rallied sharply from around 7,500 levels on the Nifty50
seen in March to over 10,000 till recently. The rally was unwarranted, as there was no change in fundamentals. There was nothing that suggested that things—in terms of likely change in economic fundamentals or the number of Covid-19 infections—have improved dramatically for the 35-40 per cent up move in the S&P BSE Sensex and the Nifty50
indices. The dent on India Inc.'s earnings was visible in companies' March 2020 quarter results though the nationwide lockdown
impacted just a few days of that month. The numbers have not been impressive and in some cases have been below expectation.
We really don’t know when Covid-19 infections will peak or when the situation will become normal again. Even if we assume that things will start to normalise in the next couple of months, economic revival will take a lot of time. Growth will be visible only in the next fiscal (FY22) and FY21 will be a bad year for the economy and India Inc. The markets
will have to come to terms with this and then price risk accordingly. Sectors such as entertainment, aviation, and hospitality will take longer to recover. They may even become irrelevant for markets, as there will not be earnings that can help them grow. People will be scared of assembling at a place in large numbers. All this will impact market sentiment. Even the fast moving consumer goods (FMCG) sector will not revive immediately. There can be some contrarian buying, but that should also fizzle out.