Ever since coronavirus hit India, a lot of negative news kept prevailing in the market. This negative news made the people think the stock market will be crashing and thus people got involved in selling all their holdings, trying to make minimum losses, etc. But once the country entered into a lock-down, it was assumed that a safe environment will be built and thus people began to take little risks and started investing again.
Today, India is the third most affected nation and yet the stock market is rising. The financial year of 2020-21 will be having the most losses and yet the Indian barometer is only showing an upward movement. Till March people feared a lot and thus the index as well as stock prices were hitting 52-week lows, after that phase passed the stock and indexes are going up while battling the world’s worst economic data. This indicates that the stock rally has lost its grim reality and has been pushing the valuations upwards.
In order to maintain a safe environment and eventually lead to economic growth, the government introduced a package of 20 Lakh Crores. This money is invested systematically in different sectors for the growth of that certain sector. C. J. George, chief executive officer at Geojit Financial Services Ltd., a brokerage backed by BNP Paribas SA said that “Any market activity without fundamentals will not sustain, we are yet to see the fundamentals improving in the country”.
The S&P BSE SENSEX is up 45% from its March 23 low, all thanks to rising interest rates of first-time investors, purchases by foreigners and beginning of imports and exports. The rebound is ranked eighth best among major global equity indexes for the period. The optimism has been boosted by the various investors trying to bring up the prices. SENSEX is been trading 24% times of one year forward earnings, whereas NIFTY is being valued at 23.5% times.
Rajnish Kumar, the chairman of State Bank of India says that the government and corp-orates should take action by opening up heir wallets and start investing quickly in order to make the economy grow faster. Although the economic activity could shrink for the full fiscal year with some economists forecasting the GDP to contract as much as 10%, GDP Kumar said the situation is improving. 75-80% of the capacity held by the industries are being utilized, but as we are in the 5th month of lock-down, the supply chain is being disrupted in places where local lock-down guidelines are stricter.
Even though the number of coronavirus cases are increasing day by day, the rebound is ranked eighth best among major global equity indexes for the period.
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