Markets End 2020 On A Cheery Note

With positive news announcements about the vaccines and successful clinical trials, the healthcare industry remained in the limelight, gaining 2.10 per cent during the fortnight 

During the fortnight, the new emergence of patients with a new corona virus strain concerned many while on the other hand, stock markets have been eager to end 2020 with record highs. Investors tried to make the best of the remaining days of 2020 with a stock-specific approach in mind. Stocks in global as well as domestic markets rallied with strong performances while some investors rushed to book profits out of the previous rallies. Overall, in spite of the rising corona virus cases and the subsequent restrictions being implemented by many countries across the globe, markets and investors look forward towards ending 2020 with a cheer. During the last few weeks, American stock markets did see some volatility. The US House of Representatives has passed a bill to meet President Donald Trump’s demand for increasing direct corona virus relief payments from USD 600 proposed to USD 2,000 which now faces an obstacle at the Republican-run Senate. In a last minute change, the bill proposes to tweak the nearly USD 1 trillion package signed into law by President Donald Trump on Sunday. Applauding the move, many said that since US is a consumer economy, putting more money into the hands of its citizens will surely give a boost to the economy.

On the other hand, jobless claims in the US witnessed a fall as data from the Department of Labor showed that initial claims for unemployment benefits fell but still remained at higher levels. Indices such as NASDAQ, S & P 500 and DJIA rose by 2.03 per cent, 0.88 per cent and 0.45 per cent, respectively. IT stocks continued gaining momentum, being less scathed by the pandemic as compared to other sectors.

A positive conclusion of the Brexit deal led to gains in Tata Motors, which derives majority of its revenue and profits from JLR sales.

European Union’s top officials finally signed the long fought over post-Brexit trade deal with UK during the fortnight. The documents now await Prime Minister Boris Johnson’s signature to seal the deal. It is said that the deal is a fair and balanced agreement which fully protects the fundamental interests of the European Union and also aims to create stability and predictability for citizens and companies of both regions. Post the positive news about the deal, FTSE 100, DAX and CAC 40 gained by 1.37 per cent, 2.98 per cent and 1.47 per cent, respectively.

Considering global cues Asian indices such as Shanghai Composite index, Nikkei and KOSPI rose by 1.38 per cent, 3.30 per cent and 0.35 per cent, respectively. Improved data of China’s industrial production profits also boosted gains. In Chinese stock markets, energy and resources stocks climbed the most and environmental protection shares jumped with a positive outlook for these sectors as Beijing vowed to reduce carbon emissions to meet the government’s green pledge, thus boosting investors’ confidence to bet on these stocks for better profit opportunities.

Markets and investors look forward towards ending 2020 with a cheer.

As a result of the positive US’ stimulus news, Japan’s Nikkei breached a hypothetical barrier, trading at recordhigh levels for the first time since April 1991. In the domestic markets, Sensex and Nifty witnessed volatility as well. The gaining momentum of the indices trading at record-high was halted by a sharp fall on December 21, 2020 when the UK announced a rise in patients with the new corona virus strain, thus applying further travel restrictions. Soon enough, Sensex and Nifty staged a good recovery to end 2020 on higher note. 

Sensex gained by 2.92 per cent while Nifty rose by 2.69 per cent during the last fortnight. Broader markets failed to attract investors and outperformed the domestic benchmark indices as the Small-Cap index rose by 1.53 per cent while the Mid-Cap index gained by 0.43 per cent. Amongst the sectoral indices, Power index and Auto index were the only indices to end the fortnight in negative, down by 1.33 per cent and 1.11 per cent, respectively. Travel restrictions in the UK triggered concerns about sales of automotive and automotive-related companies. 

However, a positive conclusion of the Brexit deal led to gains in Tata Motors, which derives majority of its revenue and profits from JLR sales. The Metal index gained by 0.40 per cent as it is expected that metal companies should have a good quarter owing to improved sales and demand in the sector. With the economy limping back to normalcy, realty sales have picked along with renovations and other works, uplifting the demand for companies in allied sectors as well. The Realty index surged 5.95 per cent while the FMCG index rose 0.59 per cent.

US’ stimulus news supported gains in global indices during the fortnight

With positive news announcements about the vaccines and successful clinical trials, the healthcare industry remained in the limelight. The healthcare index gained by 2.10 per cent during the fortnight. Bankex rose by 2.25 per cent. Considering global cues and positive traction of the IT industry globally, domestic IT companies remained in a favourable position with the IT index being the biggest gainer during the fortnight, up by 7.42 per cent. Trading data shows that FIIs were net buyers to the tune of Rs 19,421.29 crore while DIIs were net sellers to the tune of 16,101.5 crore.

Gold prices gained by more than 1 per cent during the fortnight. Investors have considered gold to be an intergral part of their portfolio since the yellow metal drags down volatility and improves the overall performance of the portfolio. Seeing the recent fortnight figures, WTI crude prices inched up to USD 48.25 from USD 47.62, moving up 1.32 per cent while Brent crude gained by 1.02 per cent to USD 51.28 from USD 50.76. The rise in the prices can be traced to the signing of US’ stimulus deal due to which an increase in demand is expected. However, this increase in demand may be stalled due to the new and rising corona virus cases which can pose fresh concerns. Another reason for a predicted boost to the oil prices can be due to the meeting of OPEC members for expanding the production capacity of the barrels per day from January 2021.