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Markets struck by volatility and virus | BNP Paribas Mutual Fund

Markets struck by volatility and virus

It has been a week of volatility and losses as concerns that a spread of coronavirus may disrupt travel & trade and slow global economic growth heightened. Investors also turned cautious ahead of the Union Budget on Saturday, 01 February 2020. Selling pressure continued following a short reprieve in the middle of the week. The expiry of the January 2020 futures & options contracts added to market volatility. However, the sentiment was marginally lifted on the last trading day of the week and the month after the Economic Survey projected GDP growth at 6-6.5% for 2020-21.

Macro-economic developments

The divestment of Air India restarted on Monday (27 January) with the government seeking to sell 100% of its equity share capital in the state-owned airline, including Air India's shareholding interest of 100% in AI Express and 50% in Air India SATS Airport Services. The sale will be implemented through the open bidding route and 17th March has been set as the deadline for interested parties to submit their bids. Those interested in bidding for Air India must have a net worth of Rs 3,500 crore. Markets will be watching this closely in the backdrop of tightening fiscal pressure and reduced government revenue.

Global developments

In the first meeting of 2020, the US Federal Reserve held rates steady at a target range of 1.50% to 1.75%. It continued to describe the US economy as “rising at a moderate rate” and changed little in its economic outlook as the economy continues to extend its longest expansion on record. But the Fed downgraded its assessment of household spending to “moderate” from “strong” in December 2019.

Institutional Activity

The year 2020 has started on a negative note with geopolitical concerns between the United State and Iran and the outbreak of the coronavirus in China further intensifying the prospects of a global slowdown and impacting investors sentiment. This has been reflected in institutional investor activity as well. For the month of January 2020 (as on 30th January), foreign portfolio investors (FPIs) have net sold Indian equities worth INR 1180 crore. Domestic institutional investor (DII) activity has been in a similar vein with DIIs net selling Indian equities worth INR 2743 crore, in the same period. For the period 24th January 2020 to 30th January 2020, FPIs have net sold Indian equities worth INR 3113 crore and DIIs have net bought Indian equities worth INR 2953 crore.


Disclaimers: The material contained herein has been obtained from publicly available information, internally developed data and other sources believed to be reliable, but BNP Paribas Asset Management India Private Limited (BNPPAMIPL) makes no representation that it is accurate or complete. BNPPAMIPL has no obligation to tell the recipient when opinions or information given herein change. It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. This information is meant for general reading purpose only and is not meant to serve as a professional guide for the readers. Except for the historical information contained herein, statements in this publication, which contain words or phrases such as 'will', 'would', etc., and similar expressions or variations of such expressions may constitute 'forward-looking statements'. These forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. BNPPAMIPL undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date thereof. The words like believe/belief are independent perception of the Fund Manager and do not construe as opinion or advise. This information is not intended to be an offer to sell or a solicitation for the purchase or sale of any financial product or instrument. The information should not be construed as an investment advice and investors are requested to consult their investment advisor and arrive at an informed investment decision before making any investments. The Trustee, Asset Management Company, Mutual Fund, their directors, officers or their employees shall not be liable in any way for any direct, indirect, special, incidental, consequential, punitive or exemplary damages arising out of the information contained in this document.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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