Indian equities lag global peers in recovery

Weighed down by the threat to the stability of the financial system and lagging pre-covid economy, Indian equity markets are yet to come out of the effect of COVID-19 pandemic. Indian markets are joined by equity markets in Hong Kong as well among the major economies.

Other than these two equity markets, all other major global equities are right now trading at a premium level, over their March 9, 2020 close -- a day prior to the date when World Health Organisation declared coronavirus outbreak as a pandemic.

India’s Nifty 50 is trading at 3.7% below the pre-pandemic level, while Hong Kong’s Hang Seng is 2.9% down.

“The Indian equity markets were weaker going into the Covid crisis.

The Indian markets had other problems like the Yes Bank crisis, the NBFC crisis and slowing growth before we hit the Covid-19 wall. The Indian economy was facing headwinds even prior to the bloodbath witnessed in March,” analysts said.

However, China’s move to curb protests in a more strict way played the spoilsport for Hong Kong, which is a special administrative region (SAR) within China.

Among other major indices, Nikkei 225 is trading 14.6% higher than its pre-pandemic levels. On the other hand, Dow 30 of the US is trading at a 7.9% higher level than the level before WHO declared coronavirus as pandemic.

Morgan Stanley Capital International (MSCI) World Index is also trading at a 10% higher level, after global equities witnessed a massive rally in May 2020.

On the other hand, MSCI Emerging Markets, which is more relevant for India for peer benchmarking, is also trading at a premium of 2.1% over its pre-pandemic levels.

However, even as the Indian markets are lagging behind the global peers in recovery, the markets have recovered 32% from the bottoms it touched on March 23 -- a rally which market watchers say isn’t sustainable.