India’s Covid-19 crisis has so far failed to spark a deep stock selloff like that seen last year, and some asset managers point to less stringent curbs on activity as one factor at least for now.
Even as the nation reports more than 300,000 confirmed infections and over 4,000 deaths a day, India’s benchmark equity index has been moving in line with regional peers. The S&P BSE Sensex index has declined 6.6% from a mid-February peak, about as much as the MSCI AC Asia Pacific index. That compares with a 23% tumble in the Sensex in March last year when the coronavirus pandemic started to rage globally.
The surprisingly muted stock market reaction to India’s virus disaster can also be seen in net outflows of foreign investors, which totaled about $1.5 billion in April versus $8.4 billion during the height of the rout last March. They turned net buyers of Indian equities this week after four straight weeks of outflows. More limited and regional lockdown measures being implemented by state governments have prevented a slide in economic activity like last year, but the risk is that the outbreak may prompt a sharp escalation in restrictions again.
“A national lockdown is not priced into the markets,” said Arvind Chari, chief investment officer at Quantum Advisors Pvt. in Mumbai. A steep fall in stocks though would provide an…