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Sanctions against Russia received lukewarm response from investors. The broader indices outperformed the frontline indices yesterday, but should you chase this rally? Let's find out

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Despite the worsening Ukraine-Russia crisis, global markets stabilised on Wednesday as sanctions announced by major economies, including the US, UK, Japan and Australia hit markets not with a bang, but a whimper.
 
Instead of a sweeping package that crippled top Russian banks, cutting its financial transactions off the global economy, or personally singling out Vladimir Putin -- the US and its allies settled on a modest ‘first tranche’ of penalties.

Markets responded with a shrug, underwhelmed by the tit-for-tat approach.
The sanctions targeted a pair of Russian banks, VEB.RF and Promsvyazbank as well as three members of Russia’s elite with close ties to the Kremlin.
The penalties also sought to freeze future purchases of Russian sovereign debt.
 
Yet the sanctions hardly amounted to the economy-crippling measures the US and its partners long telegraphed if Russian troops were to roll across the border.

Not surprisingly then, the BSE Sensex and the Nifty50 closed with tepid losses of 0.1% each, ending at 57,232 and 17,063 levels, respectively.
However, the broader indices outperformed the frontline indices. The MidCap index on the BSE advanced 0.6% while the SmallCap index climbed 0.9%.
 
The likes of Yaari Digital, Raymond, Orient Bell, Crompton Greaves, Oberoi Realty, Adani Power, IRCTC, and JSW Energy rallied between 3 and 20%.
This bounce back comes after a sharp fall of over 10% at index level in the past one week, where 13 stocks from the Nifty Midcap100 pack and 18 from the Nifty Smallcap pack hit 52-week lows.
So, does the reversal mean that the downtrend has bottomed out? Or is it just a dead cat bounce?
 
Fundamentally, too, D-Street mavens say investors should stay away from the space as market situation remains volatile.
They also say investing in large-caps could be a better option at the moment where balance sheet strength is strong.

As regards today, the developing situation in Eastern Europe and monthly F&O expiry back home will guide the indices.
That apart, stock-specific action, oil price movement and bond yields will also affect the market sentiment.

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First Published: Feb 24 2022 | 8:00 AM IST

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