Stock Market: Putin domino effect land Fed-scared equities in bear lap
By S Jha
New Delhi, February 22: Russian President Vladimir Putin’s suspension of Russia’s participation in Strategic Arms Reduction Treaty (START) with the US had sent the equity markets crashing last night, with domino effect spreading to the Indian bourses. Sensex finally sank below crucial 60,000 level, and Nifty lost the pivot to crash to 17554 on Wednesday.
The Indian equity markets will be approaching the weekly and monthly expiry on Thursday in an oversold conditions even while bearish market sentiments could set up the bourses trending amid option settlements. The bond yields are on fire. Dollar index is hot. Bears seem to have the most favourable conditions to rule the market.
Rout in the Adani group of companies is seen pushing the indices lower. Adani Enterprises was once more mauled with indications of big hands selling the group companies. With the Adani group of companies mired in controversy, the Indian equity markets continue to be stressed. Retail panic is being reported. The retail investors who have provided stability to the bourses may be exiting and pausing fresh exposure as the stock market is seen packing the investors. With no signs of bottoms in the Adani group of companies in sight, the negative sentiment is also seen spreading out.
Advance decline ration at 1:5 showed that the bulls have given up on the equity markets. Adani rout, US Fed hawkish commentaries and Ukraine War heat seem to have created a massive negative pressure on the equity market. Ukraine War by all accounts look set for extended run, as NATO firms up commitment to pour more arms in the war-ravaged country. Putin on the other hand is also digging in his heels.
Extended Ukraine War may not give respite from inflation and the Central Banks across the world could continue with their hawkish stand on rate hikes to suck the liquidity from the market to tame inflation. The equity rout is now spreading out among the small and midcaps. Cement companies were also mauled on Wednesday. The banking stocks are hit hard even since a couple of the members of the US Fed spoke of further aggressive rate hikes in the US.
The minutes of the US Fed due for release in the afternoon may set up the mood in the equity markets even while the American bourses were flat to positive after the sellout a day before. The foreign institutional investors on Wednesday sold a net of Rs 580 crores in the cash market, while their domestic counterpart bought a net of Rs 372 crores.
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