There has been a remarkable recovery on the Indian headline indices and for the week ended June 5, 20202, the gains have been to the tune of 6%. Sensex has reclaimed 34000 points, while the Nifty is on 10100 points.
Central banks around the world to tackle the fall out due to coronavirus have been releasing stimulus measures, the latest being by the European Central Bank or ECB. There is a return of foreign investors into the Indian markets. This improves risk-on sentiment of investors who now see recovery from the Covid led downturn.
And there are hopes of further stimulus measures which is improving the sentiment across the world. Also, the latest US jobs data that came in a better figure is likely to improve stock market sentiments.
FPIs betting on Indian markets:
As per the provisional data, FPIs are investing into Indian equities and on June 4, 2020 they invested a sum of $2.59 billion into the Indian equities. This is another positive for the Indian markets.
Also, a Deutsche report suggest India will benefit from the manufacturing companies shutting centres in China and also over the time and also currently India remains the top investment destination of global investors.
Gains on the Bank Nifty
As the economies including India has begun to open up via Unlock 1.0 route, banks anticipate a better cash flow situation in the hands of borrowers as per a Jefferies report. There is also a case taken that the cut in white collar jobs has been limited.
Also, individual stock situation such as the SBI result that was announced on Friday also provided an impetus to PSU Banking stocks.
But analysts ask investors to exercise cautious approach and look for moratorium aspect of the bank as well as its asset quality.
Total loans under moratorium have started to come down or are stable now, there is enough liquidity in the market for banks and tier 1 non-banking and financial companies (NBFCs) , real estate, hospitality, tourism and entertainment sectors could take longer to recover," Sukhija, analyst at BNP Paribas said.
Nifty Bank for the week has outperformed the broader Nifty with gains of 9%.
Gains on Index Heavyweights:
Heavyweights such as RIL which on Friday surged to a record high after bagging 6th Abu Dhabi deal is also aiding the sentiment.
And with rally in 95% of the stocks which was largely fuelled by global rally, markets may begin to consolidate before the next leg of run-up.