The Nifty last week ended down 0.8%, underperforming most Asian markets. The index ended down 231.1 points, or 1.3%, at 17,374.75 on Friday; while the Sensex ended down 773.11 points, or 1.3%, at 58,152.92.
US stocks ended sharply down on Friday on worries that Russia may soon invade Ukraine, which sent oil prices higher and prompted investors to move to safe haven assets.
The main US indices S&P 500, Nasdaq Composite and Dow Jones Industrial Average ended down 1.4-2.8% on Friday.
“Geopolitical tensions, 40-year high US inflation, sharp cut on US 10-year yields, VIX up 14% all add up to a volatile cocktail for the equity markets in the coming week,” said Rahul Sharma, director & head- technical derivatives research at JM Financial Services.
Recent news reports have suggested the US expects Moscow to invade Ukraine within days. US President Joe Biden has warned that Russia faces ‘swift and severe costs’ if it carries out an invasion, according to reports. A further escalation in Ukraine-Russia tensions does not bode well for oil prices and for India as oil is a key part of the country’s import bill.
Foreign investors have been paring holdings in India as a result of these global concerns.
“Indian equities have seen about $11 billion FII selling since October. About 80% of the outflows have been from banks and infotech,” said Goldman Sachs in a note on Friday. “The outflows have been offset by stronger DII buying ($12bn), but current valuation at 22 times remains above prior troughs,” said Goldman Sachs.
Investors will also watch the last leg of earnings season. Adani Enterprises, Coal India, Eicher Motors, Ambuja Cements and Nestle India, among others, will announce earnings for the quarter ended December this week.
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