Indian stock market’s passive reaction to new Covid-19 situation is not a mystery
Published On: Wednesday, May 12, 2021 | By: Team KnowMyStock
The stock market’s passive reaction to the harrowing reality on the ground caused by a destructive wave of Covid-19 is a mystery for many. Last year in the US people was dismayed by the stocks rally amid the US Fed’s unprecedented intervention, even as the healthcare infrastructure collapsed in the city after city. This year in India in a similar way the participants and non-participants are equally baffled by the resilience shown by the market even in the face of rising infections, deaths, and localized lockdowns. It goes back to the old adage in the investing world: investors hate uncertainty; they hate fogginess when they look into the future, even though their track record in predicting it accurately is about as good as a flipped coin.
Last March investors were fearful because there was no cure or answer to the pandemic that was rapidly spreading from Tokyo to Rio De Jeneiro. For all one knew, it was the end of the world.Today, while investors are concerned only about the impact of the ravaging Covid on near-term recovery of the economy, but they know that this time there is an answer to the problem: vaccines.
The assurance that the world has vaccines to fight the pandemic, no matter how ugly it has become, is enough for money managers to not panic the way they did in March 2020.
“While this second wave is expected to impact the country’s economic recovery in the short term, we expect the economy to bounce back as the government accelerates its vaccine rollout and lockdowns are getting lifted,”say analysts.
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