Investor Confidence On A Revival Path

The big dampener, however, is the rising feud between the US and China that has brought back uncertainty and volatility in the markets. 

The pace at which new coronavirus cases are being reported has slowed down substantially. Also, globally, economies have begun to ease down lockdown restrictions. During the previous fortnight this was a major boost as markets expected business operations to resume and manufacturing activities to get back to normal. In the meantime, governments have announced stimulus packages to aid in reviving industrial activity. All such positive news has been able to increase investor confidence. The big dampener, however, is the rising feud between the US and China that has brought back uncertainty and volatility in the markets. US President Donald Trump has threatened to impose a new row of tariffs, blaming the Asian country for creating the virus in a laboratory. 

Meanwhile, the Reserve Bank of India (RBI) announced Rs 50,000 crore liquidity support for mutual funds. Additionally, RBI announced extending regulatory benefits under the special liquidity facility for mutual funds to all banks. Reacting to such positive support from the government as well as considering the global cues, domestic benchmark indices Sensex and Nifty witnessed a gain of 2.67 per cent and 2.50 per cent, respectively. 

Another boost to stock indices was from the news that US-listed Gilead’s trial for its drug Remdesivir showed that it can help speedy recovery from the illness caused by the coronavirus. Further, after the drop in WTI crude prices below USD 0 per barrel, this fortnight witnessed rise in oil prices. As a result, American indices DJIA, S&P 500 and NASDAQ rose by 3.75 per cent, 4.82 per cent and 6.61 per cent, respectively. European indices FTSE 100, DAX and CAC 40 also increased by 3.69 per cent, 4.68 per cent and 2.88 per cent each. As investors start to believe that the worst of the pandemic is over, their risk appetite seems to be expanding. This became evident from the Shanghai index gaining by 1.17 per cent while Nikkei was up by 1.76 per cent and Hang Seng also gained by 0.32 per cent. 

As a negative effect of the lockdowns and liquidity issues that are considered as underlying concerns in all economies, the Realty index was the biggestloser among sectoral indices as it fell by 8.53 per cent. On the other hand, IT index gained the most by 7.95 per cent. Following it, Auto, Metal, Healthcare and Bankex increased by 2.59 per cent, 1.77 per cent, 0.12 per cent and 0.06 per cent, respectively. FMCG index fell by 4.70 per cent while Power index dropped by 1.43 per cent. Small-Cap index witnessed a mere gain by 0.80 per cent whereas the Mid-Cap index dropped by 0.75 per cent. 

For the fortnight, trading data showed that FIIs were net sellers to the tune of Rs 269.89 crore while DIIs were also net sellers to the tune of Rs 328.59 crore. A revival in crude oil prices has brought relief to many even as Brent crude price rose by 60.21 per cent from USD 19.33 per barrel to USD 30.97 during the fortnight and WTI crude price rose by 128.9 per cent to USD 26.49 per barrel from USD 11.57 per barrel during the fortnight. Gold price increased by 1.18 per cent to Rs 46,900 for 10 grams of 24 carat in the last 15 days.