Markets Display Upward Surges

Positive news about the vaccine for corona virus and the results of the US presidential election triggered fresh waves of positivity in the global markets

The last fortnight witnessed strong gains in stock markets globally as the US presidential elections concluded with a majority leaning towards Joe Biden. DJIA gained by 11.24 per cent, S & P 500 rose by 9.57 per cent and NASDAQ increased by 8.82 per cent. Investors in American stock markets were seen returning to the favoured technology stocks. Offsetting concerns over a post-Brexit deal with European Union, FTSE 100 jumped by 13.55 per cent after Moderna Inc. reported that its experimental vaccine is 94.5 per cent effective in preventing the corona virus based on data from a late-stage trial.

DAX and CAC 40 surged by 11.45 per cent and 16.63 per cent, respectively, on the basis of positive news related to the vaccine as well as on hopes of a much swifter economic recovery. Encouraging comments from European Central Bank Chief Christine Lagarde were widely appreciated by investors boosting European shares higher during the fortnight. The news of the vaccine ticked a higher risk appetite for investors. Following global cues, prominent Asian indices also ended the fortnight in green. Hang Seng surged by 7.86 per cent as casino, oil and insurance companies reported gains, offsetting weakness in financial and realty stocks. 

Following a previous sharp decline, Nikkei rebounded surging by 11.21 per cent as various companies including Toyota reported strong Q2FY21 results and a positive growth trend for the future is expected. Additionally, an increase in the number of Japanese domestic investors was seen. China’s Shanghai index gained 3.78 per cent during the fortnight. 

In the last few weeks, domestic benchmark indices continued to rally upwards. Sensex gained by 9.76 per cent, trading at all-time high levels. Nifty was up by 9.52 per cent. Amongst sectoral indices, Bankex and Metal rallied the most, gaining by 15.12 per cent and 15.53 per cent, respectively. Auto index was up by 7.98 per cent while Power index increased by 7.73 per cent. Other sectoral indices such as FMCG, Healthcare, IT and Realty rose by 6 per cent, 4.34 per cent, 3.96 per cent and 3.71 per cent, respectively. In the broader markets, the Small-Cap index gained by 6.69 per cent while the Mid-Cap index surged by 6.80 per cent. 

Gains in domestic stocks were primarily due to positive Q2FY21 results coupled with strong global cues and the recently announced relief measures. Trading data shows that FIIs were net buyers to the tune of Rs 30,842.15 crore whereas DIIs were net sellers to the tune of Rs 15,148.7 crore. During the fortnight, WTI Crude price rose by 9.69 per cent to USD 41.31 while Brent Crude price increased by 10.57 per cent to USD 43.91. Gold prices fluctuated as a result of various global economic and political factors and declined by 0.38 per cent to Rs 52,950 for 10 grams of 24 carat gold during the fortnight.