We were expecting the RBI governor to step in and provide liquidity and rate cuts. The RBI governor did just that today. He declared a string of measures like cutting the Repo and the reverse repo rates, cutting the Cash Reserve Ratio (CRR) by 100 basis points, injecting liquidity of Rs 3.74 lakh crores in the system etc. All this should cause the interest rates to go down (and hence bond prices to go up). At the time of writing this piece, the interest rates were indeed down.

Financial markets worldwide were impacted heavily by the COVID-19 pandemic as necessary lockdowns stress businesses and the economy, hopefully temporarily.

How you measure your rate of return can make a significant difference in terms of how you assess an investment.

The potential economic impact of the Coronavirus outbreak affected markets significantly towards the end of February. Another big challenge faced by the economy is continuing weakness in GDP growth combined with a relatively high fiscal deficit. Some of the key initiatives like lower corporate tax rates are expected to kick start the investment cycle by the industry

Fiscal deficit and economic growth are twin concerns facing the economy. Experts have been recommending loosening up fiscal targets and focusing on economic growth. Moreover, there seem to be early signs of the economy recovering.

Our analysis suggests that many of the larger companies, leading the Nifty, continue to grow at rates higher than nominal GDP growth and are trading at valuations that are reasonable. Moreover, as and when the economy recovers, growth rates will be stronger than long term expected growth rates as companies start re-stocking their inventories.

Despite the weak economy, the stock markets have been holding up well on the back of the reduced corporate income tax rates leading to higher earnings growth. Moreover, this step is expected to trigger an investment cycle.

Stock markets in India rebounded strong, post the announcement of reduced tax rates for Indian companies. The Nifty was up sharply, making up for the losses over the past few months.