April saw 14% rise in benchmark indices

Weekly Market View - Vinod Nair, Head of Research at Geojit Financial Services

After a 23% loss in the markets in the month of March, April saw a 14% rise in the benchmark indices. Although the gains may make it seem as if the danger posed by this virus has been mitigated, the truth is that we are yet to ascertain the full impact of the damage caused by the virus. The Covid-19 infections seem to have peaked out in many markets, yet it still continues to play havoc, in the form of lockdowns meant to limit its spread. The US economy itself saw its sharpest quarterly decline in GDP in the last 11 years. But markets this month were driven by hopes about easing of lockdown measures, stimulus packages by central banks and other steps to limit the unprecedented economic damage caused by the virus. So much so that, the current domestic earnings season has lost its relevance, in terms of numbers. Investors are looking forward to earnings guidance and commentary regarding the normalization of business and outlook. The government also made the right moves, in terms of strict measures to control and then planning to ease measures. However, the recent increase in cases and worry of the virus spread gaining strength are a concern and we will need to wait and see the roadmap drawn by the government for easing of the measures. Businesses have been impacted and it will take time to recover from the demand shock that Covid-19 has dealt them. FIIs have also been easier on India, and as per latest data, April net selling in equities by FPIs were at Rs.6800 Cr, as compared to net selling of Rs.61000 Cr in March.

WEEK AHEAD

Markets are being driven mainly by hope and the week ahead will be awaited, because the new lockdown policy will be known by the first trading day of the week, and investors will take cues from that. Any easing will be positive, alongwith announcement of stimulus packages to benefit the most affected. Earnings results have been subdued so far, as expected, with investors more interested in the commentary and outlook rather than the previous quarter numbers. This will drive stock / sectoral specific moves in the market for the next week also.

Source : Equity Bulls

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