Markets Next Week: Investors Await Economic Package, Lockdown Opening Key

Markets next week will have to contend with a whole lot of news flow, developments and global cues. It is not going to be an easy week for traders, as volatility is unlikely to ebb anytime soon.

Economic package awaited

Markets are eagerly awaiting an economic package. There are reports that the size of the package would be around Rs 1 lakh crores, with a clear focus on the MSME sector.

There have been all kinds of speculations on the package that it would also include the farming sector, but, one would have to wait and watch. It is likely that labour intensive sectors may get some respite.

This week Franklin Templeton Mutual Fund announced that it was closing six debt schemes. This was largely as a result of the covid crisis, which was creating havoc for these funds. Redemption pressure, added to one of the reasons to close these schemes. Investors remain worried that this could have an impact on other debt schemes.

If redemption pressure continues in other debt schemes, it could have a cascading impact. This may even spill over to equity mutual funds, pushing the stock markets even lower.

This was one of the reasons the Nifty lost as much as 1.7 per cent on Friday and had a weakish session.

Investors await decision on lockdown

Investors would also await a decision on the lockdown. It is likely that the hotspot centres may see an extended lockdown beyond May 3. Covid-19 infections are near 27,000 now and it could spread even more rapidly.

In any case the government has to balance between the economy and infections. It is likely that we may see partial re-opening of airline services as well.

Global cues are going to be exceedingly important in the days to come, especially from the US markets. The Dow Jones this week posted its first weekly loss in three weeks, thanks to severe fall in the initial part of the week, wherein oil prices fell into the negative territory. Global markets like the Indian markets are also likely to be volatile and the US markets are also likely to track oil prices.

Investors should be a little patient before investing, as there is a possibility of further downside to the markets.

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