Impact of Russia Ukraine War on Indian Stock Market

Why are old people like this? A power and land-hungry sick politician, on his deathbed, decided to wreck the world with a war. And it is we who have to bear the long chain of consequences, one of which is eroding more of our money every day as the war progresses.  

After more than 70 days of the war, the equity markets are down by more than seven per cent. Seven per cent may sound like a small number to you. If yes, how does more than Rs.13 lakh crore being washed out of the market sound to you now? Let me tell you that this was only in the first hour of trade after Russia declared war. Boom! This is the hole in your investments caused by the Ukraine-Russia war bombing. 

I wonder if it happens constantly. Maybe, the impact of a crisis is contagious. 

Yes, the impact of a crisis such as war is contagious, and today, we will discuss the impact of the Ukraine-Russia war on your investments. So, let’s get started.

The contagion effect

This is not the first time that an ongoing crisis in one part of the world has impacted our investments. 

Remember that this happened earlier in 2021 when our bilateral trade was affected due to the Afghanistan crisis. Of course, with the entry of the Covid19 situation pinning down our stock market in March 2020. Also, the markets had earlier plunged in 2018, when there was a trade war between the US and China. 

The moral of the crisis story is that it’s contagious, and our markets cannot remain untouched. 

The ongoing war and your returns

Those who invest in equities have witnessed their portfolio stocks moving further away from the 52-week high number. If you can relate to this fact, you realise how badly their investments are wounded due to war. 

Well, it’s not like the markets have not moved upwards on several days during the last 71 days war period. However, the sentiment has moreover been sluggish. 

Thus, the upheaval of global trade due to the ongoing Ukraine-Russia war has led to the drastic pruning of your returns.

Roti, Gaadi aur Makaan

Are you wondering what the subtitle means? It sounds like a package for a comfortable lifestyle, right? But then we discussed the impact of war, and suddenly we talked about Roti, Gaadi, aur Makaan. 

Yes, the war had impacted this entire package. Let’s understand this one by one: 

• Roti 

Your roti, the regular wheat one, isn’t spared from the impact. There’s a void filling our wheat basket because Europe’s breadbasket has been bombed. 

Ukraine and Russia contribute to more than 25 per cent of the global wheat market. Recently, Ukraine was forced to shut down its grain ports in the Black Sea. Also, imports from Russia are impacted due to bans and sanctions globally. 

Thus, your roti has become more expensive due to the rising price of wheat. 

Roti Stocks

Another impact that might be positive is the opportunity for the growth of wheat stocks. Particularly in focus are as follows:

•  ITC - have you heard of Aashirwad Aata?

• Adani Wilmar- do you remember Fortune Chakki Fresh Aata

• Hindustan Uniliver- are you familiar with Horlicks? 

These are examples of companies that are wheat exporters. Some of these stocks, like ITC and Adani Wilmar, have already moved up in the past sixty days. You can see the opportunity for growth in these stocks if the Indian wheat export picks up to fill the global wheat shortage. 

Summing up, the wheat shortage has become a threat to your roti but can also bring an opportunity to earn an extra one. 

Another aspect of your consumption is edible oil. Edible oil has also become expensive over the past few months. This has increased the cost of your overall meal. Therefore, the Ukraine - Russia war has negatively impacted the agri-business sector as a whole. 

• Gaadi

Coming to the gaadi aspect of the economy. The gaadi provides for the supply of food and is also an aspect of luxury if you own one. However, with the crude oil prices rising like fire, your pocket and investments are feeling the heat. 

The supply chain is hampered, thus raising the input cost of the manufacturing sector. This has led to unprecedented disruptions in the manufacturing of goods and tapering of industry profits. 

It’s a known fact that the rise in fuel prices can result in inflation. You might also be aware that rapidly rising inflation impacts investor sentiments and makes them move towards “safer” options like debt and gold. This is another aspect where your investment’s gaadi has moved south. 

Gaadi Stocks

The automobile sector stocks like Maruti, Mahindra & Mahindra, Tata Motors Limited, Hero Motorcorp etc., have plunged considerably after the declaration of war. 

Therefore, driving your gaadi has become expensive, whereas the ownership of your gaadi stocks has become cheap. Either way, your pocket has suffered a loss due to shelling. 

• Makaan

Now that we have discussed the two very essential aspects of our living, roti and gaadi, here comes Makaan. 

Having a Makaan is a dream everyone has but can be challenging to fulfil. But then, how can makaan be related to your investments?

Let us think of Makaan in two ways 

1.  The real-estate stocks 

2. The interest on the loan to buy a Makaan

Where the first aspect is concerned, the prices of construction and real estate related stocks have plunged. But why? The answer is associated with Gaadi. 

Makaan Stocks

Because there is a rise in crude oil prices, the prices of construction raw materials are increased. Notable among these raw materials are cement. The prices of cement stocks such as Ambuja Cement, ACC Cement, Ultra Tech Cement, J K Cement, etc. have witnessed a plunge earlier in March 2022 and another recent fall that might be due to the RBI policy to curb inflation. This brings us to the second aspect related to Makaan, which is the interest on a loan to buy it. 

The recent rise in repo rate by 40 basis points (bps) might lead to a slowdown in the growth of the residential real estate market. This is the first time since the pandemic that there has been an increase. Though this was a drastic move by the RBI to control inflation, it can be a bomb that can hurt your house buying dreams. 

Notable plunges were witnessed in real estate sector stocks post the announcement.  

Summing it up

Thus, as the war between Ukraine and Russia continues, your investments can also witness the shelling. Rising fuel prices have left no sector unaffected, and sentiment of uncertainty has made the stock market turn south. This can be a challenging position for any investor that might continue until the war does. 

Those planning to book profits might have to wait long enough for the green signal. Moreover, the rise in prices of basic household necessities might force you to look for short-term market gains. Thus, your investments might have to bear the brunt of falling markets and rising daily expenses. Together, the Ukraine-Russia war has indeed bombed your investments with all of these factors.