Investors went into hiding on Monday over fears of sanctions against Russian oil as all attempts to de-escalate the Ukraine conflict have come unstuck.

While the Sensex nosedived 1491 points to end below 53000 at 52842.75, the rupee closed at an all-time low of 76.93 to the dollar, a fall of almost 76 paise.

Inflation concerns because of rising crude oil prices saw the yields of the benchmark 10-year paper rising to 6.89 per cent from the last close of 6.81 per cent.

Investors feared a surge in the crude price will lead to an across-the-board hike in inflation that will choke consumption and hurt growth.

“Oil prices surged above $130 a barrel for the first time since July 2008, following the risk of a US and European ban on Russia’s oil export which accounts for about 10 per cent of global supply,” said Vinod Nair, head of research at Geojit Financial Services.

“As a result, the domestic market along with its global peers witnessed a huge sell-off from opening hours. Inflationary pressure is also witnessed in other commodities such as gold, aluminium and copper, which will eventually eat away corporate profits in the coming quarters,” Vinod Nair, head of research at Geojit Financial Services, said.

The Sensex opened at 53172.51 and crashed almost 1967 points to a low of 52367.10. It recouped some losses and settled at a seven month low of 52842.75 — a fall of 1491.06 points or 2.74 per cent..

Caught unawares

The Ukraine war may have torn asunder the Reserve Bank’s benign inflation projections for the next fiscal, and the moot point remains whether the apex bank considers the situation grave enough to advance its monetary policy meeting scheduled for April.

The RBI had not stated the crude price benchmark it adopted when it projected 4.5 per cent retail inflation for the next fiscal at a time consumers in the US, UK were grappling with decades-high price rises.

In a survey of professional forecasters done by the RBI during February, the median oil price was set at $77.9 per barrel and the maximum price $89 per barrel for the Indian basket in the fourth quarter of 2021-22 — way below the $130-per-barrel price for the Indian basket of crude on Monday.

Analysts said the central bank may revise the inflation forecast in the next meeting which is scheduled between April 6 and April 8. However, not many expect the meeting to be advanced. The last time the meeting was advanced was in May 2020 during the first wave of Covid-19.