The week gone by saw markets begin the week with a loud thud and falling sharply. BSESENSEX lost 2,002 points while NIFTY lost 566 points on that single Monday and that was pretty much the story of the week with markets remaining just about there. The difference was the intraday volatility which increased significantly. An example of the same was the intraday difference on Tuesday which saw BSESENSEX make a high of 32,264 points and a low of 31,403. The intraday swing was 861 points and the closing difference at 31,453 points was 262 points. This was witnessed virtually on all the trading days and is a marked difference from what one saw in April.
BSESENSEX lost 2,074.94 points or 6.15% to close at 31,642.70 points while NIFTY lost 608.40 points or 6.17% to close at 9,251.50 points. The broader indices saw BSE100, BSE200 and BSE500 lose 5.97%, 5.86% and 5.75% respectively while BSEMIDCAP lost 4.91% and BSESMALLCAP 4.17%. There were no sectoral gainers and the one to fall the least was BSEHEALTHCARE down 0.40%.
The Indian Rupee lost 43 paisa or 0.57% to close at Rs 75.54 to the US Dollar. Dow Jones rose 607.63 points or 2.56% to close at 24,331.32 points.
Reliance was the star performer at the bourses last week and gained Rs 95 or 6.48% to close at Rs 1,562. During the course of the week it also announced two stake sales in Jio Platform to Silver Lake of 1.15% and To Vista of 2.32%. These stake sales would raise Rs 5,655 crs and Rs 11,367 crs respectively. This has been done at a valuation of Jio Platform of Rs 4.9 lac crs and is at a 12.5% premium to the stake sale to Facebook. Further the company has fixed the record date for rights entitlement as Thursday the 14th of May. There would be an electronic credit of the right in the demat account in which shares are currently held.
Markets have become choppy on expected lines and going forward the same would be the order of the day as the commentary from companies declaring results about the immediate future becomes known. Labour laws have been changed in three to four states for the next 1000 days and more states would follow with similar guidelines. Migrant labour is returning to their home states and this would cause an issue for reopening of industries with labour being unavailable.
It’s a good time to look at going forward what industries would be affected as a result of covid-19. There is no doubt that every single industry and sector would be affected in the short and medium term. The extent would differ from sector to sector. However, some sectors would undergo a see change post covid-19 recovering. Let us look at some of the sectors that would be badly hit. Top of the list would be Travel and tourism, hospitality, entertainment and lifestyle sector. Expanding this would include airlines, hotels, restaurants, malls and shopping centres and multiplexes. Sporting events and live programs would take a backseat. Yet another sector which would be hit is the commercial real estate space as many corporates which were the users of this facility are having a relook at working from home as a longer-term viable option. The biggest gainer without doubt is the healthcare sector which includes pharmaceutical manufacturers and healthcare providers like hospitals and clinics. Indian companies in the chemical space too would benefit as the world looks to outsource intermediaries and bulk drugs from Indian manufacturers rather than China. In the longer term FMCG companies too would have an advantage as consumers look to buy quality rather than price.
In the next few quarters, the world would be reinvented and many sectors would have to change from the way business was being done and the way it would be done going forward. An example of what I am talking would be the simultaneous release of a new Hollywood/Bollywood film on the internet where you pay for seeing it on the net and completely avoid going to the theatre. A sporting event happening without spectators is already happening and the idea is to keep the sport alive. Box office and gate collections will remain a thing of the past for quite some time.
Credit card companies have cut the limits of card holders based on their past history and usage to minimise losses on account of defaults later on in times of the pandemic currently on. The logic is that in these hard times people may use the limits to effectively borrow and then create issues on payment. Results from the only pure play listed card company SBI Card, show thatthe revenues for the 4th quarter ended March 2020 grew to Rs 2,433 crsagainst Rs 1,983 crs in the previous year. It also made late fee reversals related to covid-19 during the year of Rs 90 crsand also made provisions of Rs 489 crs for covid-19 impact. The net profit for the quarter stood at Rs 83.5 crs against Rs 248 crs in the year ago period.
On the covid-19 front the number of patients globally has gone up to 41.80 lac cases, with 2.83 lac deaths and 14.93 lac cases recovering. In India the number of patients affected has gone up to 67,161 cases with 2,212 deaths and 20,968 patients recovering. Since last week the number of patients increasing globally is 6.14 lac, while those recovering has gone up to 3.39 lacs. Number of deaths in the week is roughly 35,000. In India in the same period the number of cases has increased by 24,500 while patients recovered is 8,200 and deaths are 800. What is a cause for concern is the number of new cases being added with just about 4000 cases coming in the last 24 hours.
Coming to the markets in the week ahead, volatility would be the order of the day. There is uncertainty about the lockdown being lifted totally and the plans to restore the economy to near normalcy seem a long way off. How to balance the delicate equation of life and work and medium-term sustenance is the challenge. In such circumstances the strategy in the market would be to sell on rallies and buy only on sharp dips.
