It's a poor start to the trading week as fears of Ukraine tensions escalating spooked the Street. Geopolitics suggests that there is US on one side and Russia plus China on the other, because China now, of course, is getting on to anyone who is the enemy's enemy. We saw them sending their first ambassador to Afghanistan, and now a $117 billion deal with Russia is getting inked. So clearly, that makes the position a little more belligerent between the US and Russia.

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For a sizeable landed economy like Russia, there is a compulsion to have the warm waters of the Mediterranean, so this is a huge historical conflict, and now to expect that it will be silenced by the US merely giving warnings to Russia should not be expected.

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Russia-Ukraine conflict: Timeline of events leading to recent crisis

On the other side, the dependence of Europe on Russia is seminal for gas and oil, and the prices of both these fuels are already at very high levels. So, chances are Europe will mediate to ensure that this belligerence doesn't keel over into a war or even into sanctions. My sense is all this huge noise is a build-up. Traders need to take note, but the chances are that if you are looking at the second half of the year, this may pass into history. This may be one of those hotspots, which got resolved by diplomacy.

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Nevertheless, at the moment, the markets have to come to terms with all kinds of fuels, especially crude going over 100 and that will mean exacerbated inflationary pressure for developed markets, which are already reeling under historically high inflation levels.

Also, the hawkish view is that four rate hikes that are priced in are not enough--it could go up to six. And, there are a lot of conversations over the first hike, maybe in March or May, being a double hike or a 50 basis point hike. The market is building up on that conversation.

Watch the accompanying video of CNBC-TV18's Latha Venkatesh for more details.

Catch latest from CNBC-TV18's coverage of Russia-Ukraine conflict

First Published:Feb 14, 2022 3:32 PM IST