Concerns over lockdown return, but bring hope of reaching infections peak and market stability

Market’s concern about the imposition of a second nationwide lockdown faded last week as announced restrictions in most states were not as stringent as expected.

We can expect this phase of stringent lockdowns to prevail for a period of two-three months, taking cues from similar cycles in developed countries like the United Kingdom and the United States.

As far as the implication on the market, the period of impact may be lower at around one to two months, in anticipation of the new normal.

The market had some relief and support from defensive sectors which too could not sustain due to profit booking in IT sector.

India’s retail inflation for March rose to 5.52 percent, WPI surged to 8-year high of 7.4 percent due to combination of base effect and rise in crude, petroleum products and basic metals.

What is going to define the trend of the market, in the near-term, is how stringent would be the lockdown-norms, effect on the economy and fall in consumer spending.

The least impacted and beneficiary will be companies that have a dynamic and strong digital platform to maintain and grow its operations, marketing and distribution.

The start to IT results are largely in-line, which may trigger short-term correction which should be used as an opportunity for building long-term position.

Market is becoming more cautious, underperforming world equity, as states are increasing restrictions.

However, states will not opt for a complete lockdown like last year, which is a relief for the market.

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