Red, Green and in Between
The Supreme Court’s decision, while delivering its verdict in the loan moratorium case that a waiver of complete interest is not possible as it affects depositors, brought some respite to banking stocks
Similar to other global equity markets, domestic markets continued to oscillate between red and green during the fortnight as any rise in US bond yields instigated fear amongst investors on one hand while improved economic data supported an optimistic view of better economic growth. While the global markets were seen recovering from the dips, concerns regarding rising corona virus cases in India and broad profit booking dragged down domestic benchmark indices. The Sensex declined by 1.29 per cent while Nifty was down by 1.42 per cent during the recent fortnight.
In the broader markets, Small-Cap index and Mid-Cap index mirrored benchmarking indices, falling by around 2.13 per cent and 1.92 per cent, respectively. During the fortnight, domestic sectoral indices remained mixed due to heightened volatility in the Indian equity markets. Some investors believe that for the long term FMCG stocks are the perfect buys that may sustain even through market volatility. As FII inflows lift up equities, FMCG stocks were seen defying the declining market trend. The FMCG index outperformed domestic benchmark indices, gaining by 4.04 per cent during the fortnight.
The IT index surged by 3.30 per cent in the last few weeks as domestic IT stocks followed a global trend, bouncing back higher from the previous pullback. For the same period of time, Power index gained by around 0.52 per cent. In the last few weeks Bankex plunged by 4.59 per cent. Banking and financial stocks were deeply hurt by uncertainty in the markets and deep plunges led by increasing US bond yields and an expected rise in inflation. Meanwhile, towards the end the of the fortnight, the Supreme Court’s decision, while delivering its verdict in the loan moratorium case that a waiver of complete interest is not possible as it affects depositors, brought some respite to banking stocks.
The Supreme Court also further said that the government and the RBI will decide on economic policy based on expert opinion. The bearish sentiments in domestic equity markets engulfed realty stocks as well with the Realty index declining by around 4.43 per cent during the recent fortnight. Following strong rallies towards the end of 2020 as well as earlier this year, automotive stocks seem to have lost their shine led by subdued investors’ interest and profit booking. The Auto index fell by 3.35 per cent during the fortnight.
While the global markets were seen recovering from the dips, concerns regarding rising corona virus cases in India and broad profit booking dragged down domestic benchmark indices.
Rising corona virus concerns and reduced efficacy of vaccines for the new strain affected investor sentiments in the pharmaceutical sector. As benchmark indices declined during the fortnight, pharmaceutical and healthcare bucked the trend with the Healthcare index falling by 2.43 per cent in the last few weeks. The Metal index was down by 0.61 per cent during the fortnight. Trading data shows that in the recent fortnight FIIs were net buyers to the tune of Rs 10,537.1 crore while DIIs were net sellers to the tune of Rs 462.81 crore.
