Lockdowns Go, Virus Remains

During the fortnight, India has initiated the process of Unlock 2.0., while shifting attention from the pandemic was a rise in the geo-political tensions between India and China.

In spite of a new rise in the number corona virus infections being reported around the world, India has, during the fortnight, initiated the process of Unlock 2.0. Meanwhile, shifting attention from the pandemic was a rise in the geo-political tensions between India and China. Globally, several nations continued to express their disappointment over China imposing the National Security Law in Hong Kong. And in the US, President Donald Trump delivered a big blow to IT employees with the announcement of temporarily discontinuing the issuing of H-1B, H-2B, H-4, L and J category visas which are mainly sought by American employers for their foreign employees to work in the US.

During the fortnight, US indices remained mixed as DJIA and S&P 500 fell by 1.81 per cent and 0.78 per cent respectively while NASDAQ gained by 1.65 per cent. For UK, the recent GDP figures show that the impact of the virus on the economy is much worse than expected as the economy is hit by the sharpest fall since 1979, contracting by 2.2 per cent in the first three months of 2020. FTSE 100 declined by 1.17 per cent during the fortnight. For the same period of time, other European indices such as DAX and CAC 40 declined by 0.04 per cent and 0.33 per cent respectively. Amongst the Asian indices, Shanghai index gained by 1.81 per cent while Hong Kong’s Hang Seng index inched up by 0.34 per cent. 

Meanwhile, Japan’s Nikkei index witnessed a drop of 1.30 per cent as the country’s industrial output fell by 8.4 per cent on MoM basis for the fourth straight month in May to 79.1, a level not seen post March 2009. During the fortnight, domestic indices outperformed global indices as the Sensex rose by 3.90 per cent while Nifty gained by 3.91 per cent. With businesses reopening and the government’s increasing focus on a self-dependent India, sectoral indices witnessed a strong positive momentum. The FMCG index gained by 5.37 per cent followed by indices such as Bankex, Power and Auto increasing by 5.12 per cent, 5.04 per cent and 4.51 per cent, respectively.

The Realty index gained by 3.56 per cent while the Metal and Healthcare indices witnessed a comparatively slow growth of 1.95 per cent and 0.79 per cent, respectively. During the fortnight, the Small-Cap index jumped by 4.43 per cent while Mid-Cap soared by 4.48 per cent. Trading data showed that FIIs were net sellers to the tune of Rs 2,410.26 crore while DIIs were net buyers to the tune of Rs 3,751.72 crore. An increase in corona virus infections around the world has caused concerns over the possibility of a second wave that may result in an increasing demand for the safe-haven asset of gold as its prices rose by 1.99 per cent to Rs 50,700 for 10 grams of 24 carats in the last few weeks.