Healthy Q2 results, lower COVID infection rate lift markets

Healthy Q2 results, lower COVID infection rate lift markets

Mumbai, October 20, 2020

Deceleration in domestic Covid infection rate, along with healthy Q2 results and expectations of a further stimulus package, lifted India's equity markets on Tuesday.

Indian benchmark indices rose for the third straight session on October 20.

In terms of global indices, Asian stocks slipped on Tuesday as investors adjusted risk exposure ahead of the US election and ahead of a deadline for Washington to pass an economic stimulus bill.

Similarly, European equities struggled for traction as anxiety grew about the economic cost of the pandemic, while record Covid-19 cases on the continent also weighed on sentiment.

Back home, volumes on NSE were a little below recent average with realty, media, IT, pharma and auto indices rising while energy, FMCG, metal and PSU bank indices closed in the red.

The Nifty50 on the National Stock Exchange closed at 11,896.80, higher by 23.75 points, or 0.2 per cent, from its previous close.

The Sensex closed at 40,544.37, higher by 112.77 points, or 0.28 per cent, from its previous close of 40,431.60.

"Nifty has outperformed most Asian markets," said Deepak Jasani, Head of Retail Research at HDFC Securities.

"It keeps rising gradually making higher intra day highs and higher close. Sectors in favour changed again. Advance decline ratio was almost equal showing simultaneous entry and exit from sectors and stocks. Some more gradual upmove for the indices seem to be in store."

According to Vinod Nair, Head Of Research at Geojit Financial Services: "The strength of Indian market is supported by the good Q2 results announced till date, in expectation of a further fiscal stimulus and drop in the rate of daily Covid cases. Till date, the optimism of the market is limited to blue-chips and sectors like IT & Banks."

"To improve the breadth of the market in the future, a lot will depend on the trend of Q2 result, which has a very positive view. This buoyancy was also supported by global trend which faded due to lack of consensus in the US to sign a fiscal package before the election and no hope of talks between EU-UK."

Nair added that volatility is expected going forward but market will maintain its optimism in-line with stock-wise Q2 result, size of the domestic stimulus and global developments.

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services, said: "Global cues were weak due to the cautiousness ahead of the US election which is now just two weeks away. Record Covid-19 cases in Europe also weighed on sentiments. On the domestic side, markets remained range bound amid stock specific action."

"Cement stocks moved higher after ACC reported better than expected numbers. The Q2 earnings season so far has been good which is providing support to the market. Additionally, declining covid cases in India and expectation of further fiscal stimulus kept the sentiments positive."


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