As if in disregard for rising Covid-19 numbers — new cases touched 3.75 lakh on Wednesday — the Sensex has gained 1,887 points or 3.9% over the last four trading sessions, to close at 49,765 on Thursday.
I also feel that foreign portfolio investment outflow, which started in April, will gather pace in the coming days and weeks if the healthcare situation does not come under control,” said the founder and CEO of a leading financial services firm.
Given the fact that in the next 3-4 years the economy is expected to go back to 7-8% GDP growth rates, one can only guess the levels at which the Sensex would trade at in three to four years,” said Madan Sabnavis, chief economist at Care Ratings.
If the absence of a nationwide lockdown and the limited impact of lockdowns announced by the states have reduced anxiety, there is optimism surrounding the vaccination programme.
“While infection and mortality is low among people who have been vaccinated, the market is optimistic that in two months’ time when India would have vaccinated around 35-40 crore people, it will result in free travel and near opening up of the economy.
Also, the fact that most countries with resources are coming to India’s help has boosted sentiment.
If global liquidity and inflow of funds by foreign portfolio investors , DIIs have invested a net of Rs 9,669 crore as against a net outflow of Rs 11,101 crore by FPIs.
In contrast, in the period October 2020-March 2021, while FPIs had pumped in a net of Rs 1.97 lakh crore that lifted the Sensex by over 31% from levels of 38,000 to over 50,000 in March, DIIs were busy selling.
While FPIs have been selling from the Indian markets, there are some who feel they may increase the pace of the sell-off if the healthcare situation does not come under control soon.
Stock investments should, however, be in high-quality companies that are better equipped to handle the current crisis and are expected to increase their market share in the current environment.