Ramesh Damani, member of BSE and Geoffrey Dennis, emerging markets commentator spoke at length about what happened overnight in the US market.

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Post Joe Biden’s Super Tuesday victories the US stock markets surged. The former Vice President has won in ten states. The wins now makes him a formidable counterweight to Senator Bernie Sanders for the presidential race.

Damani said, “Bernie Sanders has gone from being the frontrunner to be relegated to almost second. I think it’s inevitable now that Joe Biden will get the nomination. The Dow rally is because of that. It had gone down from cocktail of reasons including the coronavirus and the rise of Bernie Sanders, but now Bernie Sanders being pushed aside by Joe Biden, the odds are that we would have a technical rally, which we witnessed yesterday in America.”

He further said that the US market was reacting more to Joe Biden's victory versus the Fed cutting rates.

Speaking further about the US rally, Dennis said, “Even if the US rally is primarily because of the sudden emergence of Joe Biden as the frontrunner, I think that would spillover to global markets.”

“There is also a clear evidence now that there will be some sort of global coordinated attempt to support economies. I would like to see more evidence on the fiscal side, but the margin today was definitely the US political news that sparked this rally. I also think it has the ability to spill over to the rest of the world,” Dennis said. According to him, it was not a wise move by the Fed to cut rates, it sparked some panic.

Talking about investments in the Indian equity markets Damani said, “While the largecap stocks have continued to perform well, they are very expensive but the small and midcap stocks with good dividend yield, reasonable prospects that they will survive have been thrown out of the dishwasher. So that is a segment I would look at where the business fundamentals are intact, the business is going to remain intact for 5-10 years, dividend yields are fairly robust. I think that is a good segment to cherry-pick at this time.”

Speaking on Indian markets Dennis said, “Unfortunately, we are going to continue to hear lots of news about coronavirus cases, victims, it spreading around the world for a long time. This is far from over and that gives a scare, so the currency came down as well.”

“It’s just a fact that all economies are going to suffer from this news and it still means that despite better political news out of the US, I am so cautious about markets in the short-term because we haven’t seen any significant data reaction to the coronavirus; a macro or corporate data. We have seen downgrades to company and guidance etc., and so what happened to India in last 24-48 hours is going to happen elsewhere as well. I still think India is somewhat defensive against this backdrop,” added Dennis.

First Published:Mar 5, 2020 11:12 AM IST