The equity markets sharply rebounded on Monday, fuelled by metals and energy stocks as investors shrugged off lingering woes over the Russia’s military invasion against Ukraine. After plunging over 1,000 points in early trade, the Sensex bounced back to end the session at 56,247.28, up 388.76 points or 0.70%.
Shares of Tata Steel, Power Grid Corp and Reliance Industries primarily contributed to the Sensex’s gain. While Tata Steel surged 6.6% — its biggest single-day gain since February 1, RIL rallied 3.3% to close at Rs 2,359.10 on the BSE. While broader Nifty50 closed up 0.81% at 16,793.90 points, the BSE smallcap and midcap gained 0.80-0.83%.
Market participants are of the view that growing sanctions against Russia could also improve export potential for local steel and aluminum firms. Among BSE sectoral indices, the metal index rallied the most with 5.5% gains on Monday, followed by energy and oil & gas, which were up by 2.9% and 2.5%, respectively.
According to Siddhartha Khemka, head – retail research at Motilal Oswal Financial Services, “Metals were top gainers on Monday as commodities prices have rallied to multi-year high on account of sanctions imposed on Russia, resulting in an array of supply risk.” Now, markets will keep an eye on the outcome of talks between Ukrainian officials and their Russian counterparts, he said.
The India VIX index — the market’s fear gauge — inched up by 6.8% to 28.6 levels. During February, the Nifty50 has come off 3.2% to clock its worst return since November 2021. Foreign portfolio investors sold $524 million worth of shares on Monday, marking their 11th consecutive day of selling, having offloaded nearly $4 billion worth of shares during the period. That compares with $4.8-billion purchase by domestic institutional investors.
As Russia and Ukraine are major producers of agricultural products such as wheat, barley and maize, and Russia is also a key producer of metals, prices of these commodity are reacting too, Morgan Stanley said in its Asia Economics report. “Commodity prices have already gotten a boost from strong global demand and the effects of the energy transition and slower investment in commodity sectors,” the report said.
