Security Analysis and Portfolio Management

Assignment – 2
Topic: Impact of Covid Pandemic and Ukraine Russia
War on Indian and Global Stock Market

Submitted by,
Akshay P Nair
FM-1990
MBA 18 A
Impact of Covid Pandemic and Ukraine Russia War on Indian and
Global Stock Market

Introduction
The ongoing conflict between Russia and Ukraine has sent global markets into a
frenzy. And just as countries and central banks were recovering from the impact
of Covid-19 pandemic, the geopolitical tensions are likely to further aggravate
inflationary pressures, and a Nomura report suggests that in Asia, India is likely to
be among the worst losers as a result of this conflict.

Brent crude climbed around 3% after surging above $105 per barrel at one point
in Thursday’s trade. The report by the research firm, authored by Aurodeep Nandi
and Sonal Varma, notes that the sustained rise in oil and food prices is likely to
have an adverse impact on Asia’s economies, manifested through higher inflation,
weaker current account and fiscal balances, and a squeeze on economic growth.

Impact of Ukraine Russia on Indian and Global Stock Market

Indian equity markets plunged around 3% as geopolitical tension escalated

after Russian president Putin announced a military operation in Ukraine early
Thursday. Following this, explosions were reported in several areas of Ukraine
and air sirens went off in Kyiv, indicating that the capital city is under attack.
Markets across Asia plunged and oil prices surged after Russian military action
in Ukraine. A massive sell-off that started in Asian markets spilled over to India
and other indices. Benchmark indices in Tokyo and South Korea fell 2% and
Hong Kong and Sydney lost more than 3%. India’s Volatility index surged past
30 per cent to a 20-month high. Oil prices also jumped to over $100 per barrel
on unease about possible disruption of Russian supplies. The conflict between
two other countries drag Indian share markets down.

Meanwhile, oil prices surged on Wednesday as supply disruptions mounted

following sanctions on Russian banks, while traders scrambled to seek
alternative oil sources in an already tight market.
Brent crude futures rose by more than $8, touching a peak of $113.02 a barrel,
the highest since June 2014, before easing to $111.53, up by $6.56 or 6.3 per
cent by 0950 GMT.

US West Texas Intermediate (WTI) crude futures also jumped more than $8 a
barrel, hitting the highest since August 2013 before losing some steam to trade
up $6.39 or 6.2 per cent to $109.80 a barrel.

The Ukraine war coincides with a high-risk moment for the Federal Reserve
and other central banks. They were caught off-guard by the surge in inflation
over the past year — the consequence, mostly, of the economy’s unexpectedly
strong recovery.

In January, US consumer prices rose 7.5 per cent from a year earlier, the
biggest such jump since 1982. In Europe, figures out Wednesday show inflation
accelerated to a record 5.8 per cent last month compared with a year earlier
for the 19 countries that use the euro currency.

Mark Zandi, chief economist at Moody’s Analytics, told AP, "Now, the fighting
and sanctions that have disrupted Russia trade with the global economy
threaten to send prices ever higher, especially for energy.

Fears of a supply disruption on oil markets as a result of the Ukraine conflict

pushed crude prices above $100 a barrel for the first time since 2014, with
Brent hitting $105. On Thursday, gas prices in the United Kingdom and the
Netherlands increased by 40 percent to 50 percent. Despite the fact that crude
and gas prices fell by 17%, markets remained nervous.
Impact of Covid-19 Pandemic on Indian and Global
Stock Market
Covid 19 came out of nowhere, and the world was unprepared to deal with
the consequences. The unprecedented COVID19 epidemic has put the world in
peril and shifted the global landscape in unanticipated ways. The coronavirus
epidemic has had a significant influence on India's economic activity as well as
the loss of human life. With a few notable exceptions, almost all industries
have been negatively impacted as domestic demand and exports have sharply
decreased, with few notable exceptions where high growth has been
witnessed. As economic activity declines, so will the industries that operate in
various areas. This will have an impact on company revenue and earnings,
causing their stock value to fall. 

Every industry's demand and supply were influenced by Covid. Revenue is

being lost. The market capitalization was decreased drastically. Ever since
COVID 19 strike, markets loom under fear as uncertainty prevails. Following
the strong correlation with the trends and indices of the global market as BSE
Sensex and Nifty 50 fell by 38 per cent. The total market cap lost a staggering
27.31% from the start of the year. The stock market has reflected the
sentiments this pandemic unleashed upon investors, foreign and domestic
alike. Companies have scaled back layoffs have multiplied and employee
compensations have been affected resulting in negligible growth in the last
couple of months.

In India, the first case of covid was recorded in January of 2020, in the first
quarter of the year.

The nifty has been influenced by Covid 19. The market was bearish at the
moment, and the country experienced the greatest lockdown in history in the
first quarter of 2020. When the lockdown was announced, most of the
functions were instantly disabled. The busy roads were turned to empty roads
with no sounds. The railway stations which were crowded with passengers was
crowded with halted trains. Air craft operators found it difficult to park their
planes. Coronavirus have dampened the growth of the GDP.