Moneycontrol Pro Panorama | Ukraine war @1: Markets remain turbulent, India in a better position

The war has laid waste to the Ukrainian economy while Russia stares at a bleak future. But some of the effects are already dissipating.

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The longest armed conflict in Europe since World War II drags on. Exactly a year ago, as Russian tanks crossed into Ukraine, this is what we wrote in the day’s Panorama:

At this point, there is no end in sight to the Russia-Ukraine crisis... The US will announce more stringent sanctions and its allies will follow suit.

Oil price crossed the US$103 per barrel mark – the highest since August 2014… The fear is that apart from infrastructure losses due to war, sanctions imposed by the West on Russia are bound to cause unforeseen disruptions in global oil and gas supplies.

While markets may remain turbulent in the near term, once the situation normalises, India's relative strengths will come to the fore and lift equity markets.

One year later, the world continues to remain on edge, as this column points out.

Russian President Vladimir Putin is increasingly isolated, this FT Big Read (free for Pro subscribers) argues. He has tried to up the ante by suspending Russia’s participation in the new Strategic Arms Reduction Treaty (START) — the nuclear arms control pact, raising the spectre of whether this war can turn into a nuclear conflict.

Nonetheless, strategic experts see the stalemate continuing.

“No one has a clear definition of victory or end goals. The Western bloc is enthusiastically pursuing sanctions against Russia for the moment, but countries like India have wisely chosen to prioritise their own economic needs,” writes former ambassador PS Raghavan.

We have a series of interviews with strategic experts. You can read them here and here.

The war has laid waste to the Ukrainian economy while Russia stares at a bleak future. But some of the effects are already dissipating.

Crude oil prices, for example, are around $80 a barrel now. Russia has become the largest supplier of oil to India. This is not a temporary trend, but a structural change and will persist even if the Ukraine conflict subsides in the near future, this piece argues.

Similarly, global supply chains of other commodities that had been disrupted by the war are coming back on track. Inflation is coming under control, although not at the pace desired by central bankers worldwide.

What about the markets?

Concerns do remain, but investors seem to have shrugged off most of them. At the time of writing, the Nifty 50 is trading at 17520 compared to a close of 16248 on February 24, 2022. This is the story of global stock markets as well.

As my colleague Abhishek Mukherjee points out quoting a study by LPL Research, the Dow Jones Industrial Average slipped by an average of only 2 percent during 16 major conflagrations, including the Gulf War, the Iraq War, and 9/11. Further, most brokerages see the war as a problem only for global food and energy security, and not for determining the stock market’s trajectory.

“If history is anything to go by, it is Powell, not Putin, who will decide the fate of the market faithful,” he writes in this piece.

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Technical Picks: Hindalco, Indian Hotels, Infosys, Delhivery and Natural gas (These are published every trading day before markets open and can be read on the app)

Ravi Krishnan
Moneycontrol Pro