Moneycontrol Pro Panorama | Equity markets get a reality check

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Crude oil prices dropped to a three-month low due to concerns about global demand as the COVID-19 situation is worsening. While this is enough to give jitters, the minutes of last month's US Federal Open Market Committee meeting have no balm to offer. Instead, there's a consensus view on a scaling back of the easy money policy. Do note the meeting was held before the pandemic took a turn for the worse and its impact could delay the policy normalisation.

Demand concerns can't be brushed away. Japan has extended emergency measures. S&P Global Ratings lowered economic growth estimates of several South-East Asian countries. “The duration and severity of the pandemic has been more adverse than our previous baseline expectations. As a result, we are revising downward our 2021 growth expectations for a number of emerging South-East Asian economies,” said S&P Global Ratings.

Although India appears to have passed the worst of the second wave, we are not out of danger yet. India Ratings and Research warned that slow pace of vaccination may constrain economic recovery. “Going by the pace of vaccination, it is now almost certain that India will not be able to vaccinate its entire adult population by 31 December 2021,” the ratings agency said in a note trimming the economic growth forecast for the current fiscal year.

A silver lining is the impact slowing growth has on commodity prices. For instance, since demand for crude oil may rise slower than expected, prices are softening. That's good news for Indian consumers. While retail fuel prices are seeing a modest reduction in India, relief may be in store on the cooking oil front as well. Leading sunflower oil producers and exporters Ukraine, Russia, have sown record (sunflower) crops. This could see prices ease, point out industry observers. India is a large importer of crude and edible oil.

Of course, demand-supply dynamics vary across commodities and one is yet to see a broad-based reduction in prices. Global raw sugar prices for instance are holding up on fears of lower than anticipated surplus.

But the macro situation has become a challenging one for investors. The FOMC minutes and concerns about global economic growth are making their presence felt on stock prices. "Taper talks in the US, potentially higher US bond yields and US dollar, consensus EPS cuts and recent muted IPO gains negatively impacting retail investor sentiment could act as -ve triggers," says BofA Global Research.

Metal stocks are leading the losses on the Nifty 50 index. The NSE metal index is down 4.5 percent at 12:50 pm. It's a tough time for IPO listings too, used to making a debut in exuberant times. CarTrade Tech made a weak debut on the stock exchanges. It's not surprising that investors are taking shelter in the defensive shade of the FMCG sector.

Investing insights from our research team:

Weekly Tactical Pick | Zee Entertainment

Can resumption of credit card business reverse the underperformance of HDFC Bank?

Container Corporation of India — Macro tailwinds lift quarterly earnings

Repco Home Finance Q1 hit by second wave, but valuation comforting

What else are we reading today?

Buy Now Pay Later. Lots of takers, NPA maker?

The Green Pivot: The dirty secret of the clean energy sector – the problem of recycling

Herd Immunity Tracker: Waning efficacy of vaccines adds another layer of worry

Healthcare | Hospital stocks trump Big Pharma in growth and outlook

Can Akasa learn from the mistakes of airline pioneers in India?

SpiceJet’s air cargo spin-off first step in building a logistics chain

RoDTEP rates — Uncertainty ends, but unease lingers

Madras HC directive to make CBI more independent is only the beginning of a long battle

‘Goldfinger’ 2021 plot twist could be villainous for banks (Republished from the FT)

Picks from our technical analysts: Aurobindo Pharma, Ambuja Cement, Ambuja Cement and AU Bank (These are published every trading day before markets open and can be read on the app)

R Sree Ram

Moneycontrol Pro