Month Gone By – Markets (period ended March 31, 2021)
Just a year after the U.S. stock markets tanked in the Covid-19 crash, the S&P 500 ended
the month of March 2021 at record highs of 3972.89 (a gain of 4.24% m-o-m). All said and
done, the U.S. benchmark index has gained more than 77% in the year since the March
2020 abyss.. Nevertheless, March wasn’t exactly a smooth ride. The pace of vaccinations
with about every 3rd American having received the jab, passage of American Rescue Plan
in the Congress and unveiling of American Jobs Plan by Biden were balanced by concerns
about the potential for higher inflation, rising bond yields and the collapse of the investment
fund Archegos Capital drove a fair amount of volatility in stock prices.
Markets started on an upward trend on supportive global cues, with NIFTY hovering close
to 15,000-15,200 levels. However, the markets soon turned volatile in sync with global
markets on worries over increasing bond yields and geopolitical worries. The Supreme
Court order on lifting the NPL standstill came as a relief too. This is expected to help
recoveries in 1Q21 as banks will be able to enforce collections.
The US 10Y continued to be volatile finally ending the journey ay 1.75% on March 31st vs
1.42% on February 26th. The main factors to push the yields higher have been the FOMC
quarterly projections and the continued sell off in bond markets on expectations of growth
normalization, improving unemployment and consistent inflation beyond 2%.
The INR remained under pressure amid a strong resurgence of Covid cases through out the
country and the strengthening of dollar index from 90.88 on February end to 93.23 as on
March 31st. INR closed its jouney for the month at 73.13.