With nine out of every ten stocks bleeding in the red and investors losing Rs. Ten lakh crores in market value, Equity markets are witnessing a bloodbath because of the Ukraine-Russia crisis resulting in stocks stumbling and crude oil surging.
Domestic indices started the week plunging deep in the red as increased tension between Russia and Ukraine sent oil prices rising and forced investors to dumpy risky assets.
Ukraine-Russia Crisis
On Monday night, Russian President Vladimir Putin ordered troops into two breakaway regions of eastern Ukraine, the territories of Donetsk and Luhansk, resulting in the United States of America, the United Kingdom and the other countries condemning the move.
On Tuesday, The U.S. government imposed tough sanctions on Russian banks, sovereign debt and elites after the invasion of Russian troops in Ukraine.
Impact on the Indian Stock Market
Since the countries are interdependent economically, socially and politically, stock markets are sensitive to such developments and react sharply to them, which is why a geopolitical risk has impacted India's stock markets too.
In the Indian Stock Market, the Sensex, which was near its all time high in January at around 61,000 level, is now scraping 55,400. The rupee also fell by 0.65 per cent to hit to 75.04 to USD. Investors sentiment has taken a beating over the last few days in line with rising crude prices.
The consequences of this war would result in high oil-prices, an equity sell-off, and FIIs and DIIs flocking to safe haven assets like gold and bonds.
The investors in the market have been concerned about the ongoing rift and the increased tensions between the two countries.
With the Indian markets moving in tandem with their global peers and being under pressure owing to the persistent Ukraine-Russia tensions, it is advisable to avoid fresh longs and maintain a stock specific approach.
Short term investors can consider booking profits in high beta sectors like Adani Ports and Sez, Adani Power, Apollo Tyres, BHEL, BPCL, IndiaBulls Housin. Financ., Tata Power, State Bank of India & many such stocks and should wait for further correction before accumulating or adding fresh stocks to their portfolio.
It is also significant to have the right proportion of defensive stocks in the portfolio as volatility might increase with revision in interest rates in the near term.
With the current situation of the Ukraine-Russia crisis, the Indian Stock Market is expected to continue its volatile trend in the coming days.
In such a volatile market, a prudent approach is to have a balanced portfolio with fundamentally strong prospects and sound financials going forward.
