Terrible Thursday: Sensex crashes over 2000 pts! Is there more pain ahead?

It's a terrible Thursday on Dalal Street as Sensex crashed over 2,000 points after Russian President Vladimir Putin announced a 'military operation' in Ukraine.

He said that Russia has decided to launch a special military action in Ukraine and that clashes between Russian and Ukrainian forces are "inevitable". He asked Ukrainian service members to 'lay down their arms and go home'.
 
Equity benchmark Sensex crashed over 2,000 points and Nifty also tumbled over 500 points. Investors lost over Rs 7.5 lakh crore within minutes of market opening.

The market cap of BSE-listed firms fell by Rs 7.59 lakh crore after investor wealth declined to Rs 248.09 lakh crore against Rs 255.68 lakh crore in the previous session.
 
"We are seeing the first meaningful correction in the market after a strong performance in 2021. A correction was due where geopolitical tension has become an excuse for this correction. Inflation and rising interest rates are the major concerns for equity markets and geopolitical tension is increasing the risk of inflation as energy prices are rising," said Parth Nyati, founder, Tradingo.
 
"Anecdotally, such kinds of geopolitical issues provide a good buying opportunity for the long-term investors and we are in a structural bull run that is likely to continue for the next couple of years where intermediate corrections will be part of this journey. Long-term investors should not panic and look for buying opportunities from lower levels where the domestic economy facing sectors like capital goods, infrastructure, real estate, financials should be on investors' radar," he added.
 
Sharing his technical view, he said that Nifty has slipped below its 200-DMA which may lead to further weakness towards the 16,000 level while 16,400 is an intermediate support level. "We can expect a bounceback from the 16,000 level but confidence will back only if Nifty manages to cross the 17,200 level. If Nifty breaks the 16,000 level then the worst-case scenario could be 14,000 but still we will remain in a long-term bull market," he said.
 
He also further added that Banknifty has also slipped below its 200-DMA where 35,500 is the next important support level while 34,000 is the next major support. On the upside, it has to cross the 37,500 level to gain any strength.
 
Divam Sharma, Founder, Green Portfolio said, "We have multiple events lined up with the Ukraine Russia geo-political developments being the biggest factor impacting the markets in the short term currently. We will have to see how nations like the USA, UK, Germany react to these developments."
 
He added that the news of inflation and interest rate hikes is currently side-lined, will play a bigger role in the market as we expect more inflation in commodities going forward and the rate hikes will increasingly become inevitable.
 
"We expect that the upcoming election results should not throw many negative surprises. LIC IPO should be a positive event for the FPI inflows. We have seen most of the correction considering current developments, however, a further 10% correction cannot be ruled out if the geopolitical tensions escalate or oil prices rise sharply from here," he said.

Dr. Ravi Singh-Vice President and Head of Research-ShareIndia said, "The market panic selling is triggered by the latest developments in Ukraine Russia tensions. The selling may continue for a more correction of 8-10% in the benchmark indices."

He added that Nifty may touch the level of 15,500 in this scenario. It is advisable that all investors should follow wait and watch strategy and avoid any fresh entry at current juncture. Long term investors having investment horizon of 3-5 years will get a good opportunity to avert their portfolio, once the global situation stabilizes.

 "Geopolitical tensions usually have a long lingering effect on the market. Nifty has slipped below its 200-DMA and this means that we will see more pain in the market going ahead. Bank stocks can do well and investors will now have to be sector and stock-specific," Kranthi Bathini, equity strategist at WealthMills Securities told BusinessToday.In.

“The geopolitical event has been causing a rout across equity markets, as the world can ill-afford further disruption in trade and commodities when Covid has already weakened sovereign balance sheets," said Amar Ambani, Head – Institutional Equities, YES Securities.

"We had opined a few days ago that post the meteoric rise to 18,000 on the Nifty from lows of 7,500, it seemed like the Nifty could correct to 15,800 level. We were already witnessing the consolidation since mid-October 2021 due to lack of fresh triggers. The Russia-Ukraine issue added a negative trigger to the existing overhang of the US Fed likely raising rates in March 2022," he added.

"However, we reiterate our bullish stance on Indian equities for the next three years. History has shown us that these wars offer good entry points for investors. Be it the wars of Vietnam, the Gulf, Afghanistan, Iraq or the Crimean crisis, markets have fallen on war fear, then rallied when the actual battle broke out and further continued its upward journey post the war. The next 7-odd trading sessions will offer tremendous opportunities for the long-term investor. Invest in good quality management in sunrise sectors," he said.

Mr. Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel One Limited said, "Nifty has broken down below its crucial support of 16,800 as well as 200-SMA with a huge gap. So till the time this gap is not filled or we do not surpass 16,800-16,900, the pain is likely to continue. Since it’s happened on the back of geopolitical concerns, the further direction is dictated by the developments with respect to this only."

"So in case of further aberration 16,200-16,000 can be tested or we may see sub-16,000 levels as well. Till time things do not ease off globally, traders should avoid aggressive bets. For investors, it would be a great opportunity to accumulate quality propositions in a staggered manner," he added.