Second Wave of Corona Virus Infection in U.S.- A key risk for Global Equities.

Key Reasons That Result in Fall of Global Equities

  • Second Wave of infection can be seen in Texas where sudden spike in corona virus cases are seen in last three days.
  • Other states in U.S. also seeing a similar trend with increasing number of cases.
  • Weak economical forecast by US Federal reserve that sees a contraction of US economy to 6.5% in 2020 and 5% expansion in 2021.
  • All the US indices sees a worst day since March 2020.
  • Asian markets are showing a similar trend with deep cuts.
  • India is also seeing spike in corona virus cases with Maharashtra worst hit state.
  • SGX Nifty is showing a deep cut.

Global Equities

Why there is heavy sell off in Global equities?

  • All the three indices in United States have fallen sharply with the fear of second wave of infection that can further effect the global economy. Texas a state in U.S. has seen sudden spike in cases from last three days. As hospitalization rate is increasing causing fear of resurgence of deadly corona virus cases in United States. Other States are also seeing a similar trend threatening the re-opened economy. At present, 2 million cases are there in US.
  • Already United States economy is under tremendous pressure and can’t afford another wave of infection. Federal Reserve in its recent economical outlook sees a contraction of 6.5% in US in 2020 before recovering to 5% in 2021.
  • This resulted in sharp drop in U.S. indices with a deep cut of more than 5% in a single day that has resulted deep cut in equities around the world.

US Markets

  • Dow Jones Industrial Average plunged by 1861.82 points, or -6.90%, close at 25,128.17.
  • The S&P 500 fallen by points, or -188.04%, ends at 3,002.10.
  • Nasdaq Composite Index decreased by 527.62 points, or 5.27%, close at 9,492.73.

Asian Markets This Morning

IndicesCurrent ValuePrev. Close% Change
Nikkei 22522,008.6022472.91-2.07%
Straits Times2,624.982704.21-2.93%
Hang Seng  24088.8724480.15-1.60%
Taiwan Weighted11,341.4211535.77 -1.68%
Jakarta Composite4854.754920.68-1.34%
Shanghai Composite2,920.212920.90-0.02%
SGX Nifty 9,559.509853.00-2.98%
Time of data collection: 7:49 A.M

Nifty Outlook

  • India is seeing a sudden spike in corona virus cases with new 10000 cases registered on Thursday and 357 deaths. The worst hit states are Maharashtra, Delhi, Gujarat and Rajasthan. The worst part is the cases are expecting to increase further and Delhi can see cases at around half million by the end of July, prediction made by medical practitioners.
  • SGX Nifty is suggesting a deep cut of more than 3% at present time (6.57 a.m.). The reason is sharp sell off in U.S. markets yesterday with a fall of more than 5%. Indian Markets will start at around 9,500 level. With this fall, the risk of downside has opened in near future in Indian Markets.
  • This Sell off has opened a probability of hitting the lower end of the trend. The Nifty can retest 9000 level in near future in case global equities keep on falling. On technical chart, nifty will break 9600 support level at open and this will trigger sell off in Indian Markets too. Today shorting Nifty only if it recover its losses and trade above 9650 zone.
  1. Sell ICICI Bank (Closed on 11.06.2020 at 341.6)- Target Rs 318 and stop loss Rs 350
  2. Sell Amaraja Battery ( closed on 11.06.2020 at 640.9)- Target Rs 600 and stop loss Rs 652
  3. Sell Godrej consumer product (Closed om 11.06.2020 at 613.6)- Target Rs 580 and stop loss at Rs 630

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