Indian equity investors need to remain brave as the stock markets are expected to begin the fresh week with deep down. The major fallout of the ongoing geopolitical tension is skyrocketing of commodity prices.

West Texas Intermediate crude futures is currently hovering around $125 a barrel, after hitting as high as $130.50 on Sunday; and Brent crude at $128.60 a barrel, after peaking at $139.13.

Investors fear now that Russia-Ukraine tension will prolong further as against expectation of getting solved within a few days.

SGX Nifty at 15,843 indicates a 400-point gap down opening for Nifty. Nifty March futures on Friday closed at 16,266. Led by Japan's Nikkei, which tumbled over 3.6 per cent in early deal on Monday, equities across Asia Pacific region are weak between 1 and 3 per cent. Australia's ASX was relatively better, as the index fell by 1.25 per cent.

‘Extremely bearish’

Ruchit Jain, Lead Research, 5paisa.com, said the undertone remains bearish and the previous support of 16,800 now acted as a resistance. "The ‘Lower Top Lower Bottom’ structure continues on the daily time frame charts and the momentum oscillators too are pointing out at weak momentum," he added.

The stronger hands (Foreign institutional investors) have continued their selling streak in the cash segment and in derivatives segment too they formed bearish positions, he further said.

FPIs selling spree

In February, FPIs sold equities worth ₹45,720 crore through the stock exchanges. The trend has continued in March with a selling of ₹14,734 crore in just four days of trading. This month, FPIs have been sellers in debt too (₹2,508 crore) triggered by the depreciating rupee.

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Service, said: “In spite of around 13 per cent correction from the peak in Nifty, the FPIs continue to sell since market sentiments have been impacted globally by the uncertainty triggered by the war and the surge in crude. “

According to him, February FPI selling of ₹45,720 crore was matched by DIIs buying of ₹42,084 crore, preventing a major crash in the market. "There is a tug of war going on between FPIs and DIIs," he added.

Prashanth Tapse, Vice-President (Research), Mehta Equities, said: "The street will keenly watch on how RBI tackles the situation in the backdrop of higher oil and commodity prices, and most importantly, growth-supporting fiscal policies. Nifty’s long-term charts are still painting a bearish picture."

However, analysts are positive on Indian markets due to stable environment.

Morgan Stanley’s 6 reasons

Despite a supply shock in oil, Indian stocks appear to be relatively calm due to six major reasons, said Morgan Stanley.

According to its study, policy certainty, declining oil intensity in GDP, high relative real policy rates, rising share of FDI to FPI in external balances, rising domestic investors share and calm in INR and interest rates are the major reasons for the stability in Indian stocks.

The global financial advisory firm has analysed the likely reasons to understand whether if this is a “calm before a storm” or a new market dynamic.

Vineet Bagri, Managing Partner, TrustPlutus Wealth, said: "We have better policy stability, relatively calmer rupee, room in taxes to absorb fuel price hikes, accommodative stance by the RBI and rising capex spends by the government,"

According to him, "These will limit the downside in our equity markets. There could be a temporary shock if things worsen further in Europe, or for that matter a new front opens up in Asia; but barring that we think risks are evenly balanced at this point."

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