Weekly View & Markets ahead - June 5, 2020 - Geojit

Mr. Vinod Nair- Head of Research- Geojit Financial Services

Benchmark indices gained for the second consecutive week, by around 5.7% on a weekly basis, and maintained its bullish momentum. Additionally, the broader markets also participated in this week's gains. The banking index has played a major part in this rally. A major part of this rally is because liquidity is slowly finding its way into the markets. FIIs added to the positivity and have invested around Rs.20000 Cr to date, which is already higher than the Rs.14000 Cr investments in the entire month of May. The markets have also been in sync with global cues, mirroring expectations of a rebound in global growth, fuelled by stimulus measures by various central banks. Investors are expecting a full resumption in business activities after lockdown measures are eased, which added to the positive momentum in the market. The markets are ignoring the economic data and numbers coming in and are pricing in a fast recovery in demand, which is essential for a sustainable economic recovery.

WEEK AHEAD

The indices are approaching its technical resistance levels, although there are no signs of fatigue in the market. The number of virus infections continues to rise in India and has not shown any signs of abating. This is worrisome, because it may get worse when measures are eased from June 8th. Currently, there seems to be a disparity between the markets and the economy while valuations are also getting heated since the expected recovery is still not showing up in the numbers. Simmering geopolitical tensions may also affect the global markets which will have an impact on ours as well. Caution is advised and stock-specific accumulation may be continued.

Source : Equity Bulls

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