Share markets brought much-needed relief for investors this week, here’s what is in store next

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Updated: Apr 11, 2020 11:04 AM

The holiday-shortened week did not disappoint investors who were desperately hoping for some bounce back from the benchmark indices.

S&P BSE Sensex ended the week at 31,159 points while the 50-stock Nifty reclaimed the 9,100 mark.

The holiday-shortened week did not disappoint investors who were desperately hoping for some bounce back from the benchmark indices. Both, S&P BSE Sensex and NSE Nifty-50 close to 12% during the week whilst Sensex recorded its biggest single-day jump in percentage terms since May 2009. S&P BSE Sensex ended the week at 31,159 points while the 50-stock Nifty reclaimed the 9,100 mark. “Indian indices jumped higher taking significant cues from its global peers, mainly from the US bourses. The confidence returned with reduction in the number of daily Covid cases in some countries. Sentiments are changing from ultra-pessimistic to mildly pessimistic which is driving markets higher,” said Jimeet Modi, Founder and CEO, Samco Securities &StockNote. 

MSCI Rejig: After depository institutions CDSL and NSDL, revised foreign portfolio investment limit for all public listed companies to the sectoral limit, it paved the way for billions of dollar coming into India. Morgan Stanley and Motilal Oswal along with other brokerage and research firms expect the change in FPI limit to set in motion the change in MSCI India’s weightage in the emerging markets index, which is expected to flood Indian share markets with foreign investors. According to Morgan Stanley, Indian bourses can expect passive inflows of over $1.4 billion (about Rs 10,000 crore) and active inflows of $5.7 billion (about Rs 43,000 crore). 

Pharma stocks rally: The Nifty Pharma index was beaming throughout the week, jumping up close to 19% from the closing levels of the previous week. “The rally is a relief rally and of course people have interest in pharma stock. They have been underperforming in the past few years and now with the demand jump they are attractive in the medium term,” Vinod Nair, Research Head, Geojit Financial Services, told Financial Express Online during the week. Analysts were also cautious about buying pharma stocks as the long-term outlook seems blurred at the moment.

Volatility settling down: The fear gauge of the Indian stock market, India VIX seemed to have exhausted itself this week, after its never-ending upward march in the month of March. The volatility index started the week at 55 points and ended the week at 49.7. The index is now 43% from it’s recent highs. “If India VIX falls below 30 levels, it would be a good starting point to go long and accumulate stocks, nonetheless buying on dips is advisable,” said Jimeet Modi.

Expectations ahead-

Stimulus package: Part of the jump witnessed across the share markets on Thursday was in hopes of another stimulus package being worked out by the government, this has given many hopes that the new package will be aimed towards the sectors that are hit the most due to the lockdown.

Markets bottoming out: Analysts are already warning investors to not rush to conclude a market bottom. Although many might think that another fall, as drastic as the one seen in the second half of March, is unlikely that might not be true. “ It is too early to make that conclusion as the full economic ramifications of the demand destruction caused by the pandemic and which it is likely to cause is yet to come to full play as yet,” said Dr. Joseph Thomas, Research head, Emkay Wealth Management during the week. A similar warning was flashed by Ajit Mishra, VP – Research, Religare Broking Ltd, he said, “it could be a temporary relief rally as the worries over the economic impact of the pandemic would continue to weigh on investor sentiments. We thus advise maintaining a stock-specific approach for both trading and investment.”

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