The nifty-50 index opened at 17,110.10 on Monday, went down to 16,918.20 on Tuesday opening - bounced back to 17,216 before closing at 17,054.15 on Wednesday. From there it nosedived to 16,216, being the lowest for Thursday. It did show some buying on Friday, but at the end of the week lost 451.7 (2.64%) closing at 16,669.65.
Phew..!!!! talk about volatility.
While it is no secret that the Ukraine-Russia conflict was the primary reason for such volatility. A question arises - why did the U.S market didn't witness such a fall? Not only the U.S but even the U.K index, FTSE 100 closed just 0.32% lower for the week? even though it is closer to Ukraine than India is?
I will leave this question for you to answer, and let's move to the root cause for this stock market turmoil over the world.
Current events in Ukraine
It may seem that this started only recently but the roots of the problem trace back straight to 1991 when the soviet union fell.
It was at this time, that east European countries like Estonia, Poland, and the Czech Republic joined NATO, which essentially means that if any of the 30 member countries are attacked by an outside force, other member countries are there to support through political and military means.
Initially, it wasn't meant for Europe at all but now its influence is all over Europe and Russia has found itself in a vulnerable position. When Ukraine decided to join NATO, Russia went bonkers since Ukraine is bordered by Russia (2000kms) and both Nations share a lot of history, Russia doesn't want Ukraine to join NATO. Given that Ukraine is an independent country it has all the rights to make its own decisions but apparently, this doesn't seem to be fine with Russia. Also as of now Russia only wants to conquer eastern Ukraine, namely - Cremia, Donetsk, and Luhansk, but if it went all out to conquer Ukraine the economical and humanitarian costs for both the countries and all of Europe are gonna be enormous.
We pray Russia sees what is at stake and both nations find some way to put this to an end without the wars.
The Reliance take over
Remember the legal spat between Reliance, Future Retail, and Amazon a few months back? It still hasn't reached a solution and Future Retail continues to operate despite losses.
In November 2020, landlords began to terminate leases with Future Retail and approached Mukesh Ambani-led company following which Reliance leased many of those stores and then sub-leased to Future group.
Recently Future Retail announced the decision to tone down the operation to cut on losses and Reliance is all set to take 200 Future Retail stores operating under brands like Big Bazaar, Fbb, and Central and rebrand them as Reliance Retail. Also, the process is underway to transfer 30,000 Future group employees to its manpower.
Any take on the future of Future Retail (No pun intended:)? Let us know in the comments below.
Knowledge of the Day - SWIFT
Society for Worldwide Interbank Financial Telecommunication (SWIFT) is a system created in 1973 out of Belgium and is currently used in more than 200 countries. It is a secure financial system that makes cross-border payments possible and, ultimately, makes international trade possible.
It is actually not just one entity but a cooperative of banks and proclaims to remain neutral.
Recently the U.S, the U.K, EU, and other countries over the globe have banned some Russian banks from access to it and it is a big blow to Russia since 300 Russian financial institutions are using the system.
Now this is not a blanket ban all over Russia and it is not implemented by SWIFT but some countries over the world have agreed to ban certain banks from Russia from their system. This essentially means that the selected Russian banks cannot do business with these member countries, which is expected to hit the Russian economy.
Do let us know your thoughts on the above topics in the comment section and let a healthy conversation begin.
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The above information is to spread financial literacy. We are not SEBI registered financial advisors, kindly consult your financial advisor before making any investment decision.