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The indexes fell 2% earlier in the day, with the Nifty below 200-day average
BENGALURU: Indian shares extended their fall to a fifth straight session on Tuesday over concerns that a fresh escalation in Russia-Ukraine tensions could push oil prices higher and stoke inflation.
The blue-chip NSE Nifty 50 index ended down 0.67% at 17,092.20, while the S&P BSE Sensex fell 0.66% to 57,300.68.
The benchmark indexes fell 2% earlier in the day, with the Nifty breaking below the key 200-day moving average, a bearish technical signal, after falling below the 50-day and the 100-day moving averages this month.
Russian President Vladimir Putin ordered the deployment of troops to two breakaway regions in eastern Ukraine after recognising them as independent on Monday, drawing U.S. and European condemnation for acceleration of a crisis the West fears could unleash a major war.
“The situation is very fluid; if a response from the West is very swift and sharp then it will lead to further problems and rising crude prices is certainly a major headwind for India as it has inflationary consequence,” said V.K. Vijayakumar, chief investment strategist at Geojit Financial Services.
In Mumbai trading, heavyweight financial firm Bajaj Finserv and automaker Mahindra and Mahindra each gained more than 1%, helping limit market losses.
The Nifty and the Sensex have fallen more than 1% this month so far on geopolitical tensions, concerns around inflation and expected rate hikes by the U.S. Federal Reserve.
Foreign investors have sold a net $6.91 billion in Indian equities so far this year, while domestic institutional investors have poured in a net $5.45 billion, according to Refinitiv data.
“On the positive side, fund flows from domestic investors continue to remain strong. And any sharp fall in equities would be viewed by domestic investors as a buying opportunity if you take a medium-to-long-term view,” said Ajay Bodke, an independent market analyst.
Meanwhile, Tokyo’s Nikkei 225 index dropped 1.8% and the Hang Seng in Hong Kong fell 3.2% in early trading. Oil prices jumped, with U.S. crude up 2.8%. The future for the S&P 500 dropped 1.5% while the contract for the Dow industrials lost 1.3%.
US markets were closed Monday for Presidents Day. In Europe, shares slipped Monday as investors awaited developments in the Ukraine crisis. Germany’s DAX gave up 2.1%. In Paris, the CAC 40 in Paris declined 2%. Britain’s FTSE 100 fell 0.3%. Russia’s MOEX index dropped nearly 11%. The ruble was down 3.2% against the U.S. dollar.
Western powers fear Russia might use skirmishes in Ukraine’s eastern regions as a pretext for an attack on the democracy, which has defied Moscow’s attempts to pull it back into its orbit. A vaguely worded decree signed by Putin cast the order for troops to move into eastern Ukraine as an effort to “maintain peace.” He also recognized the independence of the separatist regions, apparently dashing slim remaining hopes of averting a conflict that could cause massive casualties, energy shortages on the continent and economic chaos around the globe.
The White House issued an executive order to prohibit U.S. investment and trade in the separatist regions Tuesday.