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Ukraine crisis hurts stocks

Mumbai, March 3: Geopolitical tensions over Ukraine today spooked investors, resulting in the benchmark Sensex slipping 173 points to close below the 21,000-mark.

Even as tensions escalated between Russia and Ukraine, sending oil prices, gold and other commodities higher, investors shed assets such as equities across various markets. The sombre mood deepened after last week’s disappointing report that the Indian economy had grown slower-than-expected in the third quarter at 4.7 per cent, which has already undermined the growth forecast of 4.9 per cent for the fiscal ended March 31.

Market circles said the growing tensions between Russia and Ukraine was not good news for India as Russia was a major oil producer and, the imposition of any sanctions by the US, could lead to a flare up in oil prices. If that happens, the strain on India’s fiscal deficit arising from higher spending on oil imports will increase.

Crude oil prices have already risen above $104 per barrel even as gold prices rose around 2 per cent to $1,348 per troy ounce in Singapore on safe haven buying.

Reflecting the unease among investors, the BSE Sensex opened marginally lower at 21079.27 and traded in a narrow range. Equities began to come under pressure after the European markets opened lower. The bellwether soon hit an intra-day low of 20920.98 and settled at 20946.65, a drop of 173.47 points, or 0.82 per cent.

The index had gained over 583 points in the previous five sessions. Healthcare, IT, power and auto shares were the worst hit among the various sectors that ended lower.

The NSE 50-issue CNX Nifty also dropped 55.50 points, or 0.88 per cent, to close at 6221.45. In the previous five days, the index had risen 185.50 points.

“Geopolitical tensions surrounding Ukraine weighed heavily on global markets including the Sensex. The ongoing conflict though likely to remain localised has led to risk aversion among equity markets,” said Sanjeev Zarbade, vice president (private client group research) at Kotak Securities.

The tensions in equity markets spilled over to the rupee which tumbled 29 paise to 62.04 against the dollar.

Elsewhere, Asian stocks, barring China, ended lower. Key benchmark indices in Hong Kong, Singapore, Japan and South Korea fell between 0.44 per cent and 1.47 per cent. European markets were also trading weak. The UK’s FTSE fell 1.01 per cent, France’s CAC was down 1.78 per cent and Germany’s DAX 2.09 per cent.

 
 
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