The Impact of Russia - Ukraine War on Indian Stock Markets

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It is a well-known fact that countries and their economies are well-connected in terms oftheir dependence on each other for various things like oil, trade, services, investments etc. Thus, any big geopolitical event, in any part of the world could leave its impact on the markets, in the rest of the countries as well.

As the war between Russia and Ukraine has been escalating over the past few weeks, markets across Asia have been volatile and the oil prices have surged. If the situation does not improve in the future, the market is likely to take a further hit as the oil prices will continue to remain at high prices.

Rising crude prices result in deprecating rupee thereby increasing the chances of inflation and fiscal deficit. This further signifies a downfall in GDP growth as according to estimates, a 10% rise in crude prices reduces the GDP growth by 20 basis points and increases inflation by around40 basis points while raising the current account deficit by around 30 basis points. Need source??

The most important point of contact, in regard to the war is inflation and as commodity prices have started rising, various resources like metals, gas and edible oils have become more valuable. It is pertinent to note that, Russia is a key supplier of energy globally and Europe relies on Russia for about a quarter of OTS oil supplies and one third of its gas supply (Source??). Moreover, Ukraine and Russia account for 90% of India’s sunflower oil imports and hence this news is not a good sign for the economy.

The Indian stock market has been taking a hit over the last few weeks because of the potential tightening of policy measures in regards to the Russia-Ukraine war.The shares of Tata Motors, Motherson Sumi Systems, Dr. Reddy's Laboratories etc. slumped owing to the tension between Russia and Ukraine in the past few weeks. The stock market presently has been gradually coming back to normalcy; however not much difference can be seen until now.

As reported by, “India's exports to Ukraine during April-December 2021-22 were worth $372 million. The imports stood at $1.98 billion during the same period. In 2020-21, the value of India's total trade with Ukraine was $2.59 billion with imports alone accounting for $2.14 billion. The report further read that India-Ukraine trade during April-December 2021-22 touched $2.35 billion and the bilateral trade for the whole year was expected to be close to the all-time high of $2.73 billion registered in 2018-19.

According to data reported by Economic Times, India exports goods worth $2.5 billion to Russia and nearly $1.5 billion to Commonwealth of Independent States (CIS) countries as per the industry figures. Moreover, India mainly imports mineral fuels, i.e. 34 per cent of the total imports, natural pearls and semi-precious stones (14 per cent), fertilizers (10 per cent), petroleum oils and crude (5.6 per cent) from Russia, as further reported by the publication. The prices of these items are projected to rise in the short-term, if the same situation continues in the upcoming days.


It has become quite tough to predict, what will be the bottom of the market in the present phase of such an uncertainty. The effects of slowing growth, rising inflation and weakening rupee will highly affect corporate profitability. Disruptions in supply of commodities can affect various industries like automobiles and other manufacturing sectors. On the contrary, the Indian IT industry could benefit from the shift of business from Ukraine and Eastern Europe.

In terms of investor decisions, the best course of action for most retail investors is to keep calm, buy on dips and stay invested. According to experts, the best strategy in the current situation is to not panic and hold your investments for better results in the future. One can in fact buy high quality stocks in a staggered manner to avail the benefits of the scenario.

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