Sensex, Nifty crash 5% on Ukraine crisis; Russian stocks dive 50%

The escalated political tensions between Russia and Ukraine have created mayhem in global equity market. The Indian market also felt the tremors of Russian missile barrage after president Vladimir Putin ordered military operations in eastern Ukraine.

"It was a big surprise for the world market as it was not anticipating a war. It was expecting a diplomatic meet between (Joe) Biden and Putin. Markets around the globe plunged deep in red as the Ukraine crisis intensified with Russia’s invasion into eastern Ukraine. Crude oil prices crossed $100 per barrel and elevated inflation risk,” says Vinod Nair, head of research at Geojit Financial Services.

The domestic benchmark indices extended fall for the seventh straight session on Thursday, crashing 4.8% due to surge in selling in the last hour of trades. The S&P BSE Sensex plunged 2,702 points, 4.72%, to settle at 54,530, while the Nifty 50 dropped 815 points, or 4.78%, to settle at 16,248. Today’s market crash was the tenth worst in the history of the Indian stock market.

Investors lost ₹13.57 lakh crore in wealth as the market capitalisation of BSE-listed companies dropped to ₹242 lakh crore from Wednesday's ₹255 lakh crore mark.

All the sectoral indices on the BSE and the NSE ended in red, while realty, auto, oil and gas were among biggest losers.

The broader market also saw sharp selling with BSE midcap and smallcap indices crashing 5.5% and 5.8%, respectively.

All the top 30 shares on the BSE Sensex pack ended in negative terrain, led by IndusInd Bank, Tech Mahindra, Bajaj Finance, Mahindra & Mahindra, Reliance Industries, Bharti Airtel, Wipro and State Bank of India, which dropped up to 8%.

The market experts warned that ongoing geopolitical tensions may add inflationary pressure and force policy makers globally to rollback economic stimulus measures.

“Prolonged geopolitical tensions between Russia and Ukraine could lead to further inflationary pressure, compelling policy makers globally to accelerate raising interest rates at the cost of economic growth. From an Indian economy standpoint, the economic impact is likely to be more short term in nature as its economy will continue to be driven by its long-term fundamental growth prospects,” Shivam Bajaj, founder and CEO at Avener Capital.

Here’s how global equities reacted to Russia-Ukraine crisis:

Russian stocks crash 50%

Russian stocks nosedived 50% today as trading resumed on Moscow Stock Exchange after a two-hour suspension amid the Ukraine crisis. The exchange had suspended stock trading after Russian President Vladimir Putin ordered military operations in two of Ukraine's eastern regions. The local market was closed on Wednesday on eve of Defender of the Fatherland Day 2022.

The RTS Index, a free-float capitalisation-weighted index of 50 Russian stocks trading on the Moscow Exchange, declined as much as 49.3% to hit a 52-week low of 610.33. The exchange's volatility (fear) index spiked to 35.10%, indicating that the market is prepared to see even higher volatility.

The sharp sell-off in Russian stocks was attributed to slew of sanctions imposed against Russia, which mainly targeted Russian banks, its debt markets and rich Russian individuals.

Singapore, Hong Kong lead Asian market fall

Shares in the Asia-Pacific region and in European market witnessed surge in selling activities today as Russia launched a full-scale invasion of Ukraine. The Russia-Ukraine tensions have rattled global equities as concerns about geopolitical tensions prompted investors to shift focus to safer assets such as dollar and gold.

In the Asia-Pacific region, all major markets ended in red, led by Singapore’s Straits Times Index, which crashed 3.45%. The Hang Seng index in Hong Kong dived 3.2%, while Australia’s ASX 200 index dropped 2%.

Japan’s Nikkei 225 ended 1.8% lower, while South Korea’s KOSPI slumped 2.6%.

In mainland China, the Shenzhen Component and the Shanghai Composite shed 2.2% and 1.7%, respectively.

European stocks follow Wall Street lower

European stocks opened sharply lower today, following negative finish at Wall Street overnight, as tensions in Eastern Europe weighed on investors’ sentiment.

Germany’s DAX plunged 3.8% in early deals, while France’s CAC index dropped 3.4%. The U.K.’s FTSE 100 index shed 2.5%, while Spain’s IBEX index slipped 3.3% in early deals.

In the overnight trade, all three major indices closed lower on Wall Street as Ukraine declared a state of emergency amid fear of invasion by Russia. The tech-heavy Nasdaq Composite was the worst performer with a 2.57% loss. The Dow Jones Industrial Average fell 1.4% and the S&P 500 lost 1.8%.