The aversion to risks is steadily reducing in the stock market

Brokers say the risk appetite is treading its way back as global markets have rallied on liquidity support from central banks, improvement in some economic indicators and strong participation from retail as well as high net-worth investors.

“The global rally continues to be very strong. We have seen many of the major markets now turning flat for the year. India, despite the rally, is down about 14 per cent of the year. The narrative on the corporate sector has changed from lockdown to how much you are away from normal run rate,” said the CEO, Motilal Oswal Institutional Equities. “Factors like GST, auto sales, fuel consumption and cement demand, the trend has improved month on month. Retail and HNI have seen strong participation in June in mid-caps and small-caps; all this indicates better risk appetite,” he said.

The risk around Covid is still there but there is a sense that economy is moving towards normalisation. Some sectors have shown reasonable strength of coming back to normal,” said Harsha Upadhyaya, CEO — equity at Kotak Institutional Equities.

Data in the derivatives segment also reflect confidence in the market as put writers have become more active at the 10,300 strike compared to last week when they were most active at 10,000 strike.

“The VIX indicates that risk perception has come down. Put writing has shifted to 10,300 from 10,000, which indicates the new base for the market is at 10,000,” said Amit Gupta, head of derivatives at ICICIdirect.