NEW DELHI: With Russia showing no signs of putting an end to its invasion of Ukraine, bearish sentiment is expected to rule stock markets worldwide in the foreseeable future. This invasion has led to a sharp increase in crude oil prices.
India being a major importer is expected to face inflationary pressure, a big negative for its equity market which till recently saw such a strong bull run.
“The Russia-Ukraine conflict, fresh sanctions on Russia by global powers, and reports of the Russian attack on Europe’s biggest nuclear plant in Ukraine added more tension on global investors. Rising oil prices along with uncertainties of supply chain disruption have instilled fears of inflation crossing RBI’s tolerance level,” said Vinod Nair, Head of Research at Geojit Financial Services.
Add to it, Q3FY22 GDP numbers were below market expectation as it reported a gentle growth of 5.4% while NSO (National Statistical Office) down revised FY22 growth from 9.2% to 8.9%.
In the coming week, in addition to geopolitical tensions, the domestic market will look at state election exit poll data and the global market on Bank of England and Fed policy statements.
“Based on current consensus, state elections outcome is unlikely to be a crucial factor but rather a short-term positive & negative reaction, accordingly. Due to war uncertainties, central banks may balance their hawkish policy against expected earlier due to high inflation. It can provide leeway to the market in the short term,” said Nair.
The market also awaits the release of February inflation data which is expected to remain high at 6.1% compared to 6.01% during January. Dragged by the geopolitical tension, benchmark indexes BSE Sensex and NSE Nifty logged its fourth consecutive week of losses.
On Friday, Sensex fell to a low of 53,887.72 and recovered slightly to close the week at 54,333.81, down 2.73%. Nifty, on the other hand, fell to a low of 16,133.8 before closing at 16,245.35, down 2.48%. During the week, the two Indexes fell below their 200-Day Moving Average (DMA).
What stock markets await?
In the coming week, in addition to geopolitical tensions, the domestic market will look at state election exit poll data and the global market on Bank of England and Fed policy statements. It also awaits the release of February inflation data which is expected to remain high at 6.1% compared to 6.01% during January.