How do you see the stock markets on Friday, 25th February after the sharp fall in the indices on Thursday?

On Thursday, the heavy panic induced cash market selling combined with futures unwinding as the Nifty cracked 815 points and the Sensex fell by a huge 2,703 points. It was one of the sharpest falls in the market. The deteriorating situation in Ukraine and with Russia moving in troops to the heart of Ukraine, the markets are likely to stay in a state of panic.

The sharp fall was exacerbated by the A/D ratio and the spike in VIX, amidst rising panic. On Thursday, the A/D ratio was totally negative with all the Nifty-50 stocks declining. In between, the VIX spiked by 30.3% to 31.98 levels, one of the highest in recent memory. There were 4-6% cuts across all the indices including the mid-cap and small-cap indices.

Foreign investors were net sellers in equities to the tune of Rs.6,448 crore while domestic funds bought Rs.7,668 crore of equities on Thursday. Dow closed flat with 0.28% gains while the NASDAQ shot up 436 points after the US imposed sanction on Russia. Europe cracked 400 bps across the board, while SGX Nifty is trading higher by 172 bps in early trades.

It eventually boils down to the geopolitical situation and hopefully, the situation should turn for the better next week and sanity should return to markets. For Russia, it was all about proving a point and they would not want to push much beyond that. We could see normalcy returning to markets in the next few weeks.