Shares of oil retailers, fertiliser manufacturers, automobile makers and information technology companies came under free fall after Russia President Vladmir Putin ordered a military operation in Ukraine and warned other countries that any attempt to interfere with the Russian action would lead to “consequences you have never seen.” In a televised address, Putin accused the U.S. and its allies of ignoring Russia’s demand to prevent Ukraine from joining NATO and offer Moscow security guarantees. He said Russia doesn’t intend to occupy Ukraine but will move to “demilitarize” it and bring those who committed crimes to justice.
Brent crude futures, which seesawed between sharp rises and falls on Wednesday, resumed a climb toward $100 a barrel on Thursday, adding 1.22 per cent to $97.98. West Texas Intermediate rose 1.32 per cent to $93.32 per barrel, news agency Reuters reported.
In domestic markets, crude oil future contracts on MCX for delivery on March 21, 2022, jumped as much as 6 per cent to hit an all-time high of Rs 7,291 a barrel.
After the surge in crude oil prices, fertiliser and oil marketing companies shares came under selling pressure as their profitability is highly affected by rising crude prices.
Shares in Chambal Fertilisers, Coromandel International, GNFC, Tata Chemicals, Rashtriya Chemicals, NFL, Deepak Fertilisers, Mangalore Chemical and SPIC fell between 2-5 per cent.
Shares of state-run oil retailers - Bharat Petroleum dropped 3 per cent, Indian Oil tumbled 2.42 per cent and HPCL declined 1 per cent as surge in crude oil prices negatively impacts their gross refining margin, which is a key metric of profitability of OMCs.
Information technology companies also came under intense selling pressure on the back of their global nature of business and very high exposure to European countries. IT heavyweights like TCS dropped 3 per cent, Infosys declined 3.3 per cent, Wipro dropped 4 per cent, HCL Technologies tumblled 3.5 per cent and L&T Infotech fell 3.96 per cent.
Auto makers Tata Motors, Balkrishna Industries, Ashok Leyland, Bharat Forge and Apollo Tyres also dropped up to 5 per cent on the back of their exposure to European countries.
