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Stock market developments in times of lockdown and COVID-19. Nifty options tips

Uploaded Date 25-Apr-20
CORONA EFFECT

Indian stock markets have extended their gains in the trading session of Thursday, 23rd April 2020. This is in the hopes of a new stimulus package by the government. The situation remains so, even while the increase in the numbers of COVID-19 cases has been a cause of concern for the investors.

On Thursday, BSE Sensex closed down on 483.53 points. This was 1.54% higher and stood at 31,863.08. Nifty, similarly, rose by 126.60 points. It was higher by 1.38% and ended on 9,313.90 on Thursday.

Numerous experts associated with the financial domains have the opinion that the sustainability of the rally is subject to the stimulus provided by the government. This will be in terms of the measures undertaken by the government for boosting the economy, in support of different industries.

Crude oil prices had hit record lows on Monday. The rebound of crude oil prices has worked nicely for the markets.

Overall, a smart recovery has been observed in the markets. Broader and the frontline indices closed close to trading sessions’ high on Thursday.

The index also sees an uptrend continuation at 9600/9800 levels, for the medium term. The volatility will nevertheless be towards the higher side, as is the case in the global markets. The India Volatility Index has been maintaining a low profile for a few weeks now.

Lockdown has led to apprehension for investors

Currently, uncertainty prevails regarding lifting the lockdown. This has been a discouraging factor for investors. Financial experts have the opinion that the risk-reward ratio is going to be only marginal for India. This is even if the effects of COVID 19 over the markets are short-lived. The GDP growth is expected to slow down by 2.5% YOY in FY21.

Global crude oil prices

In terms of global crude oil prices, there were concerns regarding a recession on a global scale. But the prices have seen a rebound.

Top analysts see this as nothing more than a relief rally. For oil prices, overall fundamentals are weak to date.
 
Two factors cause crude oil to trade at higher prices. There’s anticipation that the US will cut production to counter the lower demand. Secondly, the US is all set to roll out a stimulus package for crude oil. Equity indices are correspondingly strong at this time.

Rally in crude oil prices is sure to be short-lived. Prices are likely to witness selling pressure over the short term.

Facebook shares gains 3% following Jio deal

Reliance Industries had announced on Tuesday that Facebook will invest $5.7 billion over its Jio Platform. Facebook shares gained 3% following the announcement.
 
Facebook is also listed over NASDAQ. Here, Facebook shares gained by 2.55% to close at $175.15 in the after-hours’ trade on Tuesday.

Facebook has overall purchased a 9.99% stake in Jio Platforms. Jio Platforms here refers to the Reliance Industries’ digital apps platform. This does not refer to the Reliance Industries’ telecom business, which operates by the same name, Jio Platforms.

With the investment, Jio Platforms has now valued at Rs. 4.62 lakh crores. This allows Mukesh Ambani owned company to reduce the debt further.

Franklin Templeton freezes $3bn in India

As another important development resulting from coronavirus, Franklin Templeton Mutual Fund has shut down six open-ended debt funds, starting 23rd April. Each of these schemes was on a high-risk, high-return credit risk strategy.

Sales of the underlying securities of these funds will now be made by Franklin Templeton Mutual Fund over time. Investors will be paid off in a staggered manner.

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