Stocks rose for the second straight day on optimism that the US may send vaccines to India and a slight decline in daily Covid-19 cases. The US response for help came after the UK, France and Germany pledged aid to India over the weekend.
In the past two days, the benchmark BSE Sensex has gained 2.23%, while the 50-share Nifty added 1.86% despite the devastation caused by the Covid-19 pandemic.
On Tuesday, the BSE Sensex rose 557.63 points, or 1.15%, to 48,944.14, while the Nifty gained 168.05 points, or 1.16%, to 14,653.05. Market sentiment in other Asia-Pacific countries were mixed.
“Global markets were muted as investors were cautious ahead of the US Federal Reserve monetary policy outcome on Wednesday. On the domestic side, the Nifty rallied for the second day in a row as the number of fresh covid cases declined slightly, and countries across the world extended their help to India in fighting the pandemic,” said Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services.
Khemka said the Indian markets are likely to remain volatile due to earnings announcements, market reaction to government actions, and the progress on the vaccination drive. “Investors would actively track management commentaries in their post-results conference-calls, given the current pandemic situation. Global markets would be cautious ahead of the US Fed’s monetary policy outcome on Wednesday. Even US President Joe Biden is expected to spell out his infrastructure spending plan, and the tax hikes to pay for it which could set the market tone for the near term,” he said.
{{/usCountry}}Khemka said the Indian markets are likely to remain volatile due to earnings announcements, market reaction to government actions, and the progress on the vaccination drive. “Investors would actively track management commentaries in their post-results conference-calls, given the current pandemic situation. Global markets would be cautious ahead of the US Fed’s monetary policy outcome on Wednesday. Even US President Joe Biden is expected to spell out his infrastructure spending plan, and the tax hikes to pay for it which could set the market tone for the near term,” he said.
{{/usCountry}}Investors will be keenly watching the US Federal Reserve’s commentary on the economy as it kicks off its two-day policy meeting on Tuesday. The Federal Reserve’s outlook on rates will also be a crucial factor impacting the money flowing to Indian equities as foreign institutional investors have turned net sellers of Indian shares for the first time in six months.
Even as the second wave has continued to worsen, analysts at BofA Securities said the markets were likely to look beyond short-term pain. “Despite lockdowns, consensus Nifty FY22 earnings per share (EPS) is up 3% since March-end. We see the Street revising down its estimates during the ongoing earnings season. That said, with cases likely to peak and vaccine approvals/expansion gaining traction, we think investors are likely to look beyond the short-term pain,” said BofA Securities in a note on April 27.