Indian equity benchmarks staged a smart recovery in the second half of a volatile session on Tuesday, helped by a rebound in financial, oil & gas, IT and auto stocks. However, caution persisted among investors globally on account of geopolitical uncertainty arising out of the ongoing
Russia-Ukraine war, a hawkish tone of major central banks and rising coronavirus infections in China.
The 30-scrip Sensex index gyrated in a range of more than 1,100 points, between around the 57,000-58,000 milestones. The broader Nifty50 benchmark managed to hold the psychologically important 17,000 mark as well as its 200-day moving average of 17,013.7 throughout the day.
It also managed to surpass its 50-day moving average.
Period (No. of days) | Simple moving average | Signal |
| 5 | 17,071.7 | Bullish |
| 10 | 16,781.4 | Bullish |
| 20 | 16,704.4 | Bullish |
| 50 | 17,237.1 | Bullish |
| 100 | 17,360.8 | Bearish |
| 200 | 17,013.7 | Bullish |
The India VIX -- known in market parlance as the fear index -- finished the day down 2.2 percent to 24.1, having cooled off after jumping by the same degree during the session. Last month, Russia' move to invade Ukraine had sent the index leaping to a
20-month high of almost 34.
Here are some key factors impacting the market now:
Geopolitical tensions: The ongoing war between Russia and Ukraine, nearly a month after Russia invaded Ukraine, continues to keep investors nervous globally. Ukraine's military said its residents should brace for more indiscriminate Russian shelling of critical infrastructure as US President Joe Biden issued one of his strongest warnings yet that Moscow is considering using chemical weapons. Russian troops have failed to capture any major Ukrainian city and are increasingly resorting to causing destruction to residential areas.
Crude oil prices: Benchmark oil rates continued to rise for the fifth day in a row on Tuesday, though still 15 percent away from 14-year highs. Brent crude oil was last seen trading up 2.3 percent at $118.3 per barrel and West Texas Intermediate was up 2.2 percent at $112.4 a barrel. India meets the lion's share of its ask for oil through imports.
Higher interest rates: Last week, the Federal Reserve announced a rate hike of 25 basis points as expected -- its first increase in more than three years. Fed Chairman Jerome Powell sounded confident about the strength of the US economy and its ability to handle tighter monetary policy. The FOMC, he said, is determined to take necessary steps to restore price stability. The Bank of England delivered a third straight hike in key rates, bringing borrowing costs back to pre-COVID levels. Back home, the RBI is due to conduct its bi-monthly policy review in April.
Accelerating inflation: The more hawkish tone of central bankers comes at a time when rising prices of commodities -- crude oil in particular -- have stoked fears of stagflation. Businesses not just in India but around the globe are struggling against rising input costs.
FII outflows: March is set to be a sixth straight month of FII outflows for Dalal Street. So far this month, FIIs net sold Indian shares worth Rs 44,579.3 crore, though DIIs have made net purchases to the tune of Rs 31,872.9 crore, providing some relief to market participants, provisional exchange data shows. FII outflows have been one of the primary reasons behind the headline indices' retreat from the last of a chain of all-time highs last year. Till October 2021, both Sensex and Nifty50 had scaled a series of peaks in a near one-sided 18-month-long liquidity-driven rally.
Concerns over slower-than-expected economic recovery: Official data released in February showed India's economy expanded by a slowed-than-expected 5.4 percent in the October-December 2021 period. 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. Dan Fineman of Credit Suisse told CNBC-TV18 on Tuesday that though the Indian market has always been at a premium to Asian peers, its premium valuations remain a concern. In his view, besides high valuations, oil is another issue for the Indian market.
COVID: A recent increase in COVID cases in China, triggering curbs in a major industrial belt in the country, has remained on investors' radar. Many experts are still divided over the pace of recovery in business as well as economic activity in India, even though the worst of the pandemic appears to be behind.First Published: Mar 22, 2022 1:13 PM IST
