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Indian equity market benchmarks BSE Sensex and Nifty 50 ended lower in April, primarily on account of recent record surge in COVID-19 cases and fresh impositions such as lockdowns and curfews to curb the spread of deadly disease, which weighed on investor sentiment. The 30-share Sensex tanked 1.5 per cent while NSE’s Nifty fell 0.4 per cent in the month of April. In comparison, US stock indices, Dow Jones, tech-heavy Nasdaq Composite and S&P 500 indices surged up to 5.4 per cent, mainly driven by strong economic recovery prospects supported by sustained fiscal policy support and US Federal Reserve’s assurance to provide ample liquidity support, Madan Sabnavis, Chief Economist, CARE Ratings said in a report. According to CARE Ratings, the key drivers of the stock markets were upbeat corporate earnings, mass vaccination drives and phased reopenings, sustained policy support, improved global economic outlook and better than expected macroeconomic data.
On the contrary, factors such as surge in coronavirus cases and deaths, lockdowns and curfews, elevated US treasury yields, inflationary concerns and concerns around vaccination drives were mong ket stock market draggers. The spread of COVID infections and spike in deaths in some countries like India, Japan along with enhanced restrictions/curbs to contain the spread of the virus have also darkened prospects of the pace of economic recovery.
Sensex, Nifty worst performers in April 2021
Investor sentiment in India and Japan were dampened the most due to a surge in coronavirus cases and new lockdown measures threatened the corporate earnings and economic recovery prospects. The benchmark indices in Japan (Nikkei 225) fell by 1.3 per cent as at end April. While Shanghai composite, China’s stock market index, ended flat and South Korea’s KOSPI ended higher by 2.8 per cent at April 2021-end.
“The risks about the pace of economic recovery, darkening prospects of economic outlook and the reversal in the recent green-shoots seen in the Indian economy has led to pull-out from the foreign investors,” CARE Ratings noted. Weak macroeconomic data coupled with supply concerns in case of India’s reasonable progress in mass-vaccinations pressured investor sentiments and dragged equity markets lower.
US stocks surge over 5% in April
Key equity market indices in the US ended higher in April compared with the previous month-end with Dow Jones Industrials ending 2.7 per cent up while the gains in tech-heavy Nasdaq Composite and S&P 500 were more robust at 5.4 per cent and 5.2 per cent, respectively. Robust macroeconomic data for the US economy along with the US Federal Reserve reiterating its narrative of accommodative monetary policy, sustained liquidity support, status quo on policy interest rates, buoyed investor sentiments. While US investors remained cautious in April and gains were capped owing to sharp rise in COVID cases, deaths and consequent lockdown restrictions in some countries, which raised fears about the nascent economic recovery.
European equity markets jump on strong economic recovery prospects
Major European stocks also closed broadly higher in April 2021. FTSE 100 jumped 3.8 per cent, CAC 40 rose by 3.3 per cent while the gains in Germany’s key benchmark index DAX were muted at nearly one per cent. Investor sentiments in European equity markets were driven by stronger prospects of economic recovery reflected by better-than-expected improvement in high frequency indicators (increase in consumer confidence, Eurozone’s business activity index), upbeat corporate earnings for the first quarter of 2021 and massive inoculation drives in a number of European countries.