A ‘POWERFUL FORTNIGHT

Indian equities had witnessed a massive sell-off during the fortnight due to panic in global bond markets about a sharp rise in US’ bond yields. 

It can be said that the previous fortnight was quite eventful for the domestic markets due to heightened volatility. The domestic markets had ended the month of February 2021 with a ‘thud’ as investors turned bearish on the last trading day of the month of February 2021. Indian equities had witnessed a massive sell-off during the trading session due to panic in global bond markets about a sharp rise in US’ bond yields, which spooked investors amid fears of interest rate cycle reversal. 

While concerns over the rising bond yields kept on making rounds during the fortnight, stocks in the domestic markets were seen joining the global sell-off spree. Nevertheless, in India, such situations are being seen as a ‘buy on dips’ moments by investors who wish to gain profits from the upward momentum post a dip. Subsequently, as calmness spread over the equity markets, Sensex and Nifty recovered from the February-end plunge to gain by around 1.39 per cent and 1.69 per cent during the fortnight.

Continuing their rally, BSE Small-Cap and BSE Mid-Cap indices remained in the limelight as investors’ favourites, outperforming the domestic benchmark indices. Currently, money is seen moving into these segments on valuation comfort as investors remain confident about the broader markets. BSE Small-Cap index jumped by 6.37 per cent while BSE Mid-Cap index surged by 3.45 per cent during the fortnight.

Profit booking and market volatility created an environment for investors to take a cautious approach and think before investing.

As for the sectoral indices on BSE, Power index was the biggest gainer during the fortnight, surging by 5.14 per cent. With the change in seasons and the beginning of summer in India, the power demand is expected to see a significant rise. Power stocks were seen rallying in the last few weeks as India’s power demand was seen reclaiming it growth trajectory. Additionally, pickup in demand for solar or renewable business is expected to boost the financial performance of companies belonging to the sector in the near to medium term.

While the upward momentum in metal stocks slowed with the Metal index gaining by 3.53 per cent during the fortnight, IT index was up by 3.34 per cent for the same period of time. Realty index rose by 1.97 per cent while Healthcare and Auto indices gained by 1.53 per cent and 1.25 per cent respectively during the fortnight. FMCG stocks which had seen a good rally in recent times seemed to have become unattractive for investors as stocks in the sector rally only on news which mostly consisted of better-than-expected Q3FY21 result announcement.

The FMCG index was up by 1.08 per cent during the fortnight. Bankex underperformed other sectoral indices on BSE, gaining by a mere 0.55 per cent in the last few weeks. Trading data showed that during the fortnight FIIs and DIIS were both net sellers to the tune of Rs 229.94 crore and Rs 1,435.15 crore, respectively. Profit booking and market volatility in the last few weeks had created an environment for investors to take a cautious approach and think before investing.