During the last part of the previous month, China engaged in a verbal spat with major countries as it moved forward to implement the new security law in Hong Kong. This resulted in the Hang Seng index falling by 1.61% while the Shanghai index witnessed a mere gain of 0.79%. Later the focus shifted from Hong Kong to the riots that took place in several US cities after the alleged killing of George Floyd
These shortcomings were offset by news of various economies gradually coming out of lockdown, thus resulting investors to hope of a future economic recovery. Also we saw the jobless data improving significantly in the US, after a record number of people lost jobs after the coronavirus pandemic. As a result, major European indices including CAC 40, DAX and FTSE 100 jumped by 8.99%, 8.54% and 3.63% resp. Similarly American indices like DJIA, S&P 500 and NASDAQ rallied by 6.34%, 5.40% and 4.61% respectively.
Spot rates of Major Indices⇑
While the economy appears to be badly hit, it doesn't seem that it will get more worse. The overall broad direction will be clear only by the second quarter of the latest financial year as we will have a clear picture of the earnings of companies during the entire lockdown period.
Performance of domestic indices: Picture Abhi Baki Hain!!
A strong rally was seen in domestic markets as well owing to positive rallies by major domestic indices during the first week of June.Over the past 15 days, Sensex gained 12.02%, Nifty 50 rose by 12.39%, Midcap gained 10.71% and smallcap rose 10.36%.
Banking and financial services gained 17.37% impacted by a heavy short covering as major banks reported profitable Q4 FY 2020 performance. The majority gain was witnessed in the realty sector (19.48%) followed by automobile sector which gave a bull run of 17.81%. The automobile sector witnessed a massive buying pressure as lockdowns has been gradually relaxed and production has been started in major automobile plants.
Will the bulls domination continue???
Hear it from our analyst
"The stock market is following a pendulum pattern. If we compare the retracement levels from March lows we can see that Nifty has surged nearly 40-50% till now. The gradual easing of global and domestic lockdown will have a positive impact on investor sentiments. However we are particularly bullish on the infrastructure sector and sugar sector. We believe that a good monsoon and the restrictions imposed by the governments on the sugar companies will be scrapped. Sugar is a major input for manufacturing alcohol based hand sanitizers which will also have a positive impact on their earnings. Mr. Dev Roy will give you a further clarification on the particular stocks in which we have raised our portfolio" - Souvik Dey, Analyst and Investment Advisor.
Disclaimer: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. It is for educational purposes only.
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