Moneycontrol Pro Panorama | Panic-stricken market runs for cover on nuke fears

Russia-Ukraine war

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Ukraine has alleged that it was Russian attacks which started the fire at the Zaporizhzhia nuclear power plant, the largest in Europe.

The FT reported Rafael Mariano Grossi, the head of the International Atomic Energy Agency, as saying that he was “deeply concerned” about the situation and called on all sides “to refrain from actions that can put (nuclear plants) in danger”. For now, there seems to be no change in the radiation levels at the reactor, the agency said citing Ukrainian regulators.

The incident spooked Asian markets which dived to a 16-month low. At the time of writing, Japan and Hong Kong had shed close to 2.5 percent each. The Sensex had recouped some losses, but was still 1 percent down.

By now, it is clear that Ukraine is putting up more of a fight than Russia had imagined. However, reports yesterday indicated that Vladimir Putin will continue this war for some time to come. In a phone call with French President Emmanuel Macron, Putin is reported to have said that he was prepared to “go all the way.”

The war in Ukraine also poses a big threat to the global financial system. While not quite a Lehman moment, the impact of the sanctions will be felt across the world and there is no room for complacency, argues this FT piece. (Free to read for Pro subscribers).

Meanwhile, after hitting $118 a barrel, Brent crude has settled around $112 today on rumours that a nuclear agreement with Iran will soon be reached. A pact could hasten the lifting of sanctions on Iran, which could then add up to one million barrels a day of oil output, about one percent of global supply. Russia accounts for 4-5 percent of global oil output.

High oil prices (and those of other industrial commodities) still remain a huge threat for an importer like India. It will feed into inflation, worsen the current account deficit and accelerate the rupee’s depreciation.

“To contain inflation, retain foreign investments, arrest the depreciation of rupee, and protect India’s BOP position, the RBI needs to adopt a tighter stance and raise policy rates. The next MPC meet is in April and if this imminent pivot in approach unfolds then, it will not be a moment too soon,” argues our columnist Ananya Roy. Read more.

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Technical Picks: Nifty, Aditya Birla Fashion, ICICI Bank and SCI  (These are published every trading day before markets open and can be read on the app)
Ravi Krishnan
Moneycontrol Pro