Business & Investment

Market Outlook: Investment lessons from the year the market beat Covid and brought many surprises

The domestic stock market closed the 2021 fiscal year positively, despite the strong volatility of the stock exchange in the past week, similar to the roller coaster year.

This fiscal year was full of surprises, characterized by a sudden transition from extreme pessimism to extreme optimism. Investors were puzzled by the Nifty50 volatility from the March 2020 low of 7,511 to a record high of 15,431 in less than a year.

This quick recovery Global market Similarly, it can be due to dedicated collaboration by the host of moving variables. From trillions of dollars as a stimulus to governments around the world to interest rate cuts by central banks, these factors synergistically boosted ground-level demand and led to a gradual economic recovery. Don’t forget the timely initiative of the Government of India through production-linked incentives ()PLI) Start domestic production with increased confidence.

An additional benefit was the belief imposed by the FPI, which has been enthusiastic about India’s growth story since May 2020 and is continuously adding inflows to the market. This joint effort has resulted in a sharp recovery not only in the domestic market but also in the global market.

This year has certainly taught us some lessons. It was mainly about the fact that “price is king” and the stock market always behaves in its own mysterious way. When investors thought we were in a deep bear market in March 2020, the index bottomed out and soared to a new high. Also, the stock market has always been a surprise when market participants thought nothing was wrong.

Therefore, it is logical to recognize the downside risks that may occur in the new fiscal year.It may take longer than expected

Given the new tensions in the country and the fear of a second wave of Covid breakouts, it will return to normal. Also, if interest rates rise to curb inflationary pressure and the money supply is tight in the United States, it could be sent to the United States instead of India.

Finally, after the Covid-19 recovery phase, geopolitical risks in the form of prolonged tensions between the United States and China could be refocused. But investors have to keep investing, even. 2010 Covid’s low base will affect the first half of this year, which could lead to a volatile year.

This week’s event
The USD-INR pair has shown strength this week, especially after receiving support at around $ 72.27 / INR level. The dollar hit a year-long high as a major infrastructure stimulus was announced this week. Biden administration And an accelerated vaccination drive for Covid-19. Optimistically, bond yields have skyrocketed, and the dollar / US dollar / Indian rupee pair has also risen. Broadly speaking, the rupee has been well supported in recent months by a huge influx of foreign investment in Indian equities, and further rises in yields could shift the inflow to the United States.

Further declines in the rupee could accelerate the outflow of the vicious circle, which is negative for equities.

Technical outlook
The Nifty50 index closed positively that week. But the market lacked determinism in its direction, as it did after rebounding from channel support, Nifty It was included in the trading range on Tuesday. This week’s candles are also within the range of the previous week. While our market is actually witnessing volatility pressures, trends in other emerging indices suggest an upward integration breakout.

ET contributor

Traders are advised to maintain a slightly bullish outlook. Nifty immediate support and resistance are located at 14,260 and 14,880, respectively.

Expectations for this week
An important event I’m looking forward to next week is the RBI MPC conference.Likely RBI Given the uncertainty about the strength of the second wave of Covid-19, it will continue its accommodative stance. The governor’s comments on the overall economic scenario affect the stock exchange. This is followed by the March quarter earnings season.

Fiscal Year 2020-21 taught us a great lesson to continue investing in equities through the thick and thin parts of the market. To overcome next year’s volatility, investors are advised to maintain an investment period of 5-7 years.

Nifty50 finished the week with 14,867, up 2.48%.

Market Outlook: Investment lessons from the year the market beat Covid and brought many surprises Market Outlook: Investment lessons from the year the market beat Covid and brought many surprises

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