India’s Covid-19 crisis has so far failed to spark a deep stock selloff like that seen last year, and some asset managers point to less stringent curbs on activity as one factor at least for now. Even as the nation reports more than 300,000 confirmed infections and over 4,000 deaths a day, India’s benchmark equity index has been moving in line with regional peers. The S&P BSE Sensex index has declined 6.6% from a mid-February peak, about as much as the MSCI AC Asia Pacific index. That compares with a 23% tumble in the Sensex in March last year when the coronavirus pandemic started to rage globally.
Back to buying
The surprisingly muted stock market reaction to India s virus disaster can also be seen in net outflows of foreign investors, which totaled about $1.5 billion in April versus $8.4 billion during the height of the rout last March. They turned net buyers of Indian equities this week after four straight weeks of outflows.
More limited and regional lockdown measures being implemented by state governments have prevented a slide in economic activity like last year, but the risk is that the outbreak may prompt a sharp escalation in restrictions again. A national lockdown is not priced into the markets, said Arvind Chari, chief investment officer at Quantum Advisors Pvt..
India’s stock market isn’t pricing in a full Covid lockdown
Benchmark equity index has been moving in line with regional peers despite surge in cases India’s Covid-19 crisis has so far failed to spark a deep stock sell-off like that seen last year, and some asset managers point to less stringent curbs on activity as the main factor, at least for now.
Even as the nation reports more than 300,000 confirmed infections and over 4,000 deaths a day, India’s benchmark equity index has been moving in line with regional peers. The S&P BSE Sensex index has declined 6.6% from a mid-February peak, about as much as the MSCI AC Asia Pacific index. That compares with a 23% tumble in the Sensex in March last year when the coronavirus pandemic started to rage globally.
India’s Central Bank Says ‘Boo.’ Carry Traders Faint
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Large-scale bond-buying and money-printing may result in a glut of rupees, causing them to depreciate against the dollar.
“India joins the money printers.”
That’s how an ING Bank research note describes the Reserve Bank of India’s explicit commitment to buy ₹1 lakh crore ($14 billion) in government bonds this quarter. Since this new move has been given a fancy name Government Securities Acquisition Program it will probably both extend and expand.
Large-scale bond-buying and money-printing may result in a glut of rupees, causing them to depreciate against the dollar. Which is why the foreign-exchange market pushed the dollar 1.56% higher against the rupee, one of the largest one-day moves in the past decade.