Global equity market witnessed a heavy sell-off between February and March, 2020 amid rising fear on first pandemic in the last 100 years and first in the globalized world while in the last few months the global market have recovered from the march lows even the cases of corona-virus have increased by more than 10 times to over 13 millions cases. The ongoing rally in global equity market is primarily driven by the huge liquidity provided by the governments with a motive to support the economies and take back the economies on the track. The recent gains in market can also be called as liquidity driven market, however the hopes on vaccine and economic recovery also supported the gains. The fundamentals and future of the international market still remains a question mark. The earning season in India for Q1 FY21 have started and expect major companies to report a non-surprising sluggish performance due to the nation wide lock-down. Investors should focus more on management’s commentary and prospects on the future outlook rather than just analyzing the weak results of Q1 FY21.
Market takeaways of last week (6th July-10th July, 2020) :
Indian equity benchmark maintained the positive momentum in the last week and ended with a gain of about ~1.5% tracking the positive global cues like re-opening of global economies, hopes on quick economic recovery, recovery in economic data and hopes on virus treatment. The increasing infections of corona-virus cases across the globe weighed on the market sentiments while profit booking remained the reason for a see-saw trade last week. Buying emerged in metal stocks following the gains in the global metal prices which supported the market to end with gains however Nifty bank wiped its early gains of the week on Friday’s session over the concern of extension of the loan moratorium period and the declaration by PNB on DHFL for a fraud of Rs. 3,688 Crores. The top gainers was Bajaj finance which surged over 13% in last one week followed by the gains in Hindalco Industries and Indusind Bank while Bharti Airtel, Adani Ports and ITC were the top laggards. Top sectoral performers in the last week were Nifty Metal, Nifty Finance and Nifty Bank. Key events in this week is Reliance AGM, Investors will closely track the update on Aramco deal and Jio Fibre, Reliance is also likely to make announcement on the recent investors for the Jio platform.
Last week at a Glance
- HDFC Bank continued to remain on investors’ radar amid optimism of strong business growth during Covid Crisis which cheered the investors.
- Metal index gained about 3.5% in the last one week, primarily driven by the surge in global metal prices tracking the re-opening of major economies and optimism on demand prospects in world’s top metal consumer “China” with lower domestic inventory.
- Strong buying in Index heavyweight Reliance Industries continued over stake sale of Jio Platform.
- Easing of the border situation between India-China as Chinese military softens its engagements in LAC.
- Market volatility continued in the last week as investors were cautious over rising coronavirus cases in the country.
- Indusind Bank gained 10.7% in the last one week on report that the US hedge fund may raise stake in the bank.
- Earning session has started for Q1FY21, TCS reported weak numbers amid Covid-19 pandemic while positive management commentary saved the stock from the fall.
- Biocon drug received regulatory approval for treatment of moderate to severe COVID patients.
- IIP stood 88.4 for May month, the contraction rate improved and reported a fall of 34.7% YoY as compared to a contraction of 57.6% YoY in April. The IIP data for June month is likely to recover due to unlocking of the economy and resumption of manufacturing activities.
In the coming session market participants will closely monitor:
- Coronavirus infections spread and its impact on the economic recovery.
- Development related to treatment of Covid 19 .
- Management commentary on corporate Q1 earnings and performance.
- Crude Oil Prices.
- Relationship between Indian and China.
- Economic development data.