressures in the first nine months of FY22, largely due to the COVID-19 impact on borrowers' cash flows and gold price correcting by around 10 per cent during mid-June to September 30, 2021.

It stated ‘We believe that auctions by gold loan NBFCs would normalise in the fourth quarter of FY22 as gold prices have stabilised since October 2021, after periods of corrections seen since December 2020, along with normalcy returning in business activities.’ Besides, it said while NBFCs have seen a sharp rise in loan auctions, the situation at banks have been less intensive as the regulations ensure that the Loan-To-Value (LTV) ratio remains lower throughout the tenor of the loans, increasing the incentive for borrowers to arrange for the redemption of gold loans from lenders.

The CNX Nifty traded in a range of 17,148.55 and 16,843.80 and there were 18 stocks advancing against 32 stocks declining on the index.  

The top gainers on Nifty were Mahindra & Mahindra up by 1.44%, Bajaj Finserv up by 1.11%, Eicher Motors up by 0.98%, ONGC up by 0.95% and Hindalco up by 0.82%. On the flip side, BPCL down by 3.65%, Tata Steel down by 3.65%, TCS down by 3.58%, Tata Motors down by 3.28% and SBI Life Insurance down by 2.98% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 26.29 points or 0.35% to 7,510.62, France’s CAC rose 7.35 points or 0.11% to 6,795.69 and Germany’s DAX was up by 2.61 points or 0.02% to 14,733.73.

All the Asian markets ended lower on Tuesday after Russia recognized two Ukrainian separatist regions - Donetsk and Luhansk - as sovereign states and ordered troops into the territory as peacekeepers, accelerating a crisis the West fears could unleash a major war. Meanwhile, U.S. and allies condemned the deployment of troops in Ukraine as a calculated act by President Putin to create a pretext for invasion. China's Shanghai Composite index and Hong Kong's Hang Seng index ended lower amid fresh worries over Beijing's regulatory plans for the tech sector. Japanese shares fell for a fourth day due to an escalation in tensions around Ukraine.

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