Indian equity market benchmarks BSE Sensex and Nifty 50 ended the month at a 7-week high level on Thursday tracking global markets that gained on reports of positive trials of an experimental drug for coronavirus treatment. BSE Sensex surged 1,000 points or 3.05 percent to end the session at 33,717, while the broader Nifty 50 index advanced 306 points or 3.21 percent to 9,860. Sensex and Nifty 50 have posted 20 percent gain in April and have risen more than 30 percent from their March lows of 25638.9 and 7,511.10, respectively. In the early trade on Monday, markets will react to the quarterly earnings by Reliance Industries (RIL) and Hindustan Unilever (HUL).
“There is a distinct possibility of gradual reversal of lockdowns across countries in the coming weeks and that could lead to the revival of financial activity. But it should be noted that the economic fundamentals remain unchanged as of now, and any pick up in macroaggregates will take some time. Markets, by their very nature, run ahead of the economy,” Joseph Thomas, Head of Research – Emkay Wealth Management, said. Markets witnessed sharp gains during the week on positive global cues after encouraging trial results of an experimental COVID-19 treatment, US Federal Reserve pledges to shore up the economy and jump in oil prices along with the slowing of COVID-19 cases globally. Sentiments also got a boost after the RBI announced a special liquidity facility of Rs 500 bn for mutual funds in the wake of the winding up of six debt funds by Franklin Templeton.
Post-closing of the markets, Reliance Industries’ earnings disappointed investors whereas HUL earnings missed estimates for Q4FY20. Markets are expected to open sharply lower on Monday, however, it may hold at lower levels and retrace the fall on hopes of Finance Minister’s stimulus package, says independent analyst Ambareesh Baliga.
Markets are also expected to keep an eye on long-awaited stimulus packages as well as mutual fund investors’ behavior on the inflows and outflows from Sensex D-Street. Volatility will remain higher in the coming week and a lot of volatility is expected in small and midcap stocks, although they will face selling pressure at higher levels. Investors should be in wait and also watch mode and preserve cash by not aggressively investing at that the current levels. As it is told that in bull market equity is king and in uncertain times cash is king. Investors can selectively book profits too in order to raise liquidity. Nifty50 closed the week at 9859.90, up by 7.7%.
Investor wealth jumps Rs 7.68 lakh crore: With the four consecutive days of rally, investors’ wealth jumped Rs 7.68 lakh crore in a holiday-shortened week. The market capitalization of the BSE-listed companies gained Rs 7,68,168.35 crore to Rs 1,29,41,620.82 crore in four trading days.
Nationwide lockdown extends till May 17: The nationwide lockdown has been extended till May 17, 2020, to contain the fast-spreading coronavirus pandemic. According to the government data, the total number of infected people in India has surpassed 40,000-mark, with the death toll at 1,306. Rupee may trade towards 76 per dollar: The Indian rupee settled stronger against the US dollar on Thursday. Rupee gained 57 paise to close at 75.09 against the US dollar amid higher domestic equity markets. Sensex “The fears surrounding the virus faded with the drug coming. Also, several countries are easing lockdown restrictions which means the economies will start to get back on track. However, there is still a risk of a second wave of infection, and India’s macros are not attractive enough to bring in heavy dollar inflows. Thus, going ahead USD/INR spot may trade above the support of 74.50 towards 75.50/76.00,” as the word given by Rahul Gupta, Head of Research Currency, Emkay Global Financial Services.
The week gone by The US Federal Reserve in its two-day policy meeting decided to keep the interest rates near zero and warned of an “unprecedented” drop in second-quarter GDP. The Fed left the benchmark overnight that lending rate in a target range of 0% to 0.25% and repeated a vow to use its “full range of tools” to shore up the economy.