The equity markets continued their march forward due to increased optimism over economic recovery. However, the markets chose to ignore the second wave of infections in China and the rising number of infection in the US(~20k+ cases per day). Back in India as well, the cases continued to rise in India (~12k+ per day). Further, the border tensions between India and China kept the mood in check. Fitch Ratings downgraded India’s outlook from ‘Stable’ to ‘Negative’ but maintained the sovereign rating at lowest investment grade. Despite all the above factors, the Indian markets registered healthy gains of ~2.8% as it tried to recoup some of its recent underperformance vis-viz global peers.
The gains can be attributed to economic recovery and signs of de-escalation of tensions which further fuelled the rally. Sector-wise, Oil & Gas, Banking and Realty were the leaders whereas Consumer Durables and FMCG were the laggards. Notably, Reliance Industries announced that it has fulfilled its promise of becoming a net-debt free company which was a big positive for the company. The FIIs continued to remain net sellers for the second consecutive week to the tune of Rs. 3,300 cr (still net buyers for June 2020 – ~Rs. 8,870 cr) whereas DIIs bought shares worth ~Rs. 2,650cr.
The equity markets have seen a considerable up move from its March lows led by overwhelming liquidity provided by central banks and easing of lockdown restrictions. Going forward, the sustainability of this rally would depend upon the quantum of economic recovery. On the domestic front, the rally is largely driven by global cues as, despite increasing infections and decent restrictions in metro cities, the markets have moved higher.
Although there are positive developments as well, with meaningful signs of demand picking up for consumption-driven companies. Nevertheless, the global markets would continue to remain an important influencing factor for any move in the domestic markets. The on-going geopolitical tensions between India – China would be tracked.
Results to be announced this week: Info Edge, Asian Paints, Berger Paints, Indian Bank, Page Industries, Union Bank of India, GAIL, General Insurance of India, India Cement, IOC, PFC, Prestige Estates, Apollo Hospital, Ashok Leyland, Bank of India, HAL, ICRA, Coal India, Emami, HUDCO, Glenmark Pharma, IFCI, IRCTC, ITC, Oil India and NHPC.