Home / News / India /  Hold some cash, watch lockdown relaxations: Analysts to stock market investors

Indian stock markets were already expecting an extension of the lockdown but would be watching for the commentary and actual relaxation provided if the lockdown is partially eased in some areas from April 20, say market analysts.

After a decent recovery in the past few sessions, the Indian markets were back in the red on Monday, with the Sensex falling over 450 points. Today, domestic markets were closed for a holiday. Asian markets posted gains today on better-than-expected Chinese trade data while Dow futures were 1% higher. SGX Nifty is about 200 points higher than Monday's Nifty close of about 9,000.

"The extended lockdown is discounted by the market as the present global trend indicates the same. What market awaits is the fiscal package of relief from the government with increased stimulus holding the key. Partial opening up of industrial activity in phases will be welcome," said Sanjiv Bhasin, director of IIFL Securities.

"Globally India will stand out on the back of huge fall in oil prices and expected returns of the consumer as economic activity resumes," he added.

Prime Minister Narendra Modi today announced extension of the lockdown across the country till May 3 to fight the coronavirus pandemic, saying the measure has produced a significant outcome in containing the infection. In a nearly 25-minute televised address to the nation, PM Modi, however, suggested that those areas which are of low risk may be permitted to open up for certain specific activities from April 20.

“Until 20th April, every town, every police station, every district, every state will be evaluated on how much the lockdown is being followed. Areas that succeed in this litmus test, those which will not be in the hot-spot category, and will have less likelihood to turn into a hot-spot maybe allowed to open up select necessary activities from 20th April," he said.

“However, permissions will be withdrawn immediately if lockdown rules are broken, and if there is threat of spread of Coronavirus," PM Modi cautioned.

A detailed guidelines will be issued by the government tomorrow in this regard.

Sundar Sanmukhani, head of fundamental research desk at Choice Broking, said: "The commentary and actual relaxation provided will be observed by the market participants."

"As far as relaxation is considered, it depends on the guidelines. We are not expecting full fledged operations in any sector. If also it is provided, the operations will not be optimum. Lockdown and its extension will grossly impact the economic activities. The longer it is stretched more the negative impact," he added.

India has reported 10,363 cases of the virus infection and 339 deaths so far.

"Even after lockdown is lifted it is not easy for economic activities to come back normal. Hence severe deflationary conditions inevitable. Hence, it is better to sit on cash at least around 25% of portfolio," said Chokkalingam G, founder of Equinomics Research & Advisory.

As India extended the nationwide lockdown till 3 May to combat the covid-19 outbreak, Barclays cut its growth forecast for the country to 0% for calendar year 2020 from its earlier projection of 2.5%.

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