Rupee Plunges, Crude Oil Jumps 8%, Sensex Slumps 2700 Points, Gold Surges 3%

It's probably one of the most volatile day seen in recent times, where even the covid lockdown did not have a massive impact on all commodities. But, the Russian attack on Ukraine is causing havoc in the commodities market, the forex markets, the stock markets and the Crypto market.

The Sensex had its worst fall in 2-years and probably the fourth biggest fall in history. Crude oil jumping more than 8% is almost unheard of and so is the fact that gold rallied 3%. It's all happening thanks to the Russian attack on Ukraine.

What's happening with Brent crude

As we write Brent crude has surged 8.17% at $104 a barrel, a price that we have not seen since 2014.
"Crude's rally may have only just begun. Prices will be poised to bound higher with every unfortunate turn of events. Should the Kremlin cut off gas exports to Europe, all the world's gas producers put together do not have the spare capacity to plug the gap. OPEC+ has some spare capacity, but it is in oil. Whether it will deem it prudent to release it and how quickly it could unleash the barrels is a question mark. SPR releases could help, but again, those are oil, not gas. Iran deal could help, but that too is oil and the entire 1.3 million b/d of additional capacity locked out by US sanctions may not be able to ramp up quickly," says Motilal Oswal in a recent report.

Sensex has the biggest fall in almost 2 years

The last time the Sensex fell 2700 points, was during the covid era when there was a nationwide lockdown. In fact, there is a possibility of a further downside to the markets tomorrow as European markets have fallen even further. Today, the Sensex fell for the seventh straight day, something we have not seen since March 2020.

"Sentiments took a hit with Nifty now down by 13% from its high of 18604. Markets are likely to remain under pressure given the escalation of Russia Ukraine conflict into a war like situation. Any reaction from NATO / US armies is only going to worsen the situation further. Advice trades to remain with negative bias while investors need to keep calm and patience to tide over the current situation," says Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd.

He is right in pointing out that we may see a further downside in the markets and investors need to stay calm. One is not sure what the downside risk could be.

The rupee too remained volatile in line with the stock and commodity markets, with the currency dropping 104 paise against the dollar.

No one is sure how the markets will behave tomorrow. However, if there is an escalation and crude prices rally further, we could see the rupee and the stock markets come under pressure. India is a country that is certainly vulnerable to rising crude prices and with inflation already surging, we might see things get out of hand. We are living in interesting times, so let's wait and watch.