Global investors are betting that India’s brutal Covid-19 wave has peaked

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Global investors are betting that India’s disastrous second wave of the worst of the coronavirus epidemic has passed, which will help push the country’s stock market to record highs.

The Nifty 50 index, which tracks the 50 largest companies in India, hit a record high this week, up 9% from the low point at the end of April when Covid-19 infections surged.

This enthusiasm has spread to other Indian assets, as the rupee exchange rate against the US dollar rose by 4% during the same period.

Demand for Indian stocks highlights investor relief from devastating second wave of infections Seems to have reached the topBut it also highlights that although the country still reports more than 100,000 Covid-19 cases every day, traders believe that it will not affect the huge profits of India’s largest company.

Brijesh Ved, equity portfolio manager of BNP Paribas Asset Management India, said: “In order to value India from the perspective of equity investment, investors will transcend the current human disaster.”

He added that the country may get rid of the pandemic because Fastest growing economy And “long-term fundamental investors like us continue to see India as a growth market.”BNP Paribas “will consider any major adjustments [as an opportunity] Increase the weight of Indian stocks,” he said.

Some Indian companies thrived during the pandemic, partly because of cost reductions, including layoffs. According to data from the brokerage company Edelweiss Financial Services, the profit margin as of the end of 2020 is at an eight-year high.

“The pie may have shrunk, but the distribution of profitability has shifted very sharply… Edelweiss research director Aditya Narain said: “High-end business, this is reflected in the market index. “To some extent, this is a global phenomenon, but it is more pronounced in India. “

The second wave of Covid-19 overwhelmed the health system and caused severe shortages of oxygen and medicines. Although the economy has not been affected by the national blockade as it was last year, it has been affected by strict restrictions imposed at the local level, including some of the country’s largest cities.

Infection rates are now declining in most parts of the country, including the capital New Delhi and the financial center Mumbai.

Authorities reported on Wednesday that there were 133,000 new infections and 3,200 deaths the previous day, which was below the daily highs of over 400,000 and 4,500 in May. The official figures are believed to be substantially underestimated.

The first-quarter earnings of Indian companies did not reflect the worst of the latest wave, which rebounded in April. However, investors suspect that any loss of income will be short-lived.

Hemang Jani, stock strategist at brokerage Motilal Oswal Financial Services, said: “You will feel that this will be a month or two and it will be normal, and then profit growth will rebound very quickly.”

However, some people have warned that the second wave may have a more lasting impact than the first wave, especially in areas such as consumer demand.

“There may be some reality checks on the market, people are inferring [from] What happened last time. This time, it goes deeper, and it has something to do with people’s psychology,” Narain said, adding that “no family is unaffected.”

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