Dalal Street Corner: Investors poorer by Rs 13 lakh cr as market cracks 5% on Russia-Ukraine crisis; What should investors do on Friday?

Taking the world by surprise, Russia attacked Ukraine in early hours on Thursday throwing stock markets across the globe out of gear. The impact was such that the benchmarks corrected 5% as the war sucked out Rs 13 lakh crore from the BSE-listed companies.  

Against Rs 2,55,68,848.42 m-cap of BSE-listed companies on Wednesday, the investors got poorer by more than Rs13 lakh crore as BSE companies market capitalization shrunk to Rs 2,42,28,137.96 crore on Thursday. 

Nifty slipped below 16,300, while the Sensex tanked 2700 points as all broader market and sectoral indices slipped deep in the red, as market extended its losing street to close in the red for the seventh consecutive day. 

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Among the sectors, PSU Bank (8.26%), Realty (7.17%), Media (6.95%), Auto (6.26%) and Private Bank (5.98) took the maximum beatings on Thursday. Besides, all stocks on the benchmarks too ended in the red as bears tightening the grip on D-street. 

Tata Motors declined the most by 10.78%, IndusInd Bank (8.45%), UPL (8.28%), Grasim (7.83%) and JSW Steel (7.25%) were other top losers on the Nifty50.  

Meanwhile, Oil prices broke above $100 a barrel for the first time since 2014 and gold prices jumped more than 2% on Thursday to their highest in over a year amid the ongoing war between the two European nations.  

As market carnages left investors panicked and looking for answers in the current market scenario, we spoke to stock market experts and sought their view on the ongoing trend and how the markets are expected to pan out in the near-to-long term. Here is what they have to say.... 

Shivam Bajaj, Founder & CEO at Avener Capital 

Prolonged Geo-political tensions between Russia - Ukraine could lead to further inflationary pressure, compelling policy makers globally to accelerate raising interest rates at the cost of economic growth. From an Indian economy standpoint, the economic impact is likely to be more short term in nature as its economy will continue to be driven by its long-term fundamental growth prospects. In 2020, India imported only $7.3 billion of all products from Russia (less than 2% of India’s total imports) and exported $3.9 billion of all products from Russia (less than 2% of India’s total exports). 

Santosh Meena, Head of Research, Swastika Investmart Ltd.
There was mayhem in the equity market after Russia announced military action against Ukraine where the market witnessed the worst day since March 2020. Nifty has surrendered its 200-DMA that bulls were trying to protect therefore the overall structure has turned bearish however 16000 will be an immediate and critical support level where we can expect a bounce, while confidence will be back only if Nifty comes above the 17000 mark. The Russia-Ukraine crisis led to a sharp jump in crude oil and other commodity prices is a major headwind for equity markets because the world is already struggling with multiyear inflation.  

We are in a structural bull market like 2003-2007 and there were 3 corrections of more than 30% in the last bull run. We are seeing the first meaningful correction in the market and long-term investors should not panic by this correction because it is just taking out weak hands before resuming its upmove.  This correction will provide a good buying opportunity where major wealth can be created in the next 3-5 years.

Vineet Bagri, Managing Partner- TrustPlutus Wealth  

Given the surge in VIX this week due to the current geopolitical uncertainty, the decline in our market is not surprising. On the other hand, the strength in gold and crude are a natural fallout of this uncertainty. It has now been 4 months since the markets peaked out and we are down ~10% on the benchmark. Importantly, we must remind ourselves that this decline is not due to any India centric issue. Thus, we would not be too concerned regarding this ongoing correction and would view it as a healthy break from the rally we have witnessed over the past two years.  

Vijay Chandok - MD & CEO, ICICI Securities   

While the escalated war situation between Russia/Ukraine has led to sharp cut in key equities across the globe, we believe crude trajectory will the key to watch out for going ahead. We don’t expect major sanctions which may drive big spike in crude, equally harming Europe and US, or even in terms of aggressive rate hike leading to slower economic growth. We, thus, believe that market stabilization is likely in the short term. Nonetheless, medium to long term thesis on Indian equities remain intact amid economic recovery as reflected by key macroeconomic indicators, strong capex spends and robust corporate earnings (Nifty earnings growth likely at 21.5 % CAGR over FY21-24). We continue to see this correction as an opportunity for the investors to add on the companies with sustainable growth visibility. 

S Ranganathan, Head of Research at LKP securities  

With Brent crude breaching the $100 mark for the first time in 7 years post the Russian military operation in Ukraine, both the benchmark Indices wilted with a 5% cut as the volatility index rose 30% today with all sectoral indices ending deeply in the red wiping out over Rs 10lac crores of investor wealth.   A peep into the Advance-Decline ratio said it all as the carnage together with the volatility witnessed today was painful for both investors and traders. 

Vinod Nair, Head of Research at Geojit Financial Services 

It was a big surprise for the world market as it was not anticipating a war. It was expecting a diplomatic meet between Biden & Putin. Markets around the globe plunged deep in red as the Ukraine crisis intensified with Russia’s invasion into Eastern Ukraine. Crude oil prices crossed $100 per barrel and elevated inflation risk. 

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)