Why did India lose more wealth in the Russia-Ukraine conflict than Ukraine’s GDP?
Nowadays, Indian stock markets lost for the fourth week in a row, as the Ukraine conflict worsened sending oil prices soaring and stoking inflation fears. In their third straight day of losses, the blue-chip NSE Nifty 50 index lost 1.53 percent to 16,245 and the S&P BSE Sensex fell almost 750 points to 54,333.
Investor wealth was wiped out by Russian strikes on Europe’s largest nuclear plant in Ukraine on Friday, with geopolitical tensions eroding about Rs 15 lakh crore ($197 billion) in fortune since Russia announced a partial withdrawal of its troops from the Ukrainian border on February 15, only to launch a full-scale invasion later. As the invasion of Russia on Ukraine enters its second week, Ukraine officials announced today that Russian soldiers had taken control of Europe’s largest nuclear power plant after a building at the facility was set ablaze during severe combat.
Russia launched a large-scale military invasion of Ukraine, on February 24, 2022, signaling a dramatic escalation of a conflict that began in 2014. This invasion was dubbed the largest conventional military strike on Europe since World War II by several officials and commentators. On March 5, 2022, Russia declared a ceasefire to allow humanitarian corridors to be opened for the evacuation of civilians, which began at 6 a.m. GMT.
Only a few Wall Street analysts predicted the events that unfolded after February 15th. Since then, Sensex has dropped about 4,000 points, resulting in a $197 billion loss for investors. The wealth degradation on Dalal Street was greater than the IMF’s forecast of $181.03 billion for Ukraine’s GDP in 2021. Oil prices, on the other hand, have been hovering around $120 per barrel.
According to the Statista website, Ukraine’s GDP in 2021 is expected to be $181 billion. Meanwhile, the Indian rupee has fallen below 76 versus the US dollar. India is the world’s third-largest crude oil importer, and rising prices exacerbate the country’s trade and current account deficits, weakening the rupee and fuelling imported inflation.
The top losers in the Sensex pack were Titan, Maruti, Asian Paints, M&M, HUL, and Bajaj Finance, which fell as much as 5.05 percent. Dr. Reddy’s, ITC, Tech Mahindra, and Ultra Cemco were the biggest gainers, with gains of up to 2.96 percent.
Both indices had fallen more than 2% earlier in the day, reaching their lowest levels since early August last year, in their third straight session of losses.
Oil climbed beyond $111 a barrel in a tumultuous session on Friday, owing to concerns about supply disruptions due to Western restrictions on Russian oil exports.
Since February 14, the BSE Sensex has lost a total of 3,669 points. Despite the fact that markets remained in the green for two sessions in between, the market mood has remained low on most days.
Except for February 25, when the Sensex gained 1,329 points as markets staged a rally, markets had been losing since February 16.
Following the Dignity Revolution in Ukraine in 2014, Russia invaded Crimea, and Russian-backed separatist troops seized part of the Donbas in south-eastern Ukraine, sparking an eight-year conflict in the region. A Russian military build-up began in early 2021 near the Russian–Ukraine border. The US and others accused Russia of plotting an invasion of Ukraine, and Russian officials denied the accusations as late as February 20, 2022. During the crisis, Russian President Vladimir Putin claimed that NATO’s growth beyond 1997 was a threat to his country’s security, a position that NATO refuted, and he requested that Ukraine be blocked from joining NATO indefinitely. Putin espoused irredentist Russian views and questioned Ukraine’s claim to independence.
On February 21, Russian President Vladimir Putin recognized Luhansk and Donetsk as separate entities and authorized Russian forces to function as “peacekeepers” in the region. Ukraine proclaimed a state-wide state of emergency on February 23, and Russia declared war on Ukraine the next day. Sanctions on Russia continued to mount, and oil prices skyrocketed.
Unmarked Russian military trucks crossed the border into the Donetsk region in August 2014. Although Russia denied its troops were present in the Donbas, an unofficial conflict broke out between Ukrainian forces and separatists intermingled with Russian troops. With multiple failed truce attempts, the war came to a standstill. Russia and Ukraine agreed a set of accords known as Minsk II in 2015, but a number of disagreements prohibited them from being completely implemented. By 2019, the Ukrainian government had categorized 7% of Ukraine’s land as temporarily occupied regions, while the Russian government had recognized their forces’ presence in Ukraine in an indirect manner.
There was a substantial Russian military build-up around Ukraine’s borders in 2021 and early 2022. NATO has accused Russia of plotting an invasion, which the Russian government has rejected. Russian President Vladimir Putin has described NATO’s expansion as a threat to his country, and has urged that Ukraine be prohibited from joining the military alliance. He also advocated Russian irredentist views, questioned Ukraine’s right to exist, and claimed that Soviet Russia had unlawfully established Ukraine. Russia recognized the two self-proclaimed separatist governments in the Donbas on February 21, 2022, and dispatched soldiers to the region. After Putin launched a “special military operation,” Russia attacked Ukraine three days later.