Markets Continue To Remain Volatile

In order to avoid storage cost for WTI crude, sellers were seen paying buyers to take deliveries. This has led to a crash in WTI crude prices as May futures for the same fell below USD 0 per barrel on April 21, 2020. 

Towards the end of the fortnight, India eased out of its nationwide strict lockdown by forming zones and implemented a partial lockdown throughout the country in the virus-affected hotspot areas. Meanwhile, in the announcement made by the governor of Reserve Bank of India (RBI), the focus was on covering the challenges faced by banks and NBFCs. The reverse repo rate, which is the rate at which RBI borrows funds from the commercial banks, has been reduced by 25 basis points. Additionally, a special aid of Rs 50,000 crore will be provided to financial institutions such as NABARD, SIDBI and NHB.

In another development, US President Donald Trump recently announced the temporary suspension of immigrant visas which will lead many American companies to bear the brunt. On the global front, the tech-heavy index NASDAQ gained by 4.77 per cent along with its American peers DJIA and S&P 500 which were up by 1.61 per cent and 2.90 per cent respectively.

FTSE 100 fell by 1.11 per cent as deaths in the country increased by a huge number. With the looming uncertainty of the extent of the pandemic, DAX declined by 1.03 per cent and CAC 40 also dropped by 1.82 per cent. The East-Asian markets continued to remain volatile responding to global cues and warnings by various major organisations as regards the major economic slowdown prevalent in the economy. Subsequently, Hang Seng fell by 1.90 per cent whereas Nikkei gained by 1.74 per cent but the Shanghai index registered a mere gain of 0.22 per cent during the week.

As for the domestic markets, Sensex and Nifty were up by 1.89 per cent and 2.15 per cent, respectively. A majority of the sectoral indices gained during the fortnight. The Small-Cap and Mid-Cap indices went up by 7.84 per cent and 6.55 per cent, respectively. As for the coronavirus cases and deaths, they continue to increase around the world. This has acted as a boost for the healthcare and pharmaceutical sector as the race for the search of a vaccine or treatment continues. Hence, in the last couple of weeks, the Healthcare index has gained by nearly 11.83 per cent. Following it, Power and Auto indices made huge gains by 8.29 per cent and 7.16 per cent, respectively. Comparatively, the growth of Realty, Metal and Bankex remained timid as they increased by 2.07 per cent, 1.80 per cent and 1.19 per cent each. For the previous fortnight, the IT index declined by 1.45 per cent while FMCG fell by 0.82 per cent.

Trading data shows that FIIs continued to remain net sellers to the tune of Rs 880.7 crore whereas DIIS were also net sellers to the tune of Rs 2,997.7 crore.

Many governments around the globe have implemented lockdown restrictions in their countries. This has resulted in temporary suspension of business activities. Additionally, export and import trade and demand has also seen a downfall. Even though the OPEC allies recently agreed to cut per day oil production, the lockdown situations have caused an oversupply of crude oil with reduced demand. In order to avoid storage cost for WTI crude, sellers were seen paying buyers to take deliveries. This has led to a crash in WTI crude prices as May futures for the same fell below USD 0 per barrel on April 21, 2020. Hence, during the fortnight, WTI crude prices crashed by 54.67 per cent to USD 10.71 per barrel from USD 23.63 per barrel and by 47.27 per cent since the beginning of the month whereas Brent crude fell by 45.25 per cent to USD 17.51 per barrel from USD 31.87 per barrel and by 13.20 per cent since the beginning of the month. As for gold, the safe heaven asset, its price rose and reached Rs 46,350 for 10 grams of 24 carat gold.