Markets Reflect New Confidence
Over the past few weeks, investors have been baffled with the movements of the stock markets globally. This fortnight witnessed March 23, 2020, as the day when majority of the stock indices plummeted significantly as a result of the uncertainty of the ongoing pandemic. Later on, a wave of relief rushed through as Italy and Spain, the highly affected countries, reported slowing of new infections and also reported lesser number of deaths per day. The rebound of China’s manufacturing purchasing managers’ index (PMI) from its low of 35.7 in the month of February to its expansion to 52 in the month of March brought back confidence in the slumped global markets.
Worldwide, countries continued to lend each other a helping hand for combating the virus. Post completion of 21 days’ lockdown in India, the country is expecting not an extension of the lockdown but a continuation in the form of partial lockdown in highly affected areas. This can allow manufacturing facilities and businesses to resume work. Towards the end of the fortnight, it is assumed that the recovery in the stock markets and indices is seen as a push by bulls after the drastic drop experienced towards the end of March. This may not necessarily imply that the markets have returned to trading in green as the fluctuation may still continue.
During the fortnight, global indices remained extremely volatile. For a continuous period of time we had seen the indices fall with growing concerns over coronavirus. But as majority of indices witnessed their worse fall on March 23, 2020, a recovery can be seen. US indices such as NASDAQ, S&P 500 and Dow Jones Industrial Average (DJIA) were in the positive zone, up by 14.96 per cent, 18.86 per cent and 21.85 per cent respectively. Assuming to have control over the pandemic situation’s rapid spreading in Europe, FTSE 100 was up by 14.23 per cent along with CAC 40 and DAX up by 13.39 per cent and 18.48 per cent.
As for the domestic markets, Sensex and Nifty gained by 15.73 per cent and 15.53 per cent respectively, as global indices showed a jump, thus reviving investor sentiments. Accordingly, the sectoral indices gained in short-term as well with Mid-Cap and Small-Cap gaining by 10.91 per cent and 10.42 per cent.
Market experts had mentioned that from the bearish situations persistent in the stock markets, FMCG and healthcare will be safe for investors along with providing good returns. This statement has been proved true with a rally of FMCG and Healthcare indices by 24.59 per cent and 22.68 per cent respectively. With Prime Minister Narendra Modi lifting the ban on anti-malaria drugs and allowing export of certain quantities, pharmaceutical stocks were in a state of euphoria. Following the other indices, the IT index rose by 13.51 per cent while Bankex was up by 12.98 per cent. As China’s Hubei province rushed to get back to normalcy with the government slowly resuming services and operations in Wuhan, Auto, Metal and Power indices surged by 6.64 per cent, 9.48 per cent and 6.36 per cent respectively with the hope of manufacture and trade getting back to normal. Also, the Realty index saw a gain of 4.09 per cent.
Gold prices on April 7, 2020, extended gains for the third consecutive day to hit a fresh lifetime high of Rs.44,880 per 10 gram on the expectations of global stimulus measures to counter the economic damage caused. The rate of 10 gram 22-carat gold was Rs.41,110 while 24-carat 10 gram was Rs.44,880. Meanwhile, since the US intends to intervene to stop the fight between Russia and Saudi Arabia so that an oil output cut can take place to release the prevalent pressure, WTI crude went up by 1.15 per cent to USD 223.63 per barrel while Brent Crude rose by 7.16 per cent to USD 31.87 per barrel.
FII and DII data showed that an outflow of FIIs continued to the tune of Rs.15920.77 crore with increase in DII inflow of Rs.4,218.75 crore.
