Sensex rallies over 1,250 points, Nifty soars 363 points; robust buying in auto, IT stocks, hopes of stimulus package boost markets

The market traded on a firm note throughout the day ending up by 4 percent amid gains in global and Asian peers on hopes that the COVID-19 pandemic is nearing a peak in major hotspots countries and that governments would roll out more stimulus measures.

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The government is likely to unveil a second stimulus package in coming days to focus on help of MSME.

Oil prices extended gains on expectation of an oil production cut agreement.

Sectorially all indices ended in green with auto and BFSI index leading the rally with auto sector surging more than 1 percent. Broader indices too joined the rally and ended with a gain of more than 3 percent. Investors will keep a close eye on stimulus measures likely to be announced by the government and decisions relating to the possibility of extension of lockdown amid rising numbers of coronavirus cases.

Sensex rallied over 1,265 points on Thursday, led by robust buying in auto, financial and IT stocks amid hopes of a second stimulus package from the government to mitigate the blow of the Covid-19 lockdown.

Representative image. Reuters

After hitting a high of 31,225.20 during the day, the 30-share BSE barometer ended 1,265.66 points or 4.23 percent higher at 31,159.62.

Similarly, the NSE Nifty soared 363.15 points, or 4.15 percent, to 9,111.90.

Sumeet Bagadia, Executive Director, Choice Broking told Firstpost, "finally the Nifty has settled its Weekly Option Expiry at 9111 level with more the 363 points and has given close above 9,050-level which is a good sign for the time being, based on which we may see a further upside movement. Moreover, few large cap counters also helped out the Nifty to climb above 9000 level like HDFC, ICICI Bank, HDFC Bank, Reliance, Kotak Bank and Maruti which even settled with good numbers of gain. It seems that the Nifty has turned its table in a positive direction after giving a close above 9,000-levels as it was a second attempt but a successful one with enough volume activity. For the time being, downside support comes at 8700 while upside resistance comes at 9300 then 9,600," he said.

Mahindra and Mahindra was the top gainer in the Sensex pack, surging over 16 percent, followed by Maruti, Titan, Bajaj Finance, HDFC, Bajaj Auto and Hero MotoCorp.

On the other hand, HUL, Tech Mahindra, IndusInd Bank and Nestle were the laggards.

"Indian markets started trading on a positive note taking upbeat cues from its Asian peers in the morning session as policymakers discussed the process of reopening the global economy as data showed a slowing spread of Covid-19," said Narendra Solanki, Head-Equity Research (Fundamental), Anand Rathi to PTI.

During the afternoon session, market further strengthened on back of expectations of second stimulus package estimated at around Rs 1 lakh crore and focus on helping small and medium businesses, which led to both broad-based buying and also triggered some short covering, he added.

A Bank of America Securities report said the Centre may soon announce another fiscal package which may be almost similar to the Rs 1.75 lakh crore stimulus unveiled last month.

Rupee up

The rupee provisionally settled 6 paise higher at 76.28 against the US dollar.

The Indian rupee has been under pressure throughout the week, hitting record lows due to the uncertainty in trade created by Covid-19. The rupee hit a fresh record low of 76.54/$ earlier today. Despite the RBI flushing dollar into the markets since 20th March 2020, the RBI has been unable to contain the slide, Nish Bhatt, Founder & CEO, Millwood Kane International, an investment consulting firm.

"As per data available in the month of March, the central bank's foreign exchange reserves declined by over $17 bn. The saving grace is that the dollar reserves scaled to a life-time high of $487.23 billion in the week ending 6th March 2020.

"The unpredictability on the Covid-19 influence means that the rupee may come under more pressure in the coming weeks. Most Asian currencies have been falling due to uncertainty over the economic outlook, with near-zero exports due to the outbreak of coronavirus. However, with the Indian government announcing stimulus packages to provide relief to businesses, lifting of lockdown and steady fall in new cases of the virus will provide further strength in the domestic market, but the lockdown has to ease globally before Indian exports can commence trade and that is highly dependent on other countries. Further introduction of dollar in the market to support the INR can be expected but predicting the INR/USD cycle is difficult in these uncharted times,” he said.

European shares gain

European stock markets gained for a fourth straight day on Thursday on hopes the coronavirus pandemic was close to peaking, with investor attention also focused on a meeting of the bloc’s finance ministers to discuss an economic rescue package.

The pan-European index rose 1.5 percent and was on course to end a holiday-shortened week more than 5 percent higher, as data showed France’s coronavirus hospital deaths slowed.

Travel and leisure, insurance and banking stocks, among the worst hit this year from the outbreak, jumped between 2.2 percent and 4.6 percent, according to Reuters.

The benchmark index has earned back about $1.7 trillion in market value since hitting an eight-year low in March, but still remained nearly 24 percent below its record high as sweeping lockdown measures crush business activity and spark mass layoffs.

The number of US jobless claims - the most timely data on economic health - likely totalled a staggering 15 million in the last three weeks, and economists expect US job losses of up to 20 million in April.

“Sentiment in markets continues to shift like a yo-yo, but signs the coronavirus curve continues to flatten in the worst affected countries are very positive,” said Stephen Innes, a markets strategist at AxiCorp.

“With a lot of cash on the sidelines - provided the COVID-19 data proves reliable - this move can have legs.”

Global stock markets have also gained ground this week, partly helped by historic fiscal and monetary stimulus to cushion the economic blow of the health crisis.

EU finance ministers are set to resume talks on a half-a-trillion economic support package later in the day, while expectations that the world’s top oil producers would agree to cut output led to a 1.1 percent rise in energy stocks . The energy index has recouped nearly half of its value following a collapse in oil prices, triggered by a Saudi-Russia price war.

“The worst-case scenario, where OPEC and its previous allies fail to commit to production cuts, would be disastrous for oil-producing economies (and) would see both (oil) benchmarks test a single-digit number,” said Hussein Sayed, a market strategist at FXTM.

With major European firms withdrawing financial forecasts and launching dramatic efforts to save cash, analysts expect an earnings recession to deepen in 2020 with a 15.7 percent slide in the first quarter and 30.2 percent in the second.

Elsewhere in Asia, bourses in Shanghai, Hong Kong, and Seoul ended on a positive note, while Tokyo closed in the red.

Stock exchanges in Europe started significantly higher. Meanwhile, rent crude futures, the global oil benchmark, rose 4.2 percent to $34.16 per barrel.

The death toll due to the novel coronavirus in India rose to over 160 and the number of cases crossed 5,700, according to the Union Health Ministry.

Global tally of the infections has crossed 14.8 lakh, with over 88,000 deaths.