Tight turns, steep slopes, sudden highs and inversions are characteristics of a roller coaster. Those have also been the hallmarks of the Indian stock markets for close to three months. From hitting a three-year low on March 23 with a 13 per cent fall to bouncing back just three days later, it has shown deep falls and sharp recoveries time and again.
But don’t get fooled by that. There may be a storm brewing beneath the calm. After all, this sharp recovery is built on weak corporate and economic fundamentals and huge uncertainty in the immediate future.
With India’s economy projected to shrink 6.8 per cent in FY21, according to SBI Ecowrap (it grew slowest in 11 years at 3.1 per cent in the March quarter), early bird corporate results showing sharply shrinking top lines and bottom lines, stock markets are set to lose the only basis on which they have been rallying — the hope of a ‘V’ shaped recovery.
The optimism is dimmed further by rising coronavirus cases in India and fear of a second wave in the US, the world’s largest economy, which has led to a selloff in S&P 500, the global barometer for equity markets, as well.
Add to this the lockdown-triggered defaults feared in housing, credit card, personal and corporate loans, their impact on non-performing assets (NPAs) of banks and non-banking finance companies (NBFCs), and the stock market rally appears to be on a very, very weak wicket. “The economy is in shock. All indicators are showing that the situation is very bad. Fundamentals of the stock market story are very weak,” says Dhananjay Sinha, Head of Research and Equity Strategist, Systematix Group.
This story is from the {{IssueName}} edition of {{MagazineName}}.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the {{IssueName}} edition of {{MagazineName}}.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
Pension Scheme - Safety Net
The move to introduce the UPS has evoked mixed reactions. Analysts believe its funding will have limited impact on the fiscal math
The Reit Choice?
Real Estate Investment Trusts (Reits) Are Gaining Traction As Interest Rates Stabilise. But Returns Could Be Affected By Adverse Economic Conditions And Market Volatility
CORPORATE - Calling to Account
The sudden exit of Byju's auditor BDO marks the latest in a long series of setbacks for the edtech firm
EMPLOYMENT: Skills Push
The skill development ministry plans to partner with the UGC to improve the employability of undergraduates
Building on a Vision
L&T'S CHAIRMAN EMERITUS A. M. NAIK HAS BUILT A MAMMOTH ENTERPRISE THAT IS BUILDING A NEW INDIA, FROM ITS METRO RAIL SYSTEMS TO THE RAM TEMPLE
"KYS more important than KYC"
Vijay Kedia is a renowned equity investor; the value of his listed portfolio stands at around ₹1,750 crore
ROXX STAR
THE THAR ROXX COMBINES LUXURY WITH PERFORMANCE TO MAKE A STRONG STATEMENT IN THE MID-SIZE SUV SEGMENT
HIT THE GROUND RUNNING
Smartwatches have become indispensable tools for runners, offering real-time insights into pace, distance, heart rate, and more. Here are a few you can consider
TURNING THE TABLES
INDIA'S FURNITURE MARKET IS POISED FOR A GLOBAL TAKE-OFF. ALREADY, A HOST OF GLOBAL BRANDS HAVE MADE THE COUNTRY THEIR HOME, BUT INDIAN COMPANIES ARE NOT TOO FAR BEHIND
THE EVOLUTION OF ATHERA
IDENTIFYING OPPORTUNITIES IN ADVANCE HAS STOOD THIS BENGALURU-BASED VC FUND IN GOOD STEAD. NOW, WITH A HEIGHTENED FOCUS ON TECHNOLOGY, IT WANTS TO SUSTAIN THE SUCCESS