Optimism Prevails Despite Uncertainties

The optimistic behaviour portrayed by investors during the results season boosted market rallies. A bullish environment was witnessed in various markets globally. 

Over the last few weeks the markets have remained extremely volatile as a result of increase in US-China tensions on one hand and the rising number of corona virus cases in India as well as globally on the other hand. As a result of the rise in corona virus cases, various cities in India were put under lockdown again, causing further disruptions in businesses. However, the optimistic behaviour portrayed by investors during the results season boosted market rallies. A bullish environment was witnessed in various markets globally. Shanghai index soared by 14.41 per cent during the fortnight as investors believed in another upcoming bull run since the country is currently the least affected by the virus.

Its Asian peers, Japan’s Nikkei index and Hong Kong’s Hang Seng index gained by 1.34 per cent and 4.30 per cent respectively. Despite the uncertainty about the pandemic looming at large, US indices such as DJIA, S&P 500 and NASDAQ gained by 3.21 per cent, 3.14 per cent and 4.27 per cent respectively in the previous fortnight. Market experts say that during election year, American markets tend to rally towards the end of the month of June and in the first few weeks of the month of July, post which they tend to weaken. European indices such as FTSE 100, DAX and CAC 40 increased by 0.16 per cent, 3.14 per cent and 1.45 per cent respectively for the same period of time. 

For the fortnight, domestic indices such as Sensex rose by 3.20 per cent while Nifty jumped up by 2.96 per cent. Considering the broader markets, SmallCap index gained by 2.30 per cent while MidCap index increased by 1.70 per cent. Amongst sectoral indices, IT index rallied by 5.74 per cent followed by Metal index, Auto index, Healthcare index and FMCG index, each gaining by 3.22 per cent, 2.53 per cent, 2.41 per cent and 1.45 per cent, respectively. Whereas, Power index, Bankex and Realty index declined by 3.68 per cent, 0.26 per cent and 0.63 per cent respectively.

Trading data for the last few weeks shows that FIIs were net sellers to the tune of Rs 3,332.72 crore while DIIs were also net sellers to the tune of Rs 739.18 crore. Gold prices during the fortnight inched up higher by 1.42 per cent to Rs 50,950 for 10 grams of 24 carat gold. In the last couple of weeks, WTI crude price rose by 3.41 per cent from USD 39.27 per barrel to USD 40.61 per barrel while Brent crude prices gained by 4.60 per cent to UDS 43.17 per barrel from 41.27 per barrel.