IGI Logo

Indian markets extended losses to a third straight day on Friday amid heightened geopolitical tensions, after Ukrainian authorities said Russian forces captured the Zaporizhzhia nuclear plant. Today, markets are likely to make gap-down opening as Brent Crude surged to hit the $130 per barrel-mark in early trade, highest since 2008, amid heightened geopolitical tensions. Traders will be concerned as a private report lowered India’s economy growth forecast to 7.8 per cent for 2022 due to the nation’s exports being impacted by the Russia-Ukraine war and spiking oil prices causing ripple effects. It said rupee is likely to further depreciate against US dollar while soaring commodity prices will push inflation up. However, Indian banking sector will likely remain resilient. There will be some cautiousness as the Reserve Bank data stated that India’s forex reserves declined by $1.425 billion to $631.527 billion for the week ended in February 25 due to a dip in currency assets. Meanwhile, the GST Council in its next meeting may look at raising the lowest tax slab to 8 percent, from 5 percent, and prune the exemption list in the Goods and Services Tax regime as it looks to increase revenues and do away with states' dependence on Centre for compensation. There will be some buzz in the sugar sector stocks as industry body ISMA said India’s sugar exports are estimated to increase 15.38 per cent year-on-year to 7.5 million tonnes (MT) in the current marketing year 2021-22, on likely rise in demand for the Indian sweetener amid the possibility of a global deficit. Agriculture industry stocks will be in focus as India’s exports of agricultural items and processed foods rose 23% year on year to $19,709 million during April-January 2021-22, indicating continued robustness of the segment in the country’s exports basket. There will be some reaction in tea industry stocks as latest Tea Board data showed that tea exports during the 12 months of 2021 declined marginally at 195.50 million kilogramme from 209.72 million kg during the previous similar period. Metal stocks will be in limelight as somestic steel makers have hiked the prices of hot-rolled coil (HRC) and TMT bars by up to Rs 5,000 per tonne as supply chain is being impacted amid ongoing Russia-Ukraine conflict.

The US markets ended lower on Friday as the war in Ukraine overshadowed an acceleration in U.S. jobs growth last month that pointed to strength in the economy. Asian markets are trading deeply in red on Monday as oil prices soar amid the risk of a US and European ban on Russian supply and delays in Iranian talks triggered what was shaping up as a major stagflationary shock for world markets.

Back home, Indian equity benchmarks extended fall for the third straight session on Friday tracking a weak trend in global equities amid escalating tensions between Russia and Ukraine. Markets made a gap-down opening and stayed in red for whole day, as traders remained cautious with a private report that India's trade and current account deficits are likely to widen, putting pressure on the rupee, as global oil prices surge and the domestic economy reopens from a third wave of the pandemic. Traders were also cautious, as the CBIC cautioned the public against sharing Aadhaar and PAN details without a valid reason or for monetary gains, saying that the information could be misused by fraudsters for GST evasion. However, key gauges recouped some of their losses in afternoon deals, as traders took some support as India’s service sector activity improved in the month of February, as COVID-19 cases declined and restrictions were lifted. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index surged to 51.8 in February from 51.5 in January. Further, the Nikkei India Composite PMI Output Index -- which measures both manufacturing and services -- also improved to 53.5 in February from 53.0 in January. But, markets failed to hold recovery and ended lower as some pessimism remained among traders with private report stated that the value of foreign portfolio investors' (FPI) holdings in domestic equities reached $654 billion in three months ended December 2021, a drop of nearly 2 per cent from the preceding quarter. Finally, the BSE Sensex fell 768.87 points or 1.40% to 54,333.81 and the CNX Nifty was down by 252.70 points or 1.53% to 16,245.35.

Above views are of the author and not of the website kindly read disclaimer