THE BRIEF BUSINESS DISTILLED
Fortune India|April 2021
Boom in the Time of a Pandemic A year after the onslaught of the global pandemic, FPI inflows, corporate performance, and news of the vaccines were key to the Indian equity markets’ immunity against Covid-19. BY RAJIV BHUVA
RAJIV BHUVA

The Covid-19 pandemic has changed our lives like never before. And for those following the equity markets, it has been nothing short of a roller-coaster ride. The pandemic and the ensuing lockdown in India, understandably, gave a body blow to the economy. However, the indices displayed volatility, before breaking into a bull run, as if immune to the ravages of the Black Swan event. Sample this: On March 24, 2020, the S&P BSE Sensex touched the year’s low of 25,638.9 points—down 16,635 points (falling over 39%)—in just 46 trading days since the then high of 42,274 points on January 20, 2020. And just 226 trading days after March 24’s low, the Sensex, on February 16, 2021, touched its latest lifetime high of 52,516 points, recovering nearly 26,878 points, or nearly 105%.

What led to this recovery? Beyond news of the Covid-19 vaccines, recent improvement in corporate performance also acted as a strong booster for investor sentiment. According to Kenneth Andrade, founder and chief investment officer, Old Bridge Capital Management, a Mumbai-based portfolio management services firm, the bounce back of Indian companies has been significantly better than anyone had anticipated. On the ground, feedback reveals that corporates are witnessing demand like they have never seen before.

“Everyone had already cut costs and then you had the bounce back in demand which companies were struggling to fulfil,” says Andrade. He foresees the March 2021 quarter being no different from the previous two, when companies reported strong performance. “If the trend continues, companies are going to reset the profitability table upwards.”

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