6 Reasons Why Stock Market Rebound In April May Not Sustain In May

The stupendous rebound that Indian stock markets showed in April after a heavy coronavirus led sell-off shall be hard to sustain in the current month and going forward.
Notably, in the just ended month April, street recorded a steep gain of 4213 points on the Sensex. Also, percentage wise 14.3% gain, it has been the best monthly gain recorded in 10 years as per the reports.

6 Reasons Why Stock Market Rebound In April May Not Sustain In May

So, the rally spurred primarily by gains in financial, pharma and IT space may find difficult to sustain this month. Here's why:

1. Inadequate response of the Indian government; FIIs not happy:

As we write we are now set to enter Lockdown 3.0 from May 4 which has been extended to combat rising coronavirus cases, and if we go by market veterans FIIs are not happy with the extent of India's efforts towards combating coronavirus.

"If you put it on a scale relative to the world, we would have to put it near zero, except some response from the Reserve Bank of India (RBI)," said Samir Arora, market veteran.

Also, the RBI's and the earlier finance ministry's bail out of Rs. 1.7 lakh crore is seen to be inadequate to tide the current crisis.

So, Indian benchmark indices are set to perform weak in the near term.

 

2. Donald Trump warning of new China tariffs another threat:

 Another threat now looming and is sure to have its rub off effect on Indian indices is the US President Trump's threat to levy new tariff on Chinese products over coronavvirus crisis. And on Thursday, the President said that the deal between the two nations is nows secondary to the pandemic a

Read more at: https://www.goodreturns.in/news/6-reasons-why-stock-market-rebound-in-april-may-not-sustain-1154484.html

 

Street gained weighing reopening from May 4:

In the previous month, streets went optimistic about reopening from May 4 and much of the gains were fuelled because some of the company's resuming their operations and production work. But against sentiments, while relaxation has been granted in orange and green zones, the extended lockdown until May 17 now will further bother the street sentiment.

Read more at: https://www.goodreturns.in/news/6-reasons-why-stock-market-rebound-in-april-may-not-sustain-1154484.html

 

Rupee may again weaken:

While strong gains in the equities brought severe losses in the domestic currency under check which on the last trading day i.e. April 30, 2020 ended at 75.10 per US dollar and even gained back levels of 74.97 during the day. But as the country's macros do not support fresh heavy foreign inflows, the currency is still subjected to lose to 75.50/76.00 as per Emkay Global Financial Services.

 

 

International crude is now gaining ground:

Now as after reports that crude has bounced back by 10% on a single day due to less than expected fill up of the storage and subsequent cut back in its production, crude which tumbled to negative territory in the futures market is soaring gradually. This is indeed a negative news for the Indian markets which may discount it and fall in line.

 

 

Street awaiting fiscal stimulus for the industry, MSMEs:

The previous month's rally is said to be globally orchestrated rally and any hopes dented on further delay in stimulus measures by the government will be taken on negatively by the streets. So, in such uncertain times it shall be best to sit on cash as valuations are still expensive and fundamentals remain weak.