• S&P Global earlier this week forecast that banks in India would face ‘headwinds’ as a fallout of the Russia-Ukraine conflict.
  • The war has impacted the production and movement of a wide range of raw materials and commodities. Ukraine, for instance, is the main source of sunflower oil imported into India.
  • The conflict has also forced Ukraine to shut two neon factories that account for about 50% of the global supply needed in the manufacture of semiconductors.
  • With the dollar benefitting from a global flight to less risky assets, as well as the start of the U.S. Federal Reserve's calibrated monetary tightening to rein in inflation from a 40-year high in the world's largest economy, the rupee is expected to weaken against the U.S. currency.
  • Rising inflation, which is already just beyond the RBI’s 6% upper tolerance limit, may nudge the central bank into raising benchmark interest rates. This means more interest will have to be paid by companies that would likely face the prospect of lesser profit.