On a total-return basis, the S&P BSE Sensex fell 1.45 per cent in the month of April 2021. After the lockdown in many nations, equity markets have shown exceptional resilience. The index has returned 46.26 per cent over the last 12 months (TTM). The TTM return reflects a favourable base of April-May 2020. The S&P BSE Sensex underperformed established market indices such as the S&P 500 and Dow Jones Industrial Average, which gained 5.2 and 2.7 per cent, respectively, during the month. Improved vaccine availability in the United States is resulting in increased optimism in the country’s economic growth, which is reflected in US stock markets.
The broader market outperformed Sensex last month. The S&P BSE Midcap Index gained 0.69 per cent, while the S&P BSE Small-cap Index gained 4.97 per cent. The winning industries were healthcare and metals. The resurgence of Covid-19 has refocused attention on healthcare, while metals have benefited from the rise in global commodity prices. Investors were concerned about the effect of state-level lockdowns on near-term market prospects, so capital goods and real estate stocks underperformed.
The inflow of foreign capital has come to a standstill
In April, international investors sold $1.6 billion worth of Indian stocks. FPIs have now turned negative every month for the first time since September 2020. FPI inflows have totalled $5.5 billion so far this year. In the month of April, DIIs were buyers. Due to the Covid-19 second wave and subsequent lockdowns, India’s economic recovery can face near-term headwinds, which could result in short-term FII hedge funds withdrawing capital from Indian markets. However, India’s nominal GDP growth will outperform the rest of the world in the medium and long term. This makes it a famous destination for long-term global investors looking for yield and development.
The stock market is sturdy
The revival of Covid-19 and the resulting economic blockade has a familiar ring to it. This time, however, stock markets have shown exceptional resiliency. This time, the lockdowns are less severe and more targeted; corporate balance sheets are stronger, and the emphasis is on debt reduction and liquidity. For corporate India, the last year has been all about cost management and market continuity. In the last ten years, private banks and NBFCs have raised money and are better capitalised. Exporters and commodity producers are in good shape as the global recovery continues. Long-term investors should stay put and invest in their stock allocation in a phased fashion.