Friday 1 July 2022
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Indian investors have lost in 3 weeks wealth more than Ukrainian GDP

Indian markets have seen a wealth erosion of about Rs 15 lakh crore since 16 February when the market capitalisation of stock listed on BSE was at 2,62,18,594 crore

Indian stock markets logged their their fourth consecutive week of losses today, as a worsening Ukraine crisis sent oil prices surging and stoked inflation fears. The blue-chip NSE Nifty 50 index fell 1.53% to settle at 16,245 while S&P BSE Sensex slumped over 750 points to 54,333, in their third consecutive session of losses.

As Russia’s invasion of Ukraine has entered its second week, Ukraine authorities today said Russian forces seized the largest nuclear power plant in Europe after a building at the complex was set ablaze during intense fighting.

Ever since Russia invaded Ukraine on 24 February, Sensex has lost nearly 3,000 points. Markets were jittery even before that as Russia had amassed a large number of troops along Ukraine border. Since February 16th, when the market capitalisation of stock listed on BSE was at 2,62,18,594 crore, Indian markets have seen a wealth erosion of about Rs 15 lakh crore, which is more than the GDP of Ukraine.

Ukraine’s GDP was estimated at $ 181 billion in 2021, according to Statista website.

Meanwhile, the Indian rupee has depreciated past 76 levels against US dollar. India is the world’s third-largest importer of crude oil, and rising prices push up its trade and while hurting the rupee and fuelling imported inflation.

“The war and surge in crude has completely transformed the economic scenario and market expectations. If the war prolongs global economic growth may be impacted. In India, both the government and RBI had assumed crude price of around $ 75 and, therefore, projections in the budget and monetary policy have to be revised materially. Even if crude price declines and stays around $ 100, inflation for FY23 will be much higher than RBI’s forecast. will be forced to raise rates and this will impact the economic recovery underway,” said VK Vijayakumar, Chief Strategist at Geojit Financial Services.

Ajit Mishra, VP – Research, Religare Broking Ltd, says Indian markets are expected to remain tricky in the short term so caution is warranted. “Over the weekend, the main focus will be on news related to the Russia-Ukraine war as further escalation would result in continued pressure in the coming week. Moreover, rising crude oil is a headache for our economy and related sectors are already under tremendous pressure. We feel it’s time to remain selective and look for pockets that are fundamentally sound and likely to rebound quickly with stability in markets,” he said.

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