Indian equity market showing ‘unbreakable nature’ amid second wave

New Delhi, Jun 15 (PTI): The Indian equity market is showing an “unbreakbale nature” amid the second COVID-19 wave and the benchmark Sensex might well hit 58,500-level by March next year, according to global wealth management major Julius Baer.
Emphasising that India is a “very strong market”, Julius Baer MD and Head (Research) Mark Matthews also said companies’ earnings would ultimately drive share prices.
Notwithstanding the second COVID-19 wave that has also impacted economic activities, domestic equity market has been surging in recent months, with key indices — Sensex and Nifty — touching fresh lifetime highs.
Currently, the 30-share BSE Sensex is trading above the 52,500-level. It touched a lifetime high of 52,641.53 on June 11 in intra-day trade.
“Clearly, we were shocked and horrified by the second wave (of the pandemic). But, I was also shocked the way the market barely reacted to it at all… So, that mere fact in itself speaks to the almost unbreakable nature of the Indian market.
“I mean if it wasn’t gonna go down on that kind of a disaster, I don’t know what can take it down. So, I think it is a very strong market,” Matthews said.
About the factors that will drive the Indian market, he stressed that earnings would ultimately drive share prices, adding that the latest results season was absolutely fine. “I saw very few disappointments.”
Matthews said the Indian equity markets may continue its northward journey as the earnings growth is supportive and projected that the Sensex may hit 58,500 level by March next year.
So far this year, the benchmark index has gained 4,800.2 points or 10 per cent. Reflecting a bullish trend, the domestic equity market reached many milestones this year and Sensex hit the 50,000-mark in intra-day trade on January 21, 2021. It closed above 50,000 for the first time on February 3 and crossed the 51,000-mark in intra-day trade on February 5.
On February 8, it closed above the 51,000-level and on February 15, it rallied above the 52,000-mark.
Further, the market capitalisation of all the BSE-listed companies touched USD 3 trillion on May 24.
On whether COVID-19 will continue to have a major impact on equity markets, Matthews replied in the negative.
“I mean in America, you really don’t see much reference to it anymore. COVID-19 is clearly not dominating financial headlines.
“People are preoccupied with inflation conversation. So, the more vaccinations the country’s get, the more the COVID-19 will go away,” he said.
Citing India’s immunisation programme done for polio and smallpox, Matthews said the country already has a vaccination system in place that may help in increasing the vaccination pace.

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