$900 bn stimulus package in US and concerns over new Covid 19 variant: Anil Singhvi gauges impact on stock markets

 In a positive development for US markets, there is finally a consensus on the much-awaited stimulus package. The only thing that remains now is the voting and a go ahead by incumbent President Donald Trump. Meanwhile, in another development, a new variant of coronavirus is now emerging in the UK. How will markets see these developments? Zee Business Managing Editor Anil Singhvi gives his take on the issue. 

The Market Guru said that among the new developments, there were some things that are known and some are unknown. The US stimulus package of USD 900 billion was a known factor and the good point is that it has come without much rigour. The size of the package is good. The US markets are already responding positively to this development, Singhvi said.

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This will ensure that there is no dearth of liquidity in the markets, he said. There is a comfort that there will be enough liquidity in the markets along with low interest rates for the next 1-2 years. 

The markets made a life time high on Friday riding on the news. However, there has been some slippage from the higher levels on account of developments on the coronavirus front, he added.

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The Market Guru said that the economy is not as strong as it should have been. The markets will continue to gain strength from the low interest rates and presence of liquidity

There are palpable concerns related to the new infections in the US.  

Though, Moderna has also received approval for emergency use from Moderna. This is a positive development.  

But the real problem is now emerging in Britain, where a new variant of coronavirus has been creating havoc. There is a new kind of lockdown in place. This will have a short term impact, he said.  

The markets can show some profit booking now after creating lifetime highs. 

Medium to long term view on US Markets 

The Market Guru said that the economy is not as strong as it should have been. The markets will continue to gain strength from the low interest rates and presence of liquidity. 

As for new coronavirus strains, there are valid concerns. But now there are two vaccines – one from the stable of Pfizer and other from Moderna.  

Any correction due to the rise in number of cases will be short lived, he said.