In the first 30 days of the national-wide lockdown, India’s share markets have beaten the global equity benchmarks. With a 22% growth rate, S&P BSE Sensex and the 50-stock NSE Nifty, have outperformed the NASDAQ, which grew by only 16%.
In the first 30 days of the national-wide lockdown, India’s share markets have beaten the global equity benchmarks. With a 22% growth, S&P BSE Sensex and the 50-stock NSE Nifty, have outperformed the NASDAQ which grew by only 16%. Domestic share markets have also bettered the performance of S&P 500, FTSE 100, KOSPI, and the Dow Jones during this period, a report by Care Ratings said. Prior to the lockdown, Indian stock markets were among the worst-performing in the world, down 32% since the beginning of March till the lockdown was officially announced. Although volatile, both S&P BSE Sensex and NSE Nifty-50 have continued their climb upwards.
“The benchmark equity index – Sensex has risen by 23% in the one month period since the announcement of the lockdown,” said Care Ratings in the report. The report highlighted that the increase in the domestic equity markets has been marred by sharp day-to-day fluctuation, as domestic markets took cues from global peers, adjusted to evolving economic outlook, policy measures, and bearing the burnt of outflow of foreign investments. $2.14 billion has been withdrawn in the last 1 month by foreign investors from Indian markets.
“The overall rise in the Sensex during the period can be attributed to the expectation of a government stimulus package to revive the economy. Despite the increase, the Sensex nevertheless continues to be 17% lower than that at the start of March,” Care Ratings said. Domestic indices have seen a recovery in the banking and financial sector while the rally in pharma and FMCG stocks also aided the rise in the domestic markets.
Apart from the share markets, the report noted that the hunt for safer havens has seen the benchmark 10-year GSec yield fall by 32 basis points between March 23 and April 24. “The RBI rate cuts, safe-haven demand, OMO operations, surplus liquidity in the banking system and expectation of additional measures by the RBI to support the relief measures taken by the government have driven the yield lower for the benchmark GSec,” the report said. The stunted fall in the yield can be attributed to foreign outflows, lower trading volumes and the increase in the supply of government securities. In the one month since the lockdown was announced, 10-year Government Bond yields have fallen 5% in India, whereas the US 10-year bond yield has slumped 20%.