Markets rebound on foreign vaccines hopes to curb covid-19

Investors cheered the government's proposal to fast-track approvals for covid-vaccines made by foreign producers and approved by global health agencies. (Mint)Premium
Investors cheered the government's proposal to fast-track approvals for covid-vaccines made by foreign producers and approved by global health agencies. (Mint)
 2 min read . Updated: 13 Apr 2021, 08:04 PM IST Nasrin Sultana

MUMBAI : Indian markets made a strong rebound from the brutal sell-off on Monday as hopes of a faster rollout of covid vaccination in India uplifted investor sentiment. As the government fast-tracked emergency approvals for globally produced covid-19 vaccines amid rising cases, investors expect a quicker control on the deadly virus which had majorly disrupted businesses last year.

The BSE Sensex gained 660.68 points or 1.38% closing at 48,544.06. The 50-share index Nifty edged 194 points or 1.36% higher to end at 14,504.80.

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Shares in Asia-Pacific were mixed on Tuesday, with South Korea’s Kospi gaining 1.07% while in Japan, the Nikkei rose 0.72%.

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd said, “Investors cheered the government's proposal to fast-track approvals for covid-vaccines made by foreign producers and approved by global health agencies. Further the prediction of normal to above normal rainfall and marginally lower covid cases also provided support to the market."

Khemka expects Indian markets likely to be highly volatile and an interplay of resurgence in covid-19 cases and the pace of vaccination. “However there could be some positive impact from the earnings season," he added.

The government on Tuesday said it would allow the granting of emergency licenses for covid vaccines that have received authorization in the US, UK, Europe, Japan or from the World Health Organization (WHO). It is a significant move as India is facing a vaccine shortage with second wave pf covid cases gradually engulfing the country.

Meanwhile, private weather forecaster Skymet expects the upcoming monsoon to be ‘healthy normal’ to the tune of 103% of the long period average (LPA) of 880.6mm from June to September. Skymet expects that plains of North India along with few parts of Northeast region are likely to be at risk of being rain deficient through the season.

“Should India see strong rains this year, it would be the third consecutive normal monsoon for the country, which remains dependent on seasonal rains for agricultural output," Deepak Jasani, Head of Retail Research, HDFC Securities said.

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Despite corrections in equities, steep valuations of markets have made analysts cautious. March quarter corporate results will bear testimony if earnings can justify high valuations going ahead.

“Valuations are no more cheap, Nifty trades at a price to earnings (PE) of 22 times and 19.5 times for FY22 and FY23 against a five year average of 24. Nifty has historically traded at a premium to MSCI Emerging Markets Index, currently it trades at 10 year average of the premium. But what is heartening is the earnings per share (EPS) growth of Nifty at 60% for FY22 (coming from low base of FY21) and further 16% in FY23. This growth estimates will keep the market in good stead," said Centrum Broking Limited in a 12 April note.

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