Rise in Covid-19 cases weigh on markets as lockdown may derail economic recovery

Stock Market

Mumbai: Indian benchmark indices ended decrease on Monday as fast improve of Covid-19 cases world wide and particularly in the US, threatened to derail the economic recovery hopes. With states in India set to increase lockdown or reconsidering bringing again lockdown measures, markets appear to be weighing the unhealthy information. Maharashtra authorities, on Monday, prolonged lockdown in the state until 31 July. The state authorities requested officers to implement measures and mandatory restrictions through the prolonged lockdown to include the unfold of the virus. The BSE Sensex ended at 34,961.52, down 209.75 factors or 0.60%. The Nifty closed at 10,312.40, down 70.60 factors or 0.68%.

Markets in different elements of Asia Pacific area have been additionally weak with Japan’s Nikkei down 2.3%. Investors are cautious that surge in cases worldwide may affect the reopening of economies.

Nagaraj Shetti, Technical Research Analyst, HDFC Securities stated, “After exhibiting late upside recovery on Friday, Nifty slipped into weak spot in the early market commerce of Monday on the backdrop of weak US and Asian markets and later shifted right into a slim vary motion for the higher a part of the session. Nifty confirmed upside recovery in direction of the tip.”

According to analysts at Morgan Stanley, international financial system will be capable of maintain its recovery and keep away from a double dip. “We acquired a stark reminder this week that the combat in opposition to covid-19 just isn’t over, as new cases globally thrice reached new highs. Unsurprisingly, the primary query we get from traders is whether or not this resurgence disrupts our name for a V-shaped recovery. The reply is not any. We stay assured that the worldwide financial system will regain its pre-covid-19 ranges in 4 quarters and developed economies in eight quarters,” stated Morgan Stanley.

However, regardless of steady considerations of steep valuations and weak basic help, overseas fund flows into India considerably improved in June. According to analysts an unprecedented quantity of fiscal and financial stimulus and gradual reopening of economies submit lockdown saved sentiment intact worldwide and India has been largely beneficiary of that.

Foreign institutional traders (FIIs) inflows into Indian equities have been at $2.87 billion in June to date, highest ever in the 12 months. FIIs have been steadily allocating cash into Indian shares with an influx of $1.71 billion in May after an enormous sell-off of $8.42 in March and April. The overseas cash additionally drove Indian markets over 8% greater in June outperforming each MSCI Emerging Markets (EM) and MSCI World index in the month.

Domestic liquidity in Indian shares is petering out. Domestic institutional traders (DIIs) have bought shares price 626 crore in June after an influx of 11,355.93 crore in May. In this 12 months to date, they’ve infused cash price 85,821.68 crore in equities. Hence, cause for DIIs offloading cash in June is generally attributed to revenue reserving.

On Monday, Indian rupee was up 0.08% to finish the day at 75.58 per greenback.

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