NEW DELHI: Domestic stocks took a beating on Wednesday morning, catching up with global peers after Tuesday’s market holiday.

An overnight fall in US stocks, a surge in oil prices past $110 mark and a less-than-expected GDP print for the December quarter weighed heavily on the sentiment.

“Oil prices leapt nearly 10 per cent higher overnight and have jumped another 3 per cent in Asia this morning and there is definitely a sense of fear in the air. Asia, of course, is acutely sensitive to higher energy prices, most of Asia being huge net energy importers,” said Jeffrey Halley, Senior Market Analyst, Asia Pacific, OANDA.

VK Vijayakumar of Geojit Financial Services said crude prices surging to $110 is a major shock to the economy. “After the elections in March, petroleum product prices will rise sharply even if the government goes for an excise cut. Besides, Q3 GDP growth at 5.4 per cent came in lower than expected. This slowdown is likely to be extended, going forward,” he said.

At 11:56 am, the BSE Sensex was ruling at 55,175, down 1,072 points or 1.9 per cent. NSE Nifty was at 16,523, down 270 points or 1.6 per cent.

In the Sensex pack, ICICI Bank declined 3.8 per cent to Rs 715.90. Asian Paints, HDFC Bank and HDFC dropped up to 3 per cent. Maruti Suzuki and Kotak Mahindra Bank fell over 2 per cent each.

Hero MotoCorp shed 3.10 per cent to Rs 2,457.50.

On the flipside, Tata Steel jumped 3.16 per cent to Rs 1,259.50. Reliance Industries added 0.6 per cent to Rs 2,372.55. M&M, Power Grid, NTPC and Tech Mahindra rose up to 0.6 per cent.

Fresh sanctions on Russia, a key oil exporter, pushed crude oil prices up by $6 to $111 a barrel earlier in the day. This spike in crude price poses risk on the external balance front and can play spoilsport, given the assumptions made in the FY23 Union Budget, analysts said.

“While these are early days into the conflict, higher crude oil prices, if sustained for an elevated duration, can result in higher inflation, current account deficit, bond yields, and interest rates in India and thus impact macro-economic stability,” Motilal Oswal Securities said.

US stock indices tanked up to 1.8 per cent overnight and most Asian markets were trading in the red.

Besides, the December quarter real GDP slowed sharply to 5.4 per cent against 8.5 per cent in September quarter. Edelweiss said the print missed its estimates by 100 basis points.

Data showed foreign outflows in the first two months of 2022 reached Rs 68,895 crore.

Vijayakumar said in this highly volatile and uncertain scenario, investors should remain in a wait and watch mode. “There is relative safety in IT stocks and valuation comfort in high quality financials,” he said.


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