Russia-Ukraine war: How markets reacted in war-like situations, recovery aftermath and likely Nifty rock bottom-Anil Singhvi explains it all

As Russia declared war on Ukraine, Zee Business Managing Editor Anil Singhvi decodes how markets have reacted when two nations have gone into war or whenever there was a war-like situation between two countries and subsequent recoveries. 

On an average in six big instances, headline US index Dow Jones have declined more than 11% in a war-like situations, while reacting rather sharply, benchmark Nifty have corrected by 16.5%, Ashish Chaturvedi, Senior research analyst at Zee Business, told Anil Singhvi.  

Interestingly, the recovery is equally strong as Dow has recovered nearly 7% in 3 months, 12% in six months and around 11.5% in 12 months. 

"In terms of recovery post war-like situation, the Nifty has given better returns as the benchmark had given 23% return in 3 months and 34% in six months. It has averaged out in 12 months and gave a return of 13.5% in one year," said Ashish.  

Summing it out, Singhvi said Indian markets fall sharply than the US markets in such situation. "Considering 16.5% fall in the Indian market, the Nifty can maximum slid to the levels of 15,500-15,600 from its top of 18,600, and it will form a rock bottom. No matter how grave the situation turns out, this level will not breach on the lower side. It is a 1000 points risk from current levels. Considering this calculation, 15,500 is the level where investors should go for aggressive buying if they have money," said Anil Singhvi.  

He also underlined out of the six such scenarios analyzed, there had been only two occasions when the Dow (American market) gave a negative return in 3 months, while the recovery has been rather strong.  

Comparing the six months scenario, Barring Pearl Harbor attack, markets have generated massive returns on other 5 instances, said Singhvi.  

In one-year time frame, we also have seen markets clocking around 20% return post war.  

One has to keep in mind that this is only an indicative and an analysis has been formed based on the average data of the similar instances in the past. This also needs to be understood that beside Russia-Ukraine war, there were other factors such as the expected interest rate hike by Fed in March, inflation and other factors were also spooking the market and determining the trend.  

(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.)