Moneycontrol Pro Panorama | Rallying point for Ukraine, but market churn is on

A Ukrainian policeman walks on a platform backdropped by people waiting for a Kyiv bound train in Kostiantynivka, the Donetsk region, eastern Ukraine. (Image: AP)

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The Panorama newsletter is sent to Moneycontrol Pro subscribers on market days. It offers easy access to stories published on Moneycontrol Pro and gives a little extra by setting out a context or an event or trend that investors should keep track of.

A new week has started but investor attention continues to, rightfully so, be dominated by the consequences of Vladimir Putin’s invasion of Ukraine. Both countries are planning to hold talks this week, say reports, although there are no official statements on it. A ceasefire would bring much relief, opening a window for negotiations between the two countries and avoiding further loss of life.

Ukraine has dug its heels in and is battling Russian forces. Meanwhile, the US and its allies are rallying around Ukraine, providing more support, with additional sanctions hitting Russian entities, airspace access being denied to Russian airlines in the EU, removing some banks from the SWIFT system and even taking measures to prevent the Russian central bank from using its international reserves. The rouble plunged sharply after the sanctions on the central bank. The West is using its persuasive skills on companies and financial institutions, too. Norway’s sovereign fund will dump investments in Russian oil companies, BP will exit from its investments in Rosneft and this list will keep growing longer.

While Russia may have thought it was on the front foot after it invaded Ukraine, the collective support for Ukraine is now increasing its isolation. While many believed China may use this opportunity to openly support Russia, instead it has maintained what one could call a neutral stance. In today’s Eastern Window, we take a close look at what’s behind China’s pragmatic approach.

Instead, it appears to have united Russia’s foes. As Manas Chakrvarty writes in ‘Could Ukraine be Putin’s Afghanistan?’, the cracks that had emerged among the different countries forming the NATO may have been filled by Russia’s misadventure. He says that Russia’s military might may mean it will win the war, but the US may have a longer game plan here. What’s that? Do read.

The pressure on currencies and commodities is likely to continue, as market participants evaluate the effects of the war. The spike in oil prices is going to increase the pain for India’s consumption economy, as we point out in this analysis, and here’s another one on its effect on fiscal management and India’s defence acquisitions. Lastly, our research team took a magnifying glass to analyse Indo-Russian trade, to assess the war’s impact on key items of trade between the two countries. Do read.

The coming weeks and maybe even months could see the war wind its way to a conclusion. But its aftereffects will be with us for longer. For the investor, in the long run, these events cease to matter from a portfolio standpoint. Eventually, the focus will return to fundamentals, the pre-pandemic frailty in India’s economy that continues to this date, and which sectors and companies manage to show good growth despite these adverse circumstances.

The advice for long-term investors continues as usual, evaluate your asset allocation and ensure your portfolio is in accordance with it. You may want to read Ruchir Sharma’s view on how ‘oil may be the new data’ or how commodities may be the hot trade of the 2020s in this piece from the Financial Times (free to read for Moneycontrol Pro subscribers).

Investing insights from our research team

Devyani International: On track for faster earnings growth

Sumitomo, Dhanuka and Rallis: Bets to look at in the domestic agrochemical space

 What else are we reading?

NSE scam calls for regulatory introspection

Cummins India’s growth may stutter as new emission norms unfold

Russia-Ukraine crisis further complicates matters for RBI, its MPC

Technical Picks: Vedanta, NTPC, Hindustan Unilever and Tata Power (These are published every trading day before markets open and can be read on the app)
Ravi Ananthanarayanan
Moneycontrol Pro