Nifty Slips Amid Russian Saga Over Ukraine, but the Worst may be Over

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India’s benchmark stock index Nifty (NSEI) closed around 17092.20 Tuesday; slipping almost -0.67% amid the Russian saga over Ukraine. Nifty stumbled almost -1.50% in five trading days and made a low of 16862.05 early Tuesday amid negative global cues over lingering geopolitical tensions (Russia-Ukraine/NATO).

As highly expected, on late Monday (soon after Beijing winter Olympics ends Sunday), Russian President Putin signed a decree, officially recognizing Russia-backed separatists controlled DPR (Donetsk People's Republic) and the LPR (Luhansk People's Republic). Putin also ordered the Russian army to enter into separatists controlled DPR and LPR as a ‘peacekeeping force’. Putin signed sign an agreement on friendship and cooperation with the breakaway republics (DPR and LPR), and that includes military cooperation.

In an emotional lengthy speech, highlighting Russian and Ukraine history and terming Ukraine as a U.S. controlled puppet state’, endangering Russian security. The U.S. and E.U. said they would begin imposing limited sanctions. The UN Security Council is holding an emergency meeting. The U.S. said it will impose sanctions on the breakaway regions (DPR and LPR), but not for now on Russia. Putin’s speech came after a day of escalating, choreographed action on Ukraine.

Putin said:

  • Ukraine's authorities have been infected with a virus of nationalism and corruption
  • Ukraine has been unable to attain stable statehood and has had to rely on outside countries such as the US
  • Foreign powers are in charge of Ukraine, and this affects all levels of authorities
  • The US embassy controls anti-corruption vehicles in Ukraine
  • Western civilization’s hollow promises have been accompanied by rampant corruption, poverty, and industry on the verge of failure
  • Russian language in Ukraine has been marginalized
  • Ukraine is a US colony with a puppet regime
  • Western intelligence agencies assisting Ukraine in committing crimes
  • Ukraine is planning to create its nuclear weapons
  • The US strategic planning documents provide the legal basis for pre-emptive strikes
  • We understand that further expansion of NATO is a matter of time
  • I think the West will impose sanctions anyway
  • Russia has the right to take retaliatory measures
  • Russia will take precautions to ensure its safety
  • Ukraine shelled civilian areas in Donbass
  • Putin accuses Ukrainian forces of killing civilians
  • Russia will recognize the independence of two separatist regions in eastern Ukraine
  • A choice should be made right away
  • West would put sanctions on Russia no matter what’s the stance on Ukraine

It was not immediately certain whether the Russian troops would remain only on the territory controlled by the separatist republics (DPR and LPR), or whether they would seek to capture the rest of the two Ukrainian enclaves whose territory they claim.

But, as long as the Russian 'peacekeeping force’ is within rebel-controlled DPR and LPR (blue shaded area), Russia will not invade ‘government controlled’ Ukraine. Thus Russia officially recognizes already break away DPR and LPR as independent and secures these two ‘separatists controlled’ Ukrainian provinces with the Russian military; i.e. Russia may invade ‘separatists controlled’ Ukraine, not ‘government controlled’ Ukraine.

Last week, a French Presidency source reportedly said serious sanctions measures could be taken against Russia only if ‘government-controlled’ Ukraine is invaded. The reality of the on-the-ground situation in Ukraine is that Russian-backed separatists have controlled parts of the country for eight years. They're recognized from abroad as part of Ukraine but, effectively, they're not like these areas (DPR/LPR) in Russia-backed separatists controlled Ukraine.

In other words, if Russia/Putin again invades DPR/LPR to declare the region as independent and provide security, there may not be any serious countermeasures by U.S./NATO and Ukraine. As these areas are already controlled by Russia-backed separatists, Russia's military may not even enter again. But even if Russian troops enter again in DPR/LPR, Ukraine may not respond militarily as Ukraine is not seeking any military conflict/war directly with Russia.

In that scenario, the U.S. may impose only some token sanctions rather than SWIFT and oil & gas export restrictions. On its side, Russia is sending similar kinds of messages; Ukraine is provoking the start of a big war. Putin said Russia doesn’t want war ‘but if there is a threat to the lives of citizens of the Russian Federation and compatriots living in the DPR and LPR, then Russia will stand up for them’.

Bottom line:

The worst of the Russia-Ukraine crisis may be over for the time being. Russia may secure Donbas without any conflict since already controlled by Russia-backed separatists. And Putin declares Donbas independent and Ukraine doesn't counter-attack. Some token sanctions against Russia will be imposed by NATO/U.S./Europe. There will be a win-win situation for all including Putin (face-saving exit and getting some security guarantee). Biden may also claim that he can prevent Putin from invading ‘Government controlled’ Ukraine. Both Biden and Macron may also claim major diplomatic victory ahead of the mid-term and presidential elections. Even the Ukrainian President can claim ‘victory’ as Russian forces stopped just short of entering ‘government controlled’ Ukraine. As the complex global geopolitical games of chess complete, risk trade (equities) may soar (relief rally), while Gold and oil may slip.

Technically, whatever may be the narrative, Nifty 50 Futures now has to sustain over 16800-775 for any meaningful full rally to 17175/17400-17550/17650-17700/17825 and further 17905/18360. On the flip side, sustaining below 16750, Nifty Future may fall to 16425 in the coming days.Nifty


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  • Mitesh Jain @Mitesh Jain
    may be down fall 16200 in week
    Like 0
  • Mitesh Jain @Mitesh Jain
    may be down fall 16200 in week
    Like 0
  • Rahul Sharma @Rahul Sharma
    Like 0
  • Suhas Gedam @Suhas Gedam
    Abe worst will be start after fed rate hikes… and bjp lossingin UP
    Like 1
    Coming to 16000 this week.
    Like 1
  • Devendra Singh @Devendra Singh
    What will be the next move after this???
    Like 0
  • priya sub @priya sub
    Like 0
  • Pathik Parekh @Pathik Parekh
    too much
    Like 2

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