Indian stock markets are witnessing huge volatility right now. Investors are engaged in assessing the Russia-Ukraine crisis and its negative impact on the global economy. This rising geopolitical tension has pushed the equity market into the red. The benchmark index Nifty-50 has lost 4.72 per cent so far this year.
In the medium term, geopolitical events and economic factors such as inflation, US Fed’s decision on interest rates and the outcome of assembly elections in a large state like UP can cause volatility and impact market performance. However, analysts at brokerage firm Axis Securities believe the equity market outlook is positive for the long term. The brokerage has maintained the target of reaching 20,200 for Nifty-50 by the end of this year.
immediate concerns
According to analysts at Axis Securities, the biggest concern at the moment is about crude oil prices. Prolonged continuation of geopolitical uncertainty could push oil prices higher. This can make the inflation problem worse. Last week, oil prices crossed $100 a barrel. Meanwhile, if strict sanctions are imposed on Russia by the US and other Western countries, it will make it difficult for Russia to export oil to global markets, which will further push up crude oil prices.
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The brokerage said in a note, “India imports most of its crude oil requirement from abroad. A rise in prices will pose challenges for India to maintain trade deficit and foreign exchange reserves. Also, inflation may increase. which was earlier expected to reduce in the second half of 2022. The brokerage said that due to increase in crude tej prices, margins of Indian companies will come down and which may have an impact on their profits.
Positive outlook for the long term
Axis Securities has maintained a target for Nifty to reach the level of 20,200 by the end of this year. The brokerage believes that the long-term outlook for the equity market is still positive. The brokerage said an increase in capital expenditure will help banks improve credit growth. The brokerage also said that investors have an opportunity to buy good quality stocks in the market at a reasonable price at this time.
Popular Top Stock Picks of Axis Securities
Largecap: Tata Consultancy Services (TCS), Vedanta, Coal India, SAIL and State Bank of India (SBI)
Midcap: Oil India, Canara Bank, Dalmia Bharat, Persistent, Chola Investment & Finance
Smallcap: Finolex Industries, Birla Soft, Chambal Fertilizer, Redington India, Gujarat Narmada Valley Fertilizer
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