Global investors have bet that India’s wild Covid-19 wave has hit a high

Global investors are betting that India’s second-largest coronavirus wave disaster has been overcome, prompting the country to register its highest shares.

The Nifty 50 index, which tracks India’s top 50 companies, peaked this week and rose 9 percent when Covid-19 infections were on the rise in late April.

The excitement has spread to other Indian assets as the dollar has risen 4 per cent in the same period over the same period.

Indian stock demand eases the second devastating wave of infections among investors it seems to have been the culmination. But he also points out that traders see little of how they see profits for India’s largest companies, despite the country reporting more than 100,000 Covid-19 cases a day.

“To value India from the perspective of capital investment, investors will look beyond the current human catastrophe,” said Brijesh Ved, portfolio manager at BNP Paribas Asset Management India.

He added that the country would probably emerge from the pandemic the fastest growing economy in the world and that “long-term grassroots investors like us continue to grow as a market in India”. BNP Paribas “would consider a major amendment [as an opportunity] To increase the weight of Indian stocks, ”he said.

Some Indian companies have seen growth during the pandemic, including layoffs due in part to reduced costs. Profit margins were the highest in eight years at the end of 2020, according to the Edelweiss Financial Services agency.

“The pie may have shrunk, but the allocation of profitability has changed very quickly… Higher business, which is reflected in market indices,” said Aditya Narain Edelweiss, head of research. “It’s partly a global phenomenon, but it’s been much more rigorous in India.”

The second wave of Covid-19 overwhelmed the health system and caused a severe shortage of oxygen and drugs. The economy, despite not experiencing a national shutdown like last year, has been shaken by hard-line restrictions imposed locally, including some of the country’s largest cities.

Infections are falling in much of the country, including the capital city of New Delhi and the financial center of Mumbai.

Authorities reported 133,000 new infections and 3,200 deaths the previous day on Wednesday, 400,000 and 4,500 more than the daily maximum in May, respectively. Official figures are few.

Earnings in Indian companies in the first quarter did not reflect the worst recent surge in April. However, investors believe it will be a short-lived success.

“You sense that it will have an impact of a month or two and that there will be normalcy; then profit growth will return very sharply,” said Hemang Jani Motilal Oswal Financial Services mediation equity strategist.

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

“There could be a little bit of a reality check for markets that people are extrapolating [from] what happened last time. This time, it’s deeper and plays with people’s psyche, ”Narain said,“ there’s no family that hasn’t had any impact. ”

Latest coronavirus news

Follow FT’s live coverage and analysis of the global pandemic and the rapidly evolving economic crisis here.