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Market Sentiment Moving Into April 13- April 18
The market ended with gains during the week but dip in turnover still hints at jittery investors, who remain depressed owing to COVID-19 pandemic which has gripped economies across the globe, dealers said.
An analyst from BMA Capital Management said, “IMF board meeting would be the key event along with the current account number for the month of March.” These events would likely bring some clarity over the dollar/rupee parity.
Furthermore, the growth of new coronavirus cases in the United States is still rapidly increasing. If this trend continues it will show there has been no flattening of the curve, and would be a net negative for the economy. “We opine that gradual accumulation of fundamentally sound scrips at these levels have the potential to provide significant gains in the medium to long run,” the analyst added.
An analyst from BCA Financial Services said the market would continue trading sideways in the near-term, due to the corona pandemic and uncertainty regarding the final economic fallout of this disease. “Hence, we recommend investors to hunt attractive blue chips at every dip.”
Stocks rallied on Thursday to close out their best week since 1974, as Wall Street grew increasingly confident that the coronavirus crisis is starting to improve and the Federal Reserve took extraordinary measures to support the U.S. economy. The S&P 500 was up more than 11% for its best week since 1974.
Investors have become increasingly optimistic that the coronavirus outbreak will soon turn a corner. Thursday’s rally built on gains from the previous session, where both the Dow and S&P 500 gained more than 3% after Senator Bernie Sanders dropped out of the presidential race. The market gave up nearly 4% of gains and closed in the red on Tuesday, following a massive rally on Monday, in which the Dow posted its third-biggest point gain ever, rising nearly 8%.
After starting the week in red, expectations of further cut in the benchmark interest rate along with the positive news flows kept investors engaged. Recent treasury bills auction also brought optimism to the equity market, as yields on of three months, six months and 12 months declined by 40, 100 and 122 basis points, respectively.
This shows increased demand for longer tenor instruments, which might be on expectation of interest rate cut in the upcoming monetary policy and greater interest of banks in investment instruments due to the riskier environment.
There was some recovery at the end of the week, as the market was fuelled by government measures including stimulus of $1.2 trillion announced to tackle COVID-19.
“We expect the market to remain positive in the upcoming week as government prepares to ease off lockdown in the country,” an analyst from Arif Habib said. Moreover, loan disbursement from IMF of $1.4 billion next week would also relieve fiscal pressures.
In addition, with the construction sector resuming operations from April 14, 2020, cement and steel are expected remain in limelight. Oil prices too would remain range bound due to lower demand, he added.
The next week ahead is unlikely to see such steep gains as last week, but we may see a relatively flat market as investors are unsure of whether the impact of the stimulus are over and as Q1 earnings reports begin looming on the horizon.