India's stock market records sharp fall; was it ripple effect from Russia-Ukraine crisis?

As the threat of a Russian invasion of Ukraine looms large, the effect could be felt on the Indian market. On Monday, the Indian stock market witnessed the worst day of 2022 amid fear of Russian troops attacking Ukraine at any point in time. As Russia is one of the largest exporters of energy, the global market also witnessed a major slump in its stock markets. Of the countries in Asia, India was the worst hit by the threat as it created a fear of panic amongst investors. Investors withdrew their money out of equities, which resulted in a major blow to the Indian market. However, amongst all the stock markets in Asia, India witnessed a a number of other activities that resulted in a sharp fall in the Indian equities market.

Among the reasons which drove a major plunge in the stock market, other reasons include the recent inflation data, bank fraud, subdued factory output and spike in crude oil prices. This resulted in the crash of stocks of various companies including metals, auto, real states and banks. "We are seeing continuous selling by FIIs while DIIs flows may also come down ahead of the big LIC IPO,” Business Insider quoted Santosh Meena, head of research at Swastika Investment as saying. According to Meena, it was not only Ukraine and Russia that was the main issue behind the Monday stock crisis, but it was one of the biggest bank frauds that created a situation of panic among Indian investors. The Central Bureau of Investigation (CBI) on Saturday registered an FIR against Shipping firm, ABG Shipyard, and its directors in relation to a fraud case of allegedly duping 28 banks of Rs 22,842 crore.

Industrial growth slows down to 0.4% in December: Report

Head of research at Swastika Investment Santosh Meena further said that there was also bad economic data that created a condition of distrust amongst investors. It is worth mentioning that India's industrial production growth slowed down for a fourth straight month in December to 0.4 per cent mainly due to a poor performance by the Manufacturing sector. The Manufacturing sector, which constitutes 77.63% of the Index of Industrial Production (IIP), contracted by 0.1 per cent in December, according to the data released by the National Statistical Office (NSO) on Friday. However, on Tuesday, the Indian equities markets key indices rebounded on the back of strong buying support in FMCG, IT, and energy stocks after the Russian defence ministry announced some of the troops are moving back to their bases.

Image: PTI