Despite ongoing concerns about the HMPV virus, intraday trading on January 7 saw gains of more than half a percent for the Indian stock market benchmarks, the Sensex and Nifty 50.
The benchmarks of the Indian stock market, the Sensex and the Nifty 50, saw respectable intraday increases of more than 0.5 percent each on Tuesday, January 7, suggesting that they are about to break their two-day losing streak. The Sensex and Nifty 50 have both dropped more than 2% in the past two sessions, mostly as a result of foreign institutional investors' persistent selling in the face of rising US bond yields and an increase in HMPV virus cases.After worries about the HMPV virus's propagation surfaced, market confidence took a new hit.bringing to mind the early stages of the COVID-19 outbreak.
Amid mounting concerns about the respiratory virus, Indian authorities announced Monday that multiple human metapneumovirus (HMPV) cases have been detected, as Mint reported. A third tested positive after being admitted to the hospital in Gujarat, while two instances were reported from Bengaluru, Karnataka. The development coincides with a significant viral fever and pneumonia outbreak that China and other nations are currently dealing with.
Investors' attention is still focused on the proliferation of HMPV cases, but Tuesday's relief surge in the Indian stock market saw the Sensex rise by about 500 points.
The BSE Midcap and Smallcap indices increased by more than 1% each, indicating that the rally was more robust in the mid and small-cap segments.
Why is the stock market in India growing?
Due to rumors that the virus is not as deadly as COVID-19, the market is seeing reduced levels of purchase. The government has made it clear that although people should take measures, they shouldn't worry too much about the virus because it is a seasonal illness.
According to medical professionals, HMPV is not a novel virus. It has been circulating all over the world for many years, having been discovered for the first time in 2001. Through breathing, HMPV spreads throughout the atmosphere. All age groups are susceptible to this. Health Minister JP Nadda stated on Monday that the virus spreads more in the winter and early spring.
According to experts, the previous session's dramatic decline of more than 1% was an overreaction to the HMPV virus outbreaks.
It seems that yesterday's 1.6% decline in the Nifty 50 was an overreaction to worries about the HMPV virus. The market can recover, driven by momentum stocks, provided the government clarifies that there is no cause for excessive worry about the virus, which is not new," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
In many industries, investors are taking advantage of the slump to purchase beaten-down yet fundamentally sound equities.
At home, attitude was likewise impacted by largely positive global cues. Amid rumors that Donald Trump, the incoming US president-elect, may take a less harsh position on tariffs, several major Asian markets saw robust buying on Tuesday.
According to a Washington Post story published on Monday, Trump's advisers were considering tariff ideas that would only target industries deemed essential to economic or national security. But Trump later rejected this report.
Will the rally last?
It now appears quite unlikely that the market will continue to rise. There is a great deal of uncertainty over the growth rate of viral cases, the trade policies that Trump will declare after taking office on January 20, and the outcome of India Inc.'s Q3 earnings.
Given the unfavorable global macros, it doesn't appear that it will last. On top of that, our currency is losing value every day. This is forcing FIIs to limit their exposure, and we believe this trend will last until the President of the United States enters office. According to Kotak Securities' head of equities research, Shrikant Chouhan, volatility would continue to have a negative bias.
"The market won't likely maintain the present advances, in my opinion. Some of the biggest banks, including HDFC Bank and IndusInd Bank, released less than satisfactory business updates. This suggests that the Q3 earnings season may be less harsh."If Japan's central bank raises interest rates, there are also risks associated with yen-carry trade," stated Prashanth Tapse, Senior Vice President of Research at Mehta Equities.
According to Tapse, Q3 results, the Trump factor, and the impending Union Budget 2025 will all contribute to the domestic market's continued volatility in January. Retail investors' and HNIs' mood will also be impacted by the news flow surrounding viral cases.
"Awaiting Q3 earnings is a good idea for investors. Investors may think about purchasing high-quality stocks at that time if the December quarter results are better than those of the previous two quarters, according to Tapse.
The Indian stock market's inflated valuation is nonetheless a cause for concern. Experts continue to hold that the market lacks valuation comfort in spite of the recent drop.The market will continue to decline if earnings are disappointing.
Anirudh Garg, Partner and Fund Manager at Invasset PMS, told Mint, "We see the index as fairly priced with a temporary downward bias of about 8–10 per cent, but we remain bullish on the Nifty over the next two years."
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