Post Market views - March 4, 2022 - Reliance Securities

Mr Mitul Shah, Head Of Research at Reliance Securities.

Domestic equity markets closed lower as the geopolitical scenario continues to worsens due to the Russia-Ukraine crisis. Soaring crude prices due to supply disruptions from Russian sanctions have further escalated the situation. Nifty decreased by 1.5%. Nifty MidCap and Nifty SmallCap was down by 2.1% and 1.8% respectively. Most sectoral indices ended in red except Nifty IT (+0.1%). Nifty Auto decreased the most at 3.6% followed by Nifty Media (-2.9%) and Nifty Fin Service (-2.9%).

Volatility in US equities continues as Russian invasion of Ukraine entered its second week. Investors remain wary and attempt to gauge how international sanctions could penalise Putin's regime. The Dow Jones fell 0.3%. The Nasdaq was down more than 1.6% while the S&P 500 lost 0.5%. The yield on the 10-year Treasury note traded down slightly to 1.84% after rebounding from 1.72%. Moreover, President Biden's administration stated that it would sanction eight wealthy Russians and their families. The US and its allies continue to pressurise the elites around the Russian President in response to the ongoing crisis.

The European Union wants to cut all links between Russia and the global financial system. The madness seen last week may have subsided, but the participants are still having anxiety attacks over the Ukraine issue. The average downside in Indian market is 16-17% in past few wars, while recovery was 23% in 3 months and 34% in 6 months. Now in Russia-Ukrain War, NIFTY is down 11% from its peak of ~18,600. Even if we assume market recover by 20% by end of December 2022, we will get our year-end target of 20,000 on Nifty, which is based on 22x FY24 earnings.

Source : Equity Bulls

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