Stocks rebound on hopes of faster jab rollout to curb covid
- Investors expect the virus to be curtailed with govt fast-tracking approvals for foreign shots
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MUMBAI :Indian markets made a strong rebound from the brutal sell-off on Monday as hopes of a faster rollout of covid vaccines in India lifted investor sentiment.
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Investors expect the deadly virus, which had disrupted businesses to a great extent last year, to be brought under control faster with the government fast-tracking emergency approvals for globally-produced covid-19 vaccines amid a surge in cases.
The BSE Sensex gained 660.68 points, or 1.38%, to close at 48,544.06. The 50-share index Nifty edged 194 points or 1.36% to end at 14,504.80.
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Shares in the Asia-Pacific regions had mixed fortunes on Tuesday, with South Korea’s Kospi gaining 1.07% and Japan’s Nikkei rising 0.72%.
“Investors cheered the government’s proposal to fast-track approvals for covid vaccines made by foreign producers and approved by global health agencies. Further the prediction of normal to above normal rainfall and marginally lower covid cases also provided support to the market," said Siddhartha Khemka, head, retail research, Motilal Oswal Financial Services Ltd.
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Khemka expects Indian markets to be highly volatile and also expects an interplay of resurgence in coronavirus cases and the pace of vaccination drive. “However there could be some positive impact from the earnings season," he said.
The government on Tuesday said that it would grant emergency use licences for covid vaccines that have received authorization in the US, the UK, Europe, Japan or from the World Health Organization (WHO).
It is a significant move as India is facing a vaccine shortage amid the second wave of covid cases engulfing the country.
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Meanwhile, private weather forecaster Skymet expects the upcoming monsoon season to be ‘healthy normal’ to the tune of 103% of the long period average (LPA) of 880.6mm from June to September.
However, the plains of north India, along with a few parts of the northeast, are likely to be at risk of being rain deficient this year, according to Skymet.
“Should India see strong rains this year, it would be the third consecutive normal monsoon for the country, which remains dependent on seasonal rain for agricultural output," said Deepak Jasani, head of retail research, HDFC Securities.
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Despite corrections in equities, steep valuations of markets have made analysts cautious.
March quarter corporate results will show if earnings can justify high valuations, going ahead.
“Valuations are no more cheap, Nifty trades at a price to earnings multiple of 22 times and 19.5 times for FY22 and FY23 against a five-year average of 24. The Nifty index has historically traded at a premium to the MSCI Emerging Markets Index and currently it trades at a 10 year average of the premium. However, what is heartening is the earnings per share growth of Nifty companies at 60% for FY22 (coming from the low base of FY21) and further to 16% in FY23. This growth estimates will keep the market in good stead," said Centrum Broking Ltd in a 12 April note.
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