Of late, the debate over the divide of the market and economy has become stronger due to the fact that the market is rallying day after day while the economy is in the doldrums.
Rising COVID-19 cases, the looming threat of lockdown and geopolitical tension keep investors on tenterhooks, but liquidity gives them the hope that the market will not witness a sudden crash.
The market seems to have accepted that FY21 is a complete washout and is probably looking beyond.
The top voices of the market and economy share their views that give much clarity on the trends of now and the future. Take a look:
Christopher Wood, Global Head of Equity Strategy at Jefferies (to CNBC-TV18)
The key point about India and other developing countries is that a lockdown does more damage to general human welfare than the virus itself.
For me, the biggest risk for equities is that monetary easing may need to be called back, and Central banks' actions are increasingly toward easing.
IT & pharma are the central sectors, we don't expect them to be hit, but weak growth and an NPA cycle are big risks for India.
Housing & construction are the current exciting equity stories, but the lockdown has hurt the revival of the property market.
We are extremely bullish on gold and gold mining stocks. If gold takes out 2011 high near $1,900 per troy ounce, it will be blue skies.
COVID-19 cases are rising in the US, but not the death rate. The surge in the COVID death rate would hit the market very hard. My base case is that COVID-19 is in the process of burning itself out.
I think the vaccine will create a lot of short-term volatility. Vaccine story is pure hype, we don’t think we need a vaccine.
Shankar Sharma of First Global (to CNBC-TV18)
If you look at the contribution of Reliance Industries to the whole up-move in the index, it is a pretty significant part of the overall recovery that India as a broad market has seen from the lows of the end of March.
So, when there is so much riding on a single horse, all that money is always going to be jittery money.
In India, there have been only two kinds of recoveries in the last three months - first, is beaten down financials - banks, NBFCs, real estate and the second category in its own right is Reliance Industries.
So, everybody in terms of quality went for Reliance and so when that horse has run so fast, so hard, in a matter of three months, the stock of that size doubling, there is always going to be a temptation to take that money off the table.
India is one of the weakest markets this year. It is down 24 percent. It is right at the bottom of the pack, so it is an underperforming market, there are other markets that are doing far better.
India in my view remains an underperforming market but with some very good stocks.
We are not saying that there is going to be a broad bull market in India anytime soon. It is going to be narrow, focused on a few stocks. It has become a narrow bull market and a broader bear market.
Rashesh Shah, Chairman & CEO of Edelweiss Group (to CNBC-TV18)
The market is not looking at short-term economic indicators. If you see what happened in March and April, there was a lot of panic; nobody knew how this will end. Fortunately, with liquidity, the short-term pressure has eased off.
While for the short-term, investors are thinking liquidity will save them from an accident, for the medium-term they are thinking there will be an end to COVID, maybe December or January.
Most investors have written off FY21 for all economic indicators, GDP and earnings, but for the medium-to-long-term they are positive.
Gautam Shah, Founder of Goldilocks Premium Research
I am not surprised that the market has found resistance near 10,800-10,850 but at the same time technicals suggest that the market does not want to correct beyond a point.
The index is getting strength from different sectors which is positive. The range in which the Nifty is moving is 10,400-10,850 is the range, and a breakout or a breakdown will decide the next 500-point move on the Nifty.
The good part is that with most of the negatives in the price, the economy is opening up, there are hopes of a vaccine, the global market is looking up and the dollar index has started to correct which suggests that chances of a breakout are much higher, and if that happens we could well move in the 11,000 territories.
Jahangir Aziz - Head Emerging Market Economics - JP Morgan (to CNBC-TV18)
We expect a very sharp recovery in 2021 but the level of GDP will be 4 percent lower. The total government deficit is seen at 15 percent for India and cannot expect the private sector to invest with this level of likely deficit.
Central banks will have to buy government bonds, probably in the second half of the year. The shortfall in India revenue will be many times more than 2 percent of the GDP.
JP Morgan is looking at a contraction of (4) percent in global growth in 2020. India's growth in 2020 is seen at (-6) percent and in 2021, it should grow 8 percent.
Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.
The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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