Russian military operations in two of Ukraine’s eastern regions resulted in a Dalal Street massacre, which dragged the Sensex by more than 2,000 points. Domestic indices entered correction territory. This came in the wake of a shrug of sanctions by Russian President Vladimir Putin, whose government earlier this week recognized the independence of two regions in eastern Ukraine, took note of “a plea to Moscow” for help in stopping the alleged Ukrainian aggression. Furthermore, the Russian president authorized a military operation, which some agencies suggested could start a war in Europe over Russia’s demands to end NATO’s expansion eastward. Putin, however, insisted that Russia has no intention of occupying Ukraine.
BSE Sensex crashed over 2,000 points and NSE Nifty tumbled over 500 points as well. Investors lost more than Rs 7.5 lakh crore within minutes of the market opening. The market capitalization of BSE listed companies fell by Rs 7.59 lakh crore after investor wealth fell to Rs 248.09 lakh crore from Rs 255.68 lakh crore in the previous session.
“We are seeing the first meaningful correction in the market after a strong performance in 2021. A correction was needed where geopolitical tension has become an excuse for this correction. Inflation and rising interest rates are the biggest concerns for stock markets and geopolitical tensions are increasing inflation risk as energy prices rise,” said Parth Nyati, founder of Tradingo.
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Vikas Jain, senior research analyst at Reliance Securities, said the more than 5-month time and price correction since the highs of 18,600 levels in October 2021 would be subsidized by the end of March 22, and we expect markets to resume their upward trend. if markets would focus on full-year earnings and valuations roll towards next year’s earnings offering better risk rewards after the sharp correction in individual sectors and stocks. “In terms of sectors, we believe that private banking, IT and pharmaceuticals are the sectors where investors should gradually build positions over the coming weeks,” said Jain.
Helpful Technical Perspectives
The Indian market collapsed by more than 2.5 percent after Russia announced military action against Ukraine. All global indices plunged sharply as investors became cautious after the Russian president’s move and shifted money flow from riskier assets to safe havens such as gold, silver and crude oil.
Commenting on whether Nifty could correct further, Sachin Gupta, assistant vice president, research, Choice Broking, said that “Technically, the handy stranded the previous support of 16800 and below the lower Bollinger band and 200 days SMA moved, pointing to near-term bearish sentiments.A momentum indicator RSI & MACD suggested a negative crossover on the daily chart, pointing to further bearishness in the index.Right now, Nifty has crucial support around 16,400 levels, as the market breaks through the same so the correction can extend to 16,000/15,800 levels while the resistance is at about 16,800/17,000 levels.”
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