Volatility Amidst Optimism

A decline in IT stocks was seen as industry leaders failed to beat market estimates for Q4FY21 results, thus bringing about a correction in the sector.

Even if the corona virus pandemic situation in India seems to be quite serious with India’s infection and death figures having shown alarming growth, the benchmark equity indices have witnessed steady gains. During the last fortnight, Sensex gained by 1.67 per cent while Nifty rose by 1.80 per cent. This time, the markets are assuming that businesses are wellprepared to handle any disruptions that will be caused. In spite of partial lockdowns and mobility restrictions being put in place in parts of the country, analysts and investors are of the view that it will not cause any disruption and India will be able to witness positive economic growth.

Overall, on the sectoral front, positive Q4FY21 results boosted the general investor sentiments. Positive and better-than-expected results of PSBs and private banks brought some relief to investors worrying about the asset quality of banks. In the next few quarters, the asset quality of banks may come under pressure, but it is believed that compared to last time, now banks are much better prepared to tackle such situations by creating adequate provisions. Bankex was up by 5.38 per cent during the fortnight.

In spite of partial lockdowns and mobility restrictions being put in place in parts of the country, analysts and investors are of the view that it will not cause any disruption and India will be able to witness positive economic growth.

Continuing their strong rally, metal stocks seem to be in no mood to lose their sheen. Metal index gained by 12.66 per cent during the fortnight. The consistent rally can be attributed to industrial metal prices reaching multiyear highs globally because of the weak US dollar, decline in inventories and decent demand from major economies such as China. During the same period, Power index rose by 4.37 per cent while Realty index was up by 3.20 per cent. On the other hand, FMCG index and IT index were the only two sectoral indices to end the fortnight in the negative territory, down by 1.92 per cent and 1.81 per cent, respectively.

A decline in IT stocks was seen as industry leaders failed to beat market estimates for Q4FY21 results, thus bringing about a correction in the sector. 

Small-caps shined during the fortnight as the BSE Small-Cap index gained by 4.82 per cent while BSE Mid-Cap index rose by 2.80 per cent. With the country being in turmoil, data shows that foreign money has left India during the fortnight. FIIs were net sellers to the tune of Rs 5,016.5 crore while DIIs were net buyers to the tune of Rs 9,623.31 crore.