homemarket Newsstocks NewsInvestors lose Rs 5.6 lakh crore in 3 days as Ukraine crisis deepens: Key factors impacting Dalal Street

Investors lose Rs 5.6 lakh crore in 3 days as Ukraine crisis deepens: Key factors impacting Dalal Street

The Sensex and the Nifty50 extended losses to a third straight day on Friday, as a recovery in heavyweight financial stocks was short-lived.

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By Sandeep Singh  Mar 4, 2022 3:55:35 PM IST (Updated)

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Investors lose Rs 5.6 lakh crore in 3 days as Ukraine crisis deepens: Key factors impacting Dalal Street
Indian equity benchmarks -- Sensex and Nifty50 -- recovered much of the day's losses in a volatile session on Friday, as the Ukraine crisis deepened. Investors remained nervous across global financial markets after the news of Russian military forces seizing the Zaporizhzhia nuclear power plant in Ukraine.

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Both headline indices fell as much as 2.2 percent during the session before recovering some of those losses. The 30-scrip index lost 768.9 points or 1.4 percent for the day to settle at 54,333.8, though recovering 446.1 points from the weakest level of the day. The broader Nifty50 benchmark settled at 16,245.4, down 252.7 points or 1.5 percent from its previous close.
Investors lost Rs 5.6 lakh crore in wealth in three days as the market capitalisation of BSE-listed companies came down to Rs 246.8 lakh crore, according to exchange data.  
A recovery in the financial pack -- led by HDFC Bank -- was short-lived. The Nifty Bank failed to stay in the green, managing to recoup only about one third of its intraday loss.
The India VIX -- known in market parlance as the fear index -- finished the day close to 28, having cooled off from a 20-month high of almost 34 as Russia's move to invade Ukraine sent shockwaves across global markets.
Here are some key factors impacting the market now:
  • Geopolitical tensions:
  • Investors closely tracked updates on the Russia-Ukraine war. Ukraine said Russian forces attacked the Zaporizhzhia nuclear plant in the early hours of Friday, setting an adjacent five-storey training facility on fire. Economist Kenneth Rogoff said in an exclusive interview to CNBC-TV18 that the war will only aggravate inflation.
  • Crude oil prices: Crude oil continued to rise, though off its recent peak. Benchmark Brent crude futures were last seen up 0.5 percent at $111 per barrel, having hit almost a 10-year high of close to $120 on Thursday. India meets the lion's share of its ask for oil through imports.
  • Assembly Elections 2022: Polling in the UP assembly elections have entered the last leg. The counting of votes for UP, Punjab, Uttarakhand, Manipur and Goa -- the five states undergoing assembly elections -- is due on March 10.
  • FII outflows: In March alone, FIIs have so far net sold Indian shares worth Rs 10,983.6 crore, though DIIs have made net purchases of Rs 7,860.9 crore, provisional exchange data shows. March could be a sixth straight month of FII outflows, which have been one of the major factors preventing headline indices from revisiting their all-time highs of October 2021.
  • Fear of aggressive monetary policy normalisation: Investors globally have been closely monitoring inflation readings from major economies and central bank commentaries to assess the possibility of faster-and-bigger-than-expected hikes in interest rates from COVID-era lows.
  • Accelerating inflation: The Fed's hawkish tone of late is fuelled by surging consumer prices. Businesses across industries not just in India and but also around the world have been struggling against rising raw material rates. Central bankers are behind the curve when it comes to handling inflation, Professor Rogoff told CNBC-TV18.
  • Concerns over slower-than-expected economic recovery: Official data released this week showed India's economy expanded by a slowed-than-expected 5.4 percent on a year-on-year basis in the third quarter of FY22. Economists in a CNBC-TV18 poll had pegged the quarterly GDP growth at 5.7 percent.
  • High equity valuations: Experts have time and again flagged expensive valuations of Indian equities. Foreign brokerages as well as the RBI have raised concerns.
  • COVID: Though the worst of the pandemic appears to be behind, with many parts of the country removing COVID-related restrictions, experts are still divided over the pace of recovery in business as well as economic activity.
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