Fresh Wind In The Sails

During the fortnight, global markets remained mixed in the wake of Russia registering the first vaccine for the virus and expectations of a fresh round of stimulus from the US boosting gains in indices.

Over the previous few weeks, though there has been an unending series of corona virus cases, investors were seen gaining confidence with business operations across various economies around the globe having started to rebound to normalcy. Additionally, some companies have been reporting better than expected results for the ongoing earnings’ season. On the Indian economic front, financial activity has begun to pick up post the easing of lockdowns. In this scenario, the Monetary Policy Committee (MPC) decided to leave the interest rates unchanged while maintaining an accommodative stance.

Additional measures announced by the governor of the Reserve Bank of India (RBI) such as permitting restructuring of MSME debt till March 31, 2021, including lending to start-ups under priority sector lending and increasing the loan-to-value ratio of gold loans to 90 per cent have been well-received in the markets. As domestic markets remained volatile during the fortnight, the Sensex declined by 0.81 per cent while Nifty fell by 0.27 per cent.

During the fortnight, global markets remained mixed in the wake of Russia registering the first vaccine for the virus and expectations of a fresh round of stimulus from the US boosting gains in indices with NASDAQ, DJIA and S & P 500 surging by 5.44 per cent, 5.35 per cent and 4.41 per cent respectively. For the same period of time, European indices such as FTSE100, DAX and CAC 40 fell by 1.28 per cent, 1.15 per cent and 0.39 per cent respectively. In the Asian markets, the Shanghai index rose by 4.69 per cent whereas Hang Seng and Nikkei fell by 1.60 per cent and 1.45 per cent, respectively, during the last couple of weeks.

The broader markets outperformed the domestic benchmark indices during the last fortnight with the Small-Cap index surging by 7.37 per cent and the Mid-Cap index jumping by 5.50 per cent. Amongst sectoral indices, Healthcare index rallied by 15.77 per cent followed by indices such as Metal, Realty, Auto and FMCG gaining by 9.63 per cent, 5.75 per cent, 2.62 per cent and 2.48 per cent, respectively, in the last couple of weeks. Power index inched up higher by a mere 0.79 per cent. Bankex and IT indices ended the fortnight in negative territory, declining by 0.75 per cent and 0.27 per cent respectively.

Trading data has revealed that over the past couple of weeks FIIs were net buyers to the tune of Rs 9,194.98 crore while on the contrary DIIs were net sellers to the tune of Rs 3,601.37 crore. On hopes of revival in Asian oil demand, crude oil prices surged in the last couple of weeks. WTI crude price rose by 2.19 to USD 41.94 per barrel from USD 41.04 per barrel while Brent crude price moved up by 3.16 per cent to USD 44.99 per barrel from USD 43.61 per barrel.

Gold prices reached another peak on August 7, 2020 as gold futures on MCX were up by 0.39 per cent or Rs 220 at Rs 56,065 per 10 grams, thus hovering around a fresh record high. Silver also jumped to record highs, crossing the Rs 77,000 level. It is a generally believed that the yellow metal tends to gain when interest rates are low and political and economic uncertainties are high. During the fortnight, gold price rose by 5.66 per cent to Rs 55,975 per 10 grams of 24 carat gold.