Russian Products | Indian Equity Market: Sanctions on Russian products would have high negative bearings on global and Indian equities: Mitul Shah

The Sensex fell by about 2 per cent, while the Nifty lost 1.7 per cent for the week ended April 23. The Nifty Mid-Cap declined by 1.6 per cent, while small cap lost 1.9 per cent in the same period.

As per IMD, India is likely to witness a normal rainfall during the Southwest monsoon season this year. On the macro front, India’s WPI stood at 14.55 per cent in Mar’22, compared with 7.9 per cent on a YoY basis.

IMF has cut its FY23 growth forecast for India by 80bps to 8.2 per cent warning that Russia’s invasion of Ukraine would hurt consumption and hence growth, by way of higher prices.

The IPO market is back in focus to some extent, with IPOs set to open for subscription next week, and LIC may also follow suit.

Macro Picture

On the macro front, IIP for Mar’22 remained muted. Globally, the US, Eurozone, and South Korea will release the economic growth data for the Mar’22 quarter, while the Bank of Japan will meet to decide on interest rates.

While Mar’22 quarter may reflect the impact of the Russia-Ukraine war, the economic, consumer and industrial sentiments are feared to be taking a hit, particularly in Europe.

In China, Covid-related restrictions are presumed to have hit the manufacturing activity.

What To Watch

The Indian equity market is likely to remain volatile next week as traders roll over positions in the F&O segment from the near-month April series to the May series.

April 2022 F&O contracts will expire on 28 April 2022. The next batch of 4Q results and management commentary would be the key events that the market would be looking for in near future.

The cues from global markets, movement of the Indian rupee, and crude oil prices will dictate the near-term trend.

The Indian economy is in a good shape, given the underlying stellar corporate earnings momentum, cleansed balance sheets, improving asset quality of banks, levers in place for a capex cycle revival and credit offtake, and probable manufacturing resurgence due to the PLI scheme and other government reforms.

Over the near-term, war issues and sanctions on Russian products would have high negative bearings on global and Indian equities., which needs to be monitored closely in the coming weeks.

(The author is Head of Research at Reliance Securities)


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