New York Governor Andrew Cuomo said earlier that deaths were showing signs of hitting a plateau in the state. China reported no deaths on April 6 - the first time since January. New cases in South Korea also dropped sharply with only 47 new cases of infection for the second day running. India also reported a 20% drop in new cases on April 6th after eight consecutive days of an increase in the number of patients.
Intraday, Indian markets made a sharp up move, reflecting the global positive sentiments. Sensex closed 8.97% up while Nifty gained 700 points. All 50 stocks on the index closed in green; IndusInd Bank (up 22.5%), Axis Bank (up 20%) and Grasim (up 15%) ended the day as major gainers.
Investors can further rejoice today's move as Nifty successfully defended its level of 8,000. While the jury is still out on whether the bottom is formed or not, the market will savour this move till it lasts.
The latest report from the MSCI could also be a positive booster for the market. According to it, Indian stocks are likely to see their weightage increasing on MSCI Index.
India’s weight on MSCI emerging markets could rise by 55 basis points and India’s foreign inclusion factor to rise from 0.39 to 0.42. In simple words, India could see an FII inflow of more than $7 billion if MSCI increases the weight of Indian stocks during its impending rebalancing exercise.
Pharma at a multi-year breakout:
After being marred over the host of issues in the US market, pharma stocks have put their hands up when the market was looking for safe heavens.
Indian pharma companies faced price erosion, increased domestic competition, abated margins and a dearth of new drug approvals in the US market over the years. However, Coronavirus breakout has significantly changed the circumstances.
USFDA approvals are coming at a fast pace all of a sudden and on request of US President, India has partially lifted the ban on the export of Hydroxychloroquine and 11 other active pharmaceutical ingredients (APIs) and their formulations.
This development has given a new lease of life to US-facing drug manufacturers and a dull sector has turned vibrant with multi-year opportunities.
Housing Finance NBFCs: Strong is getting stronger
With uncertainty around jobs and restriction in movements, buying real-estate is the last thing on a customer's mind. It has come as a double whammy for Housing finance companies who were already grappling with asset-liability mismatch and liquidity crunch post the IL&FS crisis.
Many NBFCs went into self-correction mode, reduced their short borrowings and disciplined their leverage and ALM mismatch. Companies like HDFC and Canfin Homes appear better placed to endure this tough phase while PNB housing and LIC HF can face some pressure due to the higher leverage on their books.
From asset quality perspective, HDFC, LIC HF and CanFin derive sizable business from government employees & category 'A' salaried segment and remain relatively safe investment avenues. On the other hand, the highest impact will be felt on the self-employed segment. Repco and Aavas Housing have most of the exposure to this segment.