Disconnect grows in India between Covid-19’s ruination and record high markets Investors continue to snap up Indian assets, fuelling a 66% rally in the Nifty 50 Index over the past 12 months 28 May 2021 - 13:28 Nupur Acharya, Divya Patil and Baiju Kalesh India is experiencing a huge surge in Covid-19, one its health system cannot cope with. Picture: BLOOMBERG/REBECCA CONWAY
Mumbai As Covid-19 continues to ravage India, financial professionals across the country are grappling with an increasingly surreal disconnect between the epidemic’s devastation and a record-breaking boom in local markets.
The world’s worst coronavirus outbreak has battered India’s economy and lifted its official Covid-19 death toll to more than 318,000 a figure that experts say is likely a significant undercount.
Explore Now
In the booming $2.9 trillion equity market of virus-ravaged India, following the rich is proving to be a safer strategy.
The year-to-date return of Bloomberg Intelligence’s custom basket of 30 stocks favored by wealthy individual investors is about 8 per cent higher than that of the National Stock Exchange of India Ltd.’s benchmark Nifty 50 Index, according to data compiled by Bloomberg.
These shares that include the likes of
Bharat Heavy Electricals Ltd. started outpacing the Nifty 50 Index at the end of March, just days before a new wave of coronavirus infections made the Asian nation a global hotspot for the pandemic. Since then, the outperformance has widened even as the pace of infections slowed and the Nifty gauge neared a record high.
What awaits Dalal Street next week? Frustration and Déjà vu!
SECTIONS
Share
Synopsis
While indices may have logged gains over the past three weeks, they have been stuck in an 800-point range between 14,200 and 15,000 for well over two months as investors balance the near-term disruption caused by the second wave.
Getty Images
If the domestic problems weren’t weighing investors down enough, this week also resurfaced concerns over the possible future actions of the US Federal Reserve.
Related
MUMBAI: Benchmark equity indices ended a lackluster week in the red, snapping a three-week long winning streak, as the Covid-19 pandemic continued to sap investors’ enthusiasm for stocks.
Emerging markets losing charm? Why FPIs are shifting focus to developed markets
CLSA in a recent note stated that the US and UK markets may show investor preference in the coming months given the lead in vaccination.
Synopsis
The appeal of emerging markets is waning due to the slow pace of vaccination amid the emerging risk of a new wave of the pandemic.
ET Intelligence Group: Foreign investors are gradually raising wagers on the developed markets. The MSCI World index a gauge of equity performance of the developed market (DM) has outperformed the Emerging Market (EM) index by 7.3% since the beginning of March 2021, show the data from Bloomberg. This is in contrast to the earlier trend wherein backed by the scope for higher earnings upgrades, the EM index had outpaced the World index by