Why the Stock market is not going down despite India in the grip of the worst pandemic?
As we see the new and different variants to the deadly Covid-19 virus, it gets extremely volatile and uncertain to predict the economical situation in India. With an equilibrium in the rise and downfall in the covid cases, it becomes even more challenging to predict the future economic phases of the country.
This blog is all about understanding how and why the Indian stock market has not fallen despite the worst pandemic. Let’s jump straight to it. In our opinion, the major reason can be Both S&P BSE Sensex and NSE Nifty50 — benchmark market indices — have been registering strong weekly gains despite rising cases and declining economic activity.
Market optimism may also stem back to the robust results provided by key companies in Q4 of 2021. Several blue-chip companies’ values have risen so high than expected and this gives a ray of hope among the investors to look past the Covid-19 threat.
In their result commentary, companies seemed confident that business profitability will grow in the coming quarters. Because of the strong earnings season and commentary, investors are hoping that most of the stocks will continue to perform well in the future, well beyond the second Covid wave.
Did you know that commodities like copper and steel have a significant rise in their demand in the current scenario? This is the key reason why the majority of investors are putting in more money in these commodities to get fruitful results in the future. Three major reasons are deviating the focus away from Covid-19 – rising global demand, a surge in commodity prices, and liquidity availability.
Stock market movements are uncertain and tough to predict since it is usually based on perception and sentiments sometimes. For example, the Indian stock market was rallying the last May due to nationwide lockdown which made it ambiguous for the market analysts to study the indicators of economic activity due to its collapse.
Even though the country faces a bigger health crisis compared to 2020, it seems the economic damage has been lower than 2020 when everything came to a standstill due to the nationwide lockdown. The biggest factor that has kept the stock market sentiments high is the fact that the government has not announced a nationwide lockdown. This could, however, change as 98 percent of India is under some form of lockdown.
Even during the devastating pandemic, Indian stock trading continues to woo us with a soaring high. BSE Sensex has reported a 3 percent growth as compared to last year. Moreover, the NSE 50 index has risen by 7 percent this year. This makes India be one of the most sought nations for investors giving them hardly any reason to pay attention to the minor fluctuations.