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Below is the Daily Market Commentary 21 February 2022 By Mr. Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd

Domestic equities continued to witness spike in volatility amid Ukraine crisis. Nifty opened lower and swinged between red and green throughout the session. It finally closed with loss of 70 points (-0.4%) at 17,207 levels. Broader markets underperformed with Nifty midcap 100 down -1% while Nifty smallcap 100 down -2.7%. Except Private Banks and Financial Services, all other sectorial indices ended in red with Media, Metals, and oil & gas down 2% each. While Pharma, PSU Bank, Realty and FMCG down 1% each. Volatility index, India VIX rose by 3% at 22.9 levels.

Global markets witnessed weakness as the threat of Russian invasion in Ukraine continued to hover over Eastern Europe. However, hope for diplomatic solution in US-Russia summit curbed the downside.

Equity markets have seen rise in volatility in the last couple of days on the back of increasing turmoil in Ukraine. While US is consistently trying to engage with Russia, there is no cool off visible yet and there is no update on the proposed meeting between them.

Today Nifty opened lower but managed to stay above the crucial 17,000 levels. Nifty has been trading in a broader range of 16,800-17,400 for the last one month and needs a decisive breakout on either side for a clear direction. We don’t expect the volatility to cool down until the geo-political issues are resolved. Further issues like Inflation, FIIs selling and upcoming Fed rate hike could add to the volatility in the near term.

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