It’s a War Time… Russia attacked Ukraine and the entire world markets went for a toss. Dollar, Oil, Gold, all shoot-up, and the world markets crashed. Nifty is now trading around 16500, 2100 points lower from its all-time peak. Nifty has corrected 11%, Large Cap Index 11%, Mid Cap Index 15% & Small Cap Index 15%. Nifty PE is trading at around 21.35, from a high of 41 in March 2021, indicating a hefty correction valuation wise.
Key Events in March 2022:
- Duration of Russia-Ukraine War; longer the period, longer it will take to recover.
- High Crude Oil prices to fuel inflation; negative for markets, as RBI will be forced to hike rates.
- Any Setback for ruling party (BJP) in UP elections; will further open downside for markets.
- Fed Policy meet on 15th March; any rate hikes will be negative for markets.
- LIC IPO is due this month; if postponed, will be a big relief for the market, as liquidity will not be squeezed by this IPO.
Historically, markets shoot-up on an average 25% whenever such war-type event ends. Only negative for India from this war is the high crude oil prices, whereas on the positive side this is a golden opportunity for India to take over China in manufacturing and other sectors as FIIs will be hesitant to park any money in China as it is threatening the world over Taiwan. India is the safest country in Asia or Emerging markets to park money at present.
The growing retail participation in Indian markets has also not allowed markets to fall heavily despite FIIs being consistent sellers.
Therefore, start accumulating on any dips, as markets will not remain lower for long and will pull back as soon as this crisis ends. We expect max another 1000 points correction in Nifty from here, i.e., 15500. There is a good buying opportunity below 16K levels. One can look at moving debt allocation to equity, the moment Nifty breaches 16K levels. Also, one can look at equity participation on fresh funds, on a minimum one-year investment horizon as well.
Speak to your Advisor for details & guidance.