Coronavirus News Sentiment: Volatility and Direction of Indian Markets
The most interesting chart is on India. If we map the Aggregate Market Sentiment for India (not just Coronavirus News Sentiment for the country, which anyway will be a part of overall sentiment) with the market indices, there is a clear message. The market volatility is not likely to go away till the time there is some stability in the news sentiment. The smart recovery in market performance on Friday (20th March) when the market was up about 6% followed by an even deeper fall on Monday (23rd March) when there was a 13% decline gels very well with the India Corona News Sentiment.
Fig. 1: India Aggregate Market Sentiment
The worst possible news for the global markets is that US markets continue to remain in deep turmoil. Why? Maybe it is because that despite all the effort from Fed to support the markets such as increased liquidity and more types of asset classes for purchase and proactive steps from the US Government, the Coronavirus news sentiment continues to go down in USA. From the behavior of markets so far, it is likely that any turnaround will not happen till the time news sentiment on Corona starts to get better.
Fig. 2: Coronavirus News Sentiment for Multiple Countries
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EMAlpha, a data analytics and investment management firm focused on making Emerging Markets (EMs) accessible to global investors and unlocking EM investing using machines. EMAlpha’s focus is on Unstructured Data as the EMs are particularly susceptible to swings in news flow driven investor sentiment. We use thoroughly researched machine learning tools to track evolving sentiment specifically towards EMs and EMAlpha pays special attention to the timely measurement of news sentiment for investors as these markets can be finicky and sentiment can be capricious.Our team members have deep expertise in research and trading in multiple Emerging Markets and EMAlpha’s collaborative approach to combining machine learning tools with a fundamental approach help us understand these markets better.
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