How do you see the stock markets panning out on Thursday 03rd March, and do you see oil going higher from here?

On Wednesday, the Indian markets remained under stress amidst high volatility as the Nifty and the Sensex saw gyrations that were nearly twice the fall in the indices. Nifty closed 188 points lower while the Sensex closed 779 points lower for the day, but at one point, the losses were much deeper. Oil stayed above $110/bbl through the day.

On Wednesday, the advance decline ratio was firmly in the negative at 16:34 as the volatility index or the VIX stayed elevated at above the 29 levels. Earlier this week, the VIX had touched a level of 35 before retreating. This is likely to continue with the volatile prices of oil and the fluid geopolitical situation in the stand-off between Russia and Ukraine.

Foreign investors net sold Rs.4,339 crore in equities while domestic funds and LIC bought Rs.3,062 crore on Wednesday. Global investors have sold $25 billion since October 2021. On Wednesday, Dow gained 597 points while NASDAQ was up 220 points after Powell hinted at just 25 bps rate hike in March. SGX Nifty is higher by 35 bps, but it may be hard to sustain.

The whole market story now boils down to oil prices. Yesterday oil touched $113/bbl and as long as oil is at these levels, FPIs will be selling in India and the rupee and the markets will be volatile. That is something to keep a watch on. Otherwise, the markets have the potential to bottom out around these levels as long as the news flows from oil are supportive.