Indian stock markets today recorded losses for the fourth consecutive week. Ukraine’s worsening crisis fueled a surge in oil prices and heightened fears of inflation, leading to a decline in the market. Blue-chip NSE Nifty 50 index fell 1.53% to end at 16,245. While the S&P BSE Sensex closed at 54,333, down over 750 points for the third consecutive session.
Russia’s invasion of Ukraine continues in its second week. Ukrainian officials said today that the Russian military has captured the largest nuclear power plant in Europe.
The Sensex has lost nearly 3,000 points since Russia attacked Ukraine on February 24. Earlier also there was a stir in the market as Russia had deposited a large number of troops on the Ukrainian border. Since February 16, when the market capitalization of the stock listed on BSE was 2,62,18,594 crore. Since then, Indian markets have seen losses of around ₹15 lakh crore, which is more than Ukraine’s gross domestic product (GDP).
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According to the Statista website, Ukraine’s GDP was estimated at $181 billion in 2021.
Meanwhile, the Indian rupee has declined below the 76 level against the US Dollar. India is the world’s third largest importer of crude oil. Rising oil prices increase India’s trade and current account deficit. This hurts the rupee and increases imported inflation.
VK Vijay Kumar, Geojit Financial Services, said “The war and the crude oil boom have completely changed the economic scenario and market expectations. If the war goes on for a long time, global economic growth may get affected. Government and RBI in India Both had assumed the price of crude oil to be around $ 75. Therefore, the estimates in the budget and the Monterey policy will have to be revised realistically. Inflation for 2023 will be much higher than the RBI forecast. Thereafter the MPC will be forced to raise rates. This will impact the economic recovery.”
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Ajit Mishra of Religare Broking says that Indian markets are expected to remain tight in the short term, so caution should be exercised. “The main focus will be on news related to the Russo-Ukraine war at the end of the business week as the pressure continues in the week ahead. Apart from this, rising crude oil prices is a headache for our economy while the related sectors are already under tremendous pressure. We think this is the time to be selective. At this juncture one must look for pockets of fast return with strong fundamentals and stability in the markets.”
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