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Worst day for Sensex, Nifty50 in nearly 21 months after Russia invades Ukraine; here's what else is hurting the bulls

Worst day for Sensex, Nifty50 in nearly 21 months after Russia invades Ukraine; here's what else is hurting the bulls

Worst day for Sensex, Nifty50 in nearly 21 months after Russia invades Ukraine; here's what else is hurting the bulls
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By Sandeep Singh  Feb 24, 2022 4:07:36 PM IST (Updated)

Russia-Ukraine conflict triggers India market crash: February 24, 2022 was the worst day for headline indices Sensex and Nifty since May 2020 amid a global sell-off, as heightened geopolitical uncertainty rattled world equities. The India VIX index -- known as the fear index -- surged to its highest level since June 2020.

It was a bloodbath on Dalal Street on Thursday with headline indices Sensex and Nifty50 taking their biggest hit since May 2020 amid a global sell-off, after Russia launched a military operation in Ukraine. Crude oil skyrocketed to fresh seven-year peaks.

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The 30-scrip index nosedived 2,702.2 points or 4.7 percent to end at 54,529.9 and the broader Nifty50 benchmark crashed to 16,248, down 815.3 points or 4.8 percent -- their biggest single-day plunge since May 4, 2020.
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Russian President Vladimir Putin claimed the move is intended to protect civilians and is in response to threats coming from Ukraine. He warned other countries that any attempt to interfere with the Russian action would lead to consequences. 
All sectors as well as broader market gauges bore the brunt of a prevalent panic among investors.
IndexChange (%)
Sensex-4.7
Nifty50-4.8
Nifty Midcap 100-6.2
Nifty Smallcap 100-5.7
The India VIX - known in market parlance as the fear index - finished the day 32 percent higher at 30.3, having climbed to almost 34 during the session. That was its biggest surge since June 17, 2020 - both intraday and at the close.
All of the 50 Nifty scrips settled in the red, with Tata Motors, IndusInd, UPL, Grasim, JSW Steel, Adani Ports and BPCL being the worst hit.
"Besides the Russia-Ukraine crisis, there could be multiple reasons for nervousness among market participants, including the F&O expiry, soaring crude oil rates, imminent Fed rate hikes, state elections and the new margin system," AK Prabhakar, Head of Research at IDBI Capital Markets, told CNBCTV18.com.
Here are some key factors running high on investors' minds:
  • Geopolitical tension: Moscow's move drew international condemnation, with the European Union saying it is planning the strongest, the harshest package of sanctions it has ever considered at an emergency summit. It approved the first round of sanctions on Wednesday.
  • Rising crude oil prices: Global benchmark Brent rose past $103 per barrel to its highest since August 2014. Russia is the world's second-largest oil producer. India meets the lion's share of its oil requirement through imports.
  • Assembly Elections 2022: Assembly elections in five states are now in the latter phases, with only Manipur and some parts of UP still left to vote. While campaigning continues for these regions, talks are already on for likely scenarios post-results in the states that have voted.
  • FII outflows: A sustained withdrawal of funds from Indian shares has been one of the key negative factors for Dalal Street. FIIs have so far this month net sold Indian shares worth Rs 21,632 crore ($2.9 billion), provisional exchange data shows. February could be a fifth straight fund of FII outflows.
  • Fear of more aggressive Fed policy normalisation: Investors globally have been closely monitoring inflation readings from major economies and central bank commentaries to assess the timeline and magnitude of long-impending hikes in interest rates from pandemic-era lows.
  • Accelerating inflation: Surging consumer prices are among the main reasons behind the Fed's hawkish tone. Businesses across industries have been struggling against rising raw material rates.
  • High equity valuations: Many experts have time and again flagged expensive valuations of Indian equities. Foreign brokerages as well as the RBI have raised concern over sky-high valuations.
  • COVID: Though the worst of the pandemic appears to be behind, investors have been waiting eagerly for signs of recovery from the pandemic lows.
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