Weekly wrap: Falling Covid-19 cases, stimulus hopes drives Nifty to record high

Weekly wrap: Falling Covid-19 cases, stimulus hopes drives Nifty to record high

Last updated: 28 May, 2021 | 12:53 pm

Weekly wrap: Falling Covid-19 cases, stimulus hopes drives Nifty to record high

The markets saw another interesting week, with factors such as moderating Covid-19 cases across the country, Q4 earnings releases, and progress in global vaccination drive boosting investor sentiments. 

The markets were largely range-bound on the first two days of the week, closing marginally higher on Monday and Tuesday. Specific Q4 earnings and decline in Covid-19 cases drove sentiments.

On Wednesday, favorable factors such as lesser than expected contraction in GDP (SBI report), and positive cues from Asian markets led to Nifty closing above the crucial 15,300-mark. In the last two sessions of the week, newsflow around potential stimulus from the government and likely lifting of lockdown in certain states led to the index closing higher for the week by 1.7%. Nifty has posted its best 2-week gain since February.

Top gainers and losers

  • Nifty Media was the biggest gainer in the week, gaining 7.09%. PSU Bank (4.05%) & IT (3.9%) were the other top gainers this week. 
  • IOC (5.32%), SBI (5.18%), Wipro (4.89%) & Tech Mahindra (4.67%), Grasim (3.38%) were the top Nifty gainers for the week.
  • NTPC, Sun Pharma, HUL, Bharti Airtel & JSW Steel were the top Nifty losers in the week

Here is a quick recap of the market moving developments

  • Earnings season is nearing its end for Q4: The earnings season is nearing its completion with almost all the Nifty firms releasing their results. While the ongoing pandemic has affected various businesses, it has forced businesses to move towards greater digitization, providing a good opportunity for the IT industry. Most of the Nifty 50 firms have reported earnings in-line with estimates. Banks have got impacted in the quarter after the Supreme Court directed that the six-month loan moratorium offered by the RBI will not be extended further. This has led banks to report their true NPAs as opposed to pro-forma numbers (adjusted) in the last two quarters. You can read our analysis of BPCL and Sun Pharma from this week.
  • RBI’s annual report raises concerns over valuations: In its annual report, the RBI raised concerns over the widening gap between stretched asset prices relative to the weak real economy. “This order of asset price inflation in the context of the estimated 8% contraction in GDP in 2020-21 poses the risk of a bubble,” noted RBI. 
  • Government may announce a stimulus package: As the economy continues to reel under the impact of the pandemic, the government is reportedly planning to announce some stimulus measures. According to global brokerage firm Bernstein, the government may announce a package as the unlock phase commences, focussing on the most hit sectors such as small business and self-employed.

Gold prices rebound

After gaining for the first two days of the week, gold prices moved lower amid gains in equities. Rising Covid-19 cases in many parts of the world and inflation expectations had initially led investors to buy gold as an inflation hedge, while central banks maintained their easy monetary stance. However, gains in equities and moderation in cases have reduced appeal for the safe-haven asset class of late.

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