Snapping their two-session gaining streak, the domestic benchmarks closed lower on Wednesday as a full-fledged war between Russian and Ukraine rattled global equities. The continued rally in crude prices and strong sell-off in rate-sensitive stocks such as auto and banking amid inflation concerns also weighed on investors' sentiment. Investors fear that petrol and diesel price hikes may resume after state elections get over next week as the international Brent crude price crossed $110 a barrel today.

“The market is currently caught between many macro cross-winds – higher inflationary pressure exerted by sharp rises in commodities prices across the board (crude oil, gas, metals, agri commodities), determination on the part of developed market central banks to withdraw monetary accommodation, and slowing growth impulses,” says S. Hariharan, Head of Sales, Emkay Global Financial Services.

The domestic markets opened sharply lower today amid ongoing geopolitical tensions in eastern Europe, but regained some ground amid a report that Russia was ready to resume talks with Ukraine tonight. The BSE Sensex dropped over 1,200 points intraday but reversed some of the losses to close 778 points, or 1.38%, lower at 55,469. In a similar trend, the Nifty50 index rebounded from its intraday low of 16,479 to settle at 16,606, down 188 points or 1.12%.

Bucking the trend, the broader markets settled with marginal losses. The S&P BSE Midcap index fell 0.17%, and the BSE Smallcap index shed 0.12%.

The overall market breadth on the BSE was slightly positive, with 1,868 shares rising out of a total of 3,756 traded stocks. As many as 1,741 shares declined and 147 were unchanged.

"The strengthening of war drowned the global market, alarming the Indian market to start with substantial weakness. The negative effect was more on largecaps in line with weak Q3 GDP data and downgrade of FY22 growth to 8.9% from 9.2%, by NSO,” says Vinod Nair, Head of Research at Geojit Financial Services.

“Midcaps and smallcaps outperformed, in the context of the recent carnage of the broad market, making it a better pick. It makes sense to deploy the surplus cash in your portfolio in a step-by-step manner assuming stability in the future on a medium to long-term basis. The weakness subsided by the end of the day. However, volatility is expected in the near term given boiled crude price, state election outcome, and Fed policy status in the coming weeks," Nair added.

Auto, bank sectors lead fall

The market witnessed broad-based selling with most of the sectoral indices ending lower. The rate sensitive auto and bank stocks declined the most, while metal and power sectors were among best performers.

The BSE auto index closed 2.87% lower, led by index heavyweights Maruti Suzuki India, Bajaj Auto, Hero MotoCorp, TVS Motor Company and Eicher Motors, as investors reacted to their monthly sales numbers.

The auto sector was followed by BSE Bankex index, which dropped 2.25%. The worst performers in the banking space were private sector lenders such as Bandhan Bank, ICICI Bank, HDFC Bank and Kotak Mahindra Bank.

Top gainers and losers

The BSE barometer Sensex witnessed bearish trade throughout the session with 23 of top 30 shares settling in the red zone. The top loser on the Sensex pack was Maruti Suzuki India, which ended 6% lower after it reported disappointing monthly sales in February 2022. The other worst performers include Dr. Reddy's Laboratories, Asian Paints, ICICI Bank and Housing Development Finance Corporation, which fell up to 5.1%.

On the gaining side, Tata Steel, the country’s largest steelmaker, topped the chart on the Sensex with a 5.54% gain. The other best performers include Titan Company, Reliance Industries, Nestle India, Axis Bank, Power Grid and Bajaj Finserv, which climbed up to 1.9%.

Asian stocks follow Wall Street lower, European markets buck trend

Global equity markets witnessed mixed trade on Wednesday, with most of Asian shares ending in red, while European shares edge higher in early deals. In the overnight trade, all three major U.S. indices closed lower as investors gauge the impact of Russia-Ukraine conflict on global economic growth.

In the Asia-Pacific region, the Hang Seng index in Hong Kong emerged as the biggest loser by falling 1.84%. It was followed by Japan’s Nikkei 225, which closed 1.68% lower.

The Straits Times Index in Singapore fell 1%, Thailand’s SET Composite slipped 0.26%, and Indonesia’s Jakarta Composite dropped 0.77%.

Bucking the trend, South Korea’s KOSPI rose 0.16%, and Australia’s ASX 200 index surged 0.28%.

In mainland China, the Shenzhen Component and the Shanghai Composite nosedived 1% and 0.13%, respectively.

Meanwhile, European stocks edged higher in early trade amid buying in beaten down stocks. Germany’s DAX gained 0.16%, the U.K.’s FTSE 100 index added 0.8%. France’s CAC index climbed 0.3%, while Spain’s IBEX 35 rose 0.1%.

Russia's Moscow Exchange remained suspended for a third day in a row on Wednesday amid ongoing crisis between Russia and Ukraine. The Russian stocks had witnessed wild volatility in recent past after the U.S. and the other Western countries imposed harsh sanctions on Russian individuals, businesses and financial institutions in wake of invasion of Ukraine.

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