Russia-Ukraine flare-up limits market recovery; Nifty, Sensex end higher

Nifty, Sensex end losing streak but give up most of their intraday gains

Indian equity benchmarks, the Sensex and the Nifty 50, halted their losing streak on Tuesday, buoyed by selective buying interest. However, both indices surrendered a significant portion of their intraday gains as the latest flare-up in the Russia-Ukraine war dampened sentiment. 

 

The Nifty 50 ended at 23,519, up 65 points or 0.3 per cent, snapping a seven-session losing streak — its longest since February 28, 2023. The Sensex, which surged as much as 1,113 points (1.4 per cent) during intraday trade, closed 239 points higher at 77,578, representing a gain of 0.3 per cent. The 30-share index had closed lower in the past four sessions.  

 

Both indices remain in correction territory, having fallen more than 10 per cent from their 52-week highs, due to persistent selling from foreign portfolio investors (FPIs) and a tepid Q2FY25 earnings season for India Inc.  

 

Tuesday’s rebound was under-pinned by bottom-fishing, but caution reasserted itself. Ukrainian forces employed US-made ATACMS rockets for the first time to strike inside Russian territory, following approval from American President Joe Biden.

 

In response, Russian President Vladimir Putin signalled a reduced threshold for a nuclear strike to counter perceived escalations. 

 

This escalation rattled global investor sentiment, triggering a shift to risk-off trades. European equity markets fell sharply before closing, while major Wall Street indices opened lower.

 

Safe-haven assets saw renewed demand. The yield on the 10-year US Treasury fell 1.07 per cent to 4.36 per cent, while gold prices rose 1 per cent to $2,637.60 per ounce, marking a 3 per cent gain over two sessions. 

 

 “News about escalating tensions between the West and Russia came at the tail end of the trading session in India, sparking nervousness, especially with a market holiday tomorrow,” said U R Bhat, co-founder, Alphaniti Fintech. While the immediate reaction was restrained given the gravity of the news, Tuesday’s recovery appears to be a one-off, he said. 

 

FPIs were net sellers of shares worth Rs 3,411 crore, while domestic institutional investors (DIIs) offset some of this pressure, buying Rs 2,784 crore worth of equities.

 

Two-thirds of Sensex constituents closed higher. HDFC Bank, which gained 2.2 per cent, was the biggest contributor to the index’s rise, followed by Mahindra and Mahindra, which climbed 3.5 per cent. Conversely, Reliance Industries was the biggest drag, falling 1.5 per cent and emerging as the worst-performing Sensex stock. 

 

The broader market exhibited a positive bias, with 2,410 stocks advancing against 1,559 decliners. 

 

The markets have corrected significantly and thus some rebound was expected, said Andrew Holland, CEO of Avendus Capital Public Markets Alternate Strategies. "There’s no clear catalyst to drive the markets up in a sustained manner. Market activity wanes anyway towards the end of the year. Domestic flows will move the markets.”

 

December might bring a moderate recovery, but volatility could resurface in January as the equity markets grapple with fresh policy shifts under the upcoming US presidency of Donald Trump, he added.