Stock Market: Fuel on fire sends indices crashing in shadow of Canada row

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By S Jha

New Delhi, September 21: Nifty crashed by 160 points to lose over 400 points in the last five days. Bank Nifty tumbled by over 770 points on Thursday to log loss of more than 1400 points in the last five days.

Brent Crude was trading with a minor cut at over $92 per barrel, while observers are betting on it to cross $100 per barrel soon. At the same time, Russia announced curb on export of diesel and gasoline on Thursday, with the western commentators claiming that Russian President Vladimir Putin was weaponising fuel in his war on Ukraine.

With fuel on fore and inflation already heated, the equity markets appear to face sustained bear assault as conventional wisdom suggests that rising brent crude oil price acts negatively against the equity markets. Also, the street is buzzing that India-Canada row in the wake of the accusations of Justin Trudeau, the Canadian Prime Minister, against New Delhi is also casting a shadow over the bourses, as the Ottawa-based fund houses are rumoured to be selling the Indian equities.

Indices are not showing any signs of strength, according to technical chartists, who claim that more pain is in the offing, as the fear of inflation spiking looks more possible. It may be noted that Canada had already restricted the export of Masoor dal even before Trudeau made his allegations against India. With a shortfall in the acreage of the crops of pulses, the prices of lentils along with rice and wheat are already firming up. With food inflation staying heated, the fear of the RBI letting go the pause on the interest rate hike may haunt the equity markets.

Yet, a slight glimmer of hope for the bulls came in the fag end of the trading session as Infosys spurted in the last hald an hour, tracking the gains in Tech Mahindra. Some of the midcap IT firms such as Birlasoft, LT Tech, were seen gaining grounds. The gains in the IT sector were secular, and some of them being heavyweights in the indices bring hope to the bulls that they may stage a relief rally after sharp correction on the bourses.

The foreign institutional investors sold another Rs 3000 crores in the cash market, while their domestic counterparts could not match the scale in the day.