How do you see the stock markets on Tuesday, 22nd February and do you see the Ukraine situation getting worse?

On the first day of trading this week, Nifty gyrated by over 400 points during the day but eventually closed about 70 points lower. Sectors like pharma and infrastructure were consistently under a lot of pressure. However, some IT companies did register a sharp bounce on Monday. Meanwhile, Ukraine continues to be the principal worry.

If you look at the market internals, the advance decline ratio or the A/D ratio was unfavourable at 12:38. In between, the VIX spiked further to the 23 levels, showing a lot of confusion and concern in the markets. The situation in Ukraine continues to be very tense and that is rubbing off on the Indian markets.

Foreign investors net sold Rs.2,262 crore in equities while domestic funds and LIC bought stocks worth Rs.2,393 crore on Monday. Globally, Dow fell 233 points, NASDAQ fell by 169 points while France and Germany fell by over 2% on Ukraine fears. SGX Nifty is 106 bps lower in early trades and crude shot up to above $97/bbl on geopolitical worries.

Russia remains the X-factor with the recent decision to recognize the break-away faction of Ukraine. This is almost tantamount to war and Russia could see the first round of sanctions from the US coming very soon. In response, Brent crude shot up to $97/bbl and that remains the biggest worry for the Indian markets due to its inflationary potential.