The week ahead – Crisis in India as COVID19 cases are increasing
The Indian markets have left us confusing in the last week. Investors are tensed about the decisions they are about to take. They are thinking about both the sides of the coin. Now the biggest decision to be made is to weather this is the right time for investment or should wait for more confirmation in the uptrend.
Last week no doubt confirmed a positive uptrend and a positive sentiment among FDI. But when it comes to Friday stock market opening, it made investors tensed a little bit.
So the coming will revolve around the increasing number of covid19 cases and the global tensions of trade relations because of Trump government decisions, and the Decisions of state governments on the increasing cases.
On Monday the markets will respond to the World Bank report which says that the economy in India might shrink to 3.2 percentage in FY21. Even the S&P decided to keep India’s rating to lower investment grade. This might look like a challenge and a difficult future for the Indian economy hence the stock market will react to these reports. But when we closely observe the FDI investments that are coming from the past week, it seems like a positive sentiment for the Indian economy among the global investors.
Many reports have pointed out that though India’s economy may face a shrink in FY21, the economy will recover at a faster rase considering the economic stimulus packages and global banks actions and stimulus to the country if needed.
And one more thing that might affect the market movement is the fear of a possible second wave of coronavirus which is possible will have devastating effects on the global economy and India is no exception. A drop in the Wallstreet reflected in the Indian index on Friday though the markets recovered eventually by closing. But it indicates that global actions will affect the Indian economy.
Things to watch in the week ahead
India’s Trade deficit has reduced to $6.76 billion in April a drop from $9.76 Billion the month before. pandemic has affected the global demands and the exports have reduced 60% to their lowest since 2006.
Modi is about to discuss with the chief ministers of the states on June 16th and 17th about the present situation and about any possible suggestion on the measures to be taken to flatten the covid19 curve. The outcome of the event is an important thing to keep a watch in the coming week.
As the news in the social media is spreading on the possible another lockdown across the country, the government has stepped in to announce that there is no official information as of now about any increase in the complete lockdown and don’t get into these fake news in the times of this pandemic. But when it comes to market movement, a piece of small fake news even may affect the investor’s sentiment. It is important to keep a watch on the market movement to find and analyze any possible downtrend if observed to exit and possible entry.
Now the US FED decisions last week made US Wallstreet crumble. and the effect spread to Indian markets in the opening session on Friday. So it is important to watch for any government decisions across the globe and see the effect of these on the Indian markets.
Companies announcing the financial results including but not limited Tata Motors, Pidilite, HPCL. Observe these financial results and the effect of covid19 and lockdown on these company results.
Our Outlook: Views are personal
We expect a positive outlook on the Indian stock market in the coming week. But any decision on the possible lockdown in the meeting supposed to happen on 16th June will make the outlook negative. If there is small news of the possibility of lockdown extension suggestion in the meeting that comes out from any government official, then the stock market will surely crumble the sentiments of investors and it is important to find such situation and exit if possible.