Equity markets continued on its road to recovery – Weekly Market Newsletter

Equity markets continued on its road to recovery – Weekly Market Newsletter

Market Overview

Equity markets continued on its road to recovery for yet another week as early signs of growth bottoming out led to strong buying interest from investors. The ECB approved yet another stimulus package to revive the ailing Eurozone economy. Encouraging economic data from advanced economies and liquidity measures from central banks have increased confidence of investors on risky asset class like Equity. Back home, Indian markets too participated as easing restrictions and gradual reopening of the economy lifted sentiments.

Even the ratings downgrade from Moody’s did not affect the sentiments and Nifty ended above the important psychological level of 10,000. The rally was not limited to only frontline stocks as midcap and smallcap ended with smart gains. Further, the cyclical sectors like Metals, Banking and Consumer Durables were the star of week ending higher by more than 9%. On the fund flow front, FIIs bought stocks worth ~Rs. 13,900 cr whereas DIIs were net sellers to the tune of Rs. 1,600 cr. 

Market Outlook

The current rally has come as a surprise to many but that is the power of liquidity. While we do believe there are positive developments as well and we have discussed it at length in our previous article – “Reasons behind the current rally in markets”. However, even if the economy is on its road to recovery, it most likely will not be 100% at least in the next one year. And therefore it is prudent to remain cautious at these levels.

In the coming week, the OPEC meeting, US Fed meet (June – 9 & 10), and key economic data announcements (worldwide) would be key influencing factors for the markets. On the domestic front, IIP, CPI and WPI would hold key to assess the economic impact of COVID – 19. Apart from this, the earnings announcements from companies like Abbot India, INOX Leisure, Chalet Hotels, Gujarat State Petronet, PVR, Titan, Bombay Dyeing, Graphite, Hero Motocorp, Century Textiles, Mahanagar Gas, Hindalco, M&M and BHEL would be tracked.

Also this time we have incorporated a promoted post titled “What can we learn from previous multibagger stocks? Top 5 lessons!”. In case if it interests you, here is the link.

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