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Because of the Ukraine-Russia situation, which has resulted in equities crashing and crude oil skyrocketing, equity markets are witnessing a massacre, with nine out of 10 stocks bleeding red and investors losing Rs. ten lakh crores in market value.
Domestic indices began the week in the red as rising oil prices drove investors to sell riskier assets due to growing tensions between Russia and Ukraine.
The impact of the Ukrainian-Russian conflict on the Indian stock market
- The Ukraine-Russia Conflict
- The Indian Stock Market's Impact
- What are the options for investors?
The Ukraine-Russia Conflict
Russian President Vladimir Putin ordered troops into two breakaway regions of eastern Ukraine, Donetsk and Luhansk, on Monday night, prompting condemnation from the United States, the United Kingdom, and other countries.
After Russian forces invaded Ukraine on Tuesday, the US administration announced harsh penalties on Russian banks, sovereign debt, and elites.
The Indian Stock Market's Impact
Stock markets are sensitive to such developments and respond swiftly to them since the countries are economically, socially, and politically interdependent, which is why a geopolitical risk has influenced
Indian stock market as well.
The Sensex, which was near its all-time high in January at approximately 61,000, is barely scraping 55,400 on the Indian stock market. The rupee also dropped 0.65% to $75.04 per US dollar. In response to increased crude prices, investor mood has taken a hit in recent days.
High oil prices, an equities sell-off, and FIIs and DIIs fleeing to safe-haven assets like gold and bonds would be the effects of this war. Investors in the stock market Concerns about the continued schism and rising tensions between the two countries have been expressed.
What are the options for investors?
With the Indian markets moving in lockstep with their global counterparts and under pressure as a result of the ongoing Ukraine-Russia tensions, it's best to avoid new longs and stick to a stock-by-stock strategy.
Short-term investors should consider taking profits in high beta sectors such as Adani Ports and Sez, Adani Power, Apollo Tyres, BHEL, BPCL, IndiaBulls Housing Finance, Tata Power, State Bank of India, and many others before accumulating or adding new companies to their portfolio.
It's also crucial to have the correct mix of defensive equities in your portfolio, as interest rate hikes could exacerbate volatility in the near future.