The financial year 2021-22 has been full of ups and downs, higher highs and lower lows, giving investors a taste of both the bull run as well as bearishness, accompanied by extreme volatility.
The liberal monetary policy, low interest rates and unprecedented retail participation flooded the markets with liquidity, which resulted in the strong bull run getting extended to more than 18 months.
The benchmark Indian stock indices hit their historical highs on October 19, 2021 – that’s when the markets changed direction and started declining. The hawkish stance of the US Federal Reserve on impending interest rate hikes, rising US Treasury yields, the increase in crude oil prices as economies opened up and demand climbed, and the impact of the Omicron variant of the Covid-19 virus were some of the factors that made wary investors start booking profit.
Just when things seemed to settle down and the markets tried to price in higher US interest rates, the flare up between Russia and Ukraine spoiled sentiment. When Russia invaded Ukraine on February 24, the markets witnessed their biggest intra-day decline in 2022. Billions of dollars of investor wealth across global markets were washed away in a single day.