Easing restrictions fueled rally – Weekly Market Newsletter

Easing restrictions fueled rally – Weekly Market Newsletter


Market Overview

Equity markets globally had a healthy run this week as governments across the globe eased lockdown restrictions. Further, the hopes of coronavirus vaccine kept the mood buoyant. However, the markets chose to ignore rising tensions between the US-China after China’s parliament approved Hong Kong national security bill. Back in India, after three weeks of losses, the indices rebounded sharply, making up for the recent underperformance.

The easing of lockdown restriction in India and positive commentary from some of the consumption companies lifted sentiments. Yet again the markets ignored the rising number of cases in metro cities which could force further extension of lockdown. Nevertheless, the Nifty ended higher by 5.7%. Banks which have been the biggest pain point witnessed strong buying interest as it ended higher 11.7%. Consumption driven sectors also ended with healthy gains led by Auto. Amongst the laggards were the IT and FMCG sectors. Fund flow wise, both FIIs and DIIs were net buyers buying stock worth Rs. 8,200 cr and Rs. 6,400 cr.

Market Outlook

The US-China relations seems to be getting worse day by day and that will not go well for risky asset class like equity. Globally, the developments on this would be one of the biggest influencing factors for the markets worldwide. Additionally, the key macroeconomic data (GDP data, PMI, Auto Sales etc) announcement worldwide would be actively tracked by investors. The ECB monetary policy statement on Thursday (Expected to maintain status quo) is also an important event for market participants.

On the domestic front, the GDP growth of 3.1% in Q4FY20 is tepid but was better than what the street was estimating. Going forward, macro data from India and earnings announcement from companies like BPCL, Cholamandalam, SRF, Aurobindo Pharma, NIIT, Gujarat Gas, Interglobe Aviation, and Motherson Sumi would be actively tracked.

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