Equity markets braved all odds this fiscal and rewarded buyers with excessive returns because the benchmark Sensex surged greater than 66 per cent regardless of COVID-led disruptions and considerations over its impression on the economic system. Market analysts termed FY 2020-21 as a curler coaster trip for not solely Indian markets but in addition for fairness indices globally as a result of pandemic.
In an unprecedented come again, the 30-share BSE Sensex has jumped 19,540.01 factors or 66.30 per cent up to now this fiscal.
This extraordinary rally holds significance as markets confronted unstable tendencies this fiscal. The BSE benchmark hit its one-year low of 27,500.79 on April 3 final yr. But, in direction of the latter a part of the fiscal, indices marched greater and the frontline BSE 30-share index zoomed to its all-time excessive of 52,516.76 on February 16, 2021.
“The bull-run got further strength with the progressive unlocking and sharp rebound in the economy. Discovery of vaccines and optimism it generated gave further strength to the bulls. Globally, markets witnessed a huge rally in November. Emerging markets continued to be flooded with FPI money,” V Ok Vijayakumar, Chief funding Strategist at Geojit Financial Services, mentioned.
The benchmark Sensex hit record highs multiple times throughout this monetary yr which ends on March 31 and simply two buying and selling days are left.
The frontline index had closed above the 50,000-mark for the primary time ever on February 3 this yr, primarily pushed by euphoria over the Union Budget.
It closed above the 51,000-mark on February 8. It rallied over the 52,000-mark for the primary time on February 15.
“The 2021 Union Budget was path-breaking. Major reform initiatives like privatisation lifted markets’ sentiments further,” Vijayakumar mentioned.
From witnessing mammoth losses to record-shattering positive factors, buyers witnessed a wide selection of feelings in fiscal 2020-21.
Equity markets had gone right into a tailspin in March 2020, with the Sensex sinking a large 8,828.8 factors or 23 per cent throughout that month as considerations over the pandemic impression on the economic system ravaged investor sentiments.
Religare Broking Ltd’s Vice President of Research Ajit Mishra mentioned the foremost issue which assured that the market restoration sustains was the reopening of the economic system, which led to the kick-start of companies. “Further, government, as well as RBI support, brought the economy and macro factors back on track. Lastly, supportive global markets and the beginning of vaccination drive pushed the markets higher”.
Of late, markets have witnessed correction amid rising COVID-19 circumstances in the nation which has dented investor sentiment as soon as once more.
“Now, a major concern is a second, and in certain parts of Europe a third, wave of COVID. Even though this is a negative, it is unlikely to impact markets much since vaccination is proceeding at a healthy rate. Also, the second wave has not resulted in a lockdown, only limited restriction of economic activity,” Vijayakumar mentioned.
On the highway forward, Vijayakumar famous that markets are more likely to stay buoyant because the US Federal Reserve is dedicated to maintain rates of interest close to zero by 2023.
“Recently, markets witnessed some sell-offs when the US 10-year yield rose. If the US 10-year bond yield goes above 2 per cent, that can cause a sharp global stock market correction. So, this space needs to be watched,” he famous.
According to Mishra, the emotions have already been impacted for the markets. “However, we do not expect any panic as investors are well aware that the government’s focus is more on reviving the economy. Besides, we expect the vaccine drive to gain momentum in the coming months which would further ease the pressure”.
As the second wave of COVID has began impacting buyers’ sentiments, “we feel some consolidation cannot be ruled out in the near future,” Mishra mentioned.
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