Weekly Market View - May 15, 2020 - Vinod Nair, Head of Research at Geojit Financial Services
The stock markets exhibited considerable amount of volatility this week, following global cues and domestic news events by the government. The much awaited stimulus package announcement by the government was greeted with a 2% gain the very next day, but then gave up its gains in the following days to close out the week down by almost 2 % on a weekly basis. The proposed stimulus package was met with scepticism by the markets, on account of the execution of the proposed measures and the effectiveness of these measures to boost demand in the economy. The step by step disclosure of the package has also not found favor with an impatient market, waiting for a quick fix for the economy. Worries about economies struggling to emerge from lockdowns, continuing infections around the world, resurgence in US-China trade tensions were the global factors to impact the markets. In India, the rising case of virus infections shows no signs of abating, inspite of the high impact lockdown, and this is also weighing on the minds of investors. The government will have to adopt a balanced approach because it will have to weigh the benefits of extending the lockdown against the high economic damage caused by it.
Government has made it clear that it will introduce the measures in tranches, but execution is key and that will be followed by the markets. Markets will also be driven by the rate of infections, lockdown 4.0 norms and any stock specific earnings commentary in the ongoing results season.