NEW DELHI: Building on their previous day gains, benchmark equity indices jumped further on Thursday thanks to buying in metal, bank and auto stocks. The promises of cheap money for an extended period by the RBI and its US counterpart have boosted investors' sentiment.
The surge in Covid cases continues to be a concern for the economy and markets. However, the saving grace is that since the lockdowns and restrictions are sporadic, the impact on the economy will be insignificant, said an analyst.
Investors can hedge against the uncertainty surrounding the second wave with reduced exposure to economy-facing stocks and higher exposure to IT, pharma and FMCG segments. Rupee depreciation is another tailwind for IT. A distinct trend in the market is the outperformance of mid-small-caps, which is likely to continue,“ said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
FACTORS DRIVING MARKETS
- Fed minutes: Minutes of the US central bank's last policy meeting showed its members felt the US economy was still far short of the target and were in no rush to scale back bond buys of $120 billion a month.
- RBI policy meet: The MPC maintained the status quo on policy rates. The central bank also announced a flurry of announcements to infuse more liquidity in the market.
- Yields fall: Yields on 10-year Treasuries have since eased back a little to 1.667 per cent, from the recent 14-month top of 1.776 per cent, but have struggled to break under 1.59 per cent.