The market in India is bummed out for at least three reasons and none of them are going away in a hurry

• Crude oil prices have risen to their highest level at a 7-year high as markets fear a full-blown war between Russia and US over Ukraine.
• The fear of interest rate hikes in the US and its impact on the foreign money inflow into India is also playing its part.
• To top it all, India’s equity investors just discovered that the biggest bank fraud ever in the country has hit two of the biggest banks.
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Sensex and Nifty50, the two benchmark indices that reflect the moves in the country’s biggest listed companies, are down 2% each. The market mood in India is similar to much of the world that’s fearing a war between the US and Russia over Ukraine.

But that’s not it. There are other factors playing on the traders mind for a few weeks now and that would explain why the Sensex has lost over 6% of its value in the last one month.

Top Losers among blue-chip stocks	Change as of 11:54 a.m. on Feb 14
HDFC Life Insurance	-5.64%
JSW Steel	-5.67%
ITC	-4%
HDFC	-3.86%
ICICI Bank	-3.52%
State Bank of India	-3.54%
Tata Steel	-3.48%
IndusInd Bank	-3.31%
Tata Motors	-3.21%
Grasim Industries	-3.13%

An outright conflict in Ukraine is likely to disrupt global crude oil supply. That could lead to a higher import bill for India, which relies on other countries for more than 80% of its crude oil demand. Having to pay more for crude oil erodes the country’s dollar reserves, weakens the rupee, increases the cost of doing business and squeezes people’s purchasing power.

But that’s not all. “World markets were trying to digest record inflation in the US but the surge in geopolitical tension spoiled the mood. There is some sentimental impact of the bank fraud issue of ABG group on banking stocks but it doesn't have a material impact as it is already part of NPA,” said Parth Nyati, founder at Tradingo.

Record inflation in the US is forcing the American central bank to suck out the excess cash in the system with interest rate hikes, the first of which is scheduled in March.

Rise in the US interest rate does not bode well for the Indian markets. This is because foreign investors pull out their investments from the Indian share and bond market and shift it to the US markets because they can get a better return for lesser risk compared to an emerging economy like India.

It also makes the dollar stronger, making imports more expensive for India.

Then, there was a fraud

If these macroeconomic risks weren’t enough to make the Monday morning blues worse, two of India’s biggest banks, the State Bank of India (SBI) and ICICI Bank were hit in the biggest bank fraud in the country ever. ABG Shipyard, one of the most prominent private sector shipyard companies in India, has allegedly defrauded banks of nearly ₹23,000 crore.

Bank	Exposure	Share gain/loss
ICICI Bank	₹7,089 crore	-3.58%
IDBI Bank	₹3,639 crore	-2.20%
SBI	₹2,925 crore	-3.61%
Bank of Baroda	₹1,614 crore	-3.61%
PNB	₹1,244 crore	-3.9%
Others	₹6,331 crore
Total	₹22,842 crore

The owners of ABG Shipyard allegedly siphoned some of the loans given to the company and even invested some of that money in an overseas subsidiary.

This is the biggest loan fraud in India since 2017, when similar cases came to light at the Punjab National Bank (PNB). The accused, diamond merchants Nirav Modi and Mehul Choksi, are still to be apprehended.

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SBI and ICICI Bank investors pay the price for the nearly ₹10,000 crore lost to the biggest bank fraud ever in India