Sensex rebounds over 750 points, Nifty recovers 120 points in opening session; RIL, ICICI Bank, HDFC rally on strong gains

Market benchmark Sensex rebounded over 750 points in the opening session on Monday led by strong gains in index-heavyweights Reliance Industries, ICICI Bank and HDFC as global investors began bottom-fishing after last week’s selloff.

After rallying over 785 points, the 30-share index pared some gains to trade 449.56 points, or 1.17 percent, higher at 38,746.85.

#CNBCTV18Market | Market snaps 6-day losing streak, opens sharply higher pic.twitter.com/ZAqnySxXsy

— CNBC-TV18 (@CNBCTV18Live) March 2, 2020

Likewise, the NSE Nifty recovered 120.05 points, or 1.07 percent, to 11,321.80. Top gainers in the Sensex pack included ICICI Bank, HCL Tech, Reliance Industries, TCS, ONGC, Titan and Infosys, rising up to 3 percent.

#CNBCTV18Market | All Nifty stocks trade higher, Vedanta & ICICI Bank amongst top gainers pic.twitter.com/RbHnzitZj8

— CNBC-TV18 (@CNBCTV18Live) March 2, 2020

On the other hand, Kotak Bank, M&M and Tech Mahindra were in the red.

In the previous session, the Sensex logged its second-biggest one-day fall in history as concerns over the coronavirus triggered a manic global sell-off. The 30-share index ended 1,448.37 points, or 3.64 percent, lower at 38,297.29, while the Nifty sank 431.55 points or 3.71 percent to end at 11,201.75.

Further, on a net basis, foreign institutional investors (FPIs) sold equities worth Rs 1,428.74 crore, while domestic institutional investors bought shares worth Rs 7,621.16 crore on Friday, data available with stock exchanges showed.

According to traders, following the recent selloff in global equity markets, investors are bottom-fishing recently-battered stocks.

Stock exchanges in Shanghai, Hong Kong, Seoul and Tokyo were also trading with firm gains.

Meanwhile, China has reported 42 new fatalities from the novel coronavirus outbreak, taking the death toll in the country to 2,912, Chinese health officials said on Monday, as the rapid spread of the epidemic wreaked havoc globally causing over 3,000 deaths and infecting more than 88,000 people.

On the domestic front, stocks are expected to react to the GDP growth numbers released after market hours on Friday.

India’s gross domestic product (GDP) growth slipped to a nearly 7-year low of 4.7 percent in October-December 2019, weighed by a contraction in manufacturing sector output.

Global oil benchmark Brent crude futures rose 3.50 percent to $51.41 per barrel.

Rupee rises 20 paise

The Indian rupee appreciated by 20 paise to 72.04 against the US dollar in early trade on Monday tracking positive opening in domestic equities and weakening of the American dollar in the overseas market.

#Rupee opens slightly higher against the US dollar pic.twitter.com/Y4cZ6Lvj1F

— CNBC-TV18 (@CNBCTV18Live) March 2, 2020

At the interbank foreign exchange the rupee opened at 72.09, then gained further ground and touched a high of 72.04 against the US dollar, registering a rise of 20 paise over its previous close. The domestic currency, however, could not hold on to the gains and was trading at 72.18 against the American unit at 0957 hrs. On Friday, the rupee had settled at 72.24 against the greenback. Meanwhile, investor sentiment remained fragile amid concerns over the impact of coronavirus outbreak on the global economy, forex traders said. The number of deaths globally in the new coronavirus outbreak passed 3,000 on Monday, as China reported 42 more deaths. The dollar index, which gauges the greenback’s strength against the basket of six currencies was trading 0.15 per cent lower at 97.98. The 10-year government bond yield was at 6.34 percent in the morning trade.

Asian stock markets reverse losses

Asian shares steadied from early losses on Monday as investors placed their hopes on a coordinated global monetary policy response to weather the damaging economic impact of the coronavirus epidemic.

Pandemic fears pushed markets off a precipice last week, wiping more than $5 trillion from global share value as stocks cratered to their steepest slump in more than a decade, according to a Reuters report.

The sheer scale of losses prompted financial markets to price in policy responses from the U.S. Federal Reserve to the Bank of Japan and the Reserve Bank of Australia. Futures now imply a full 50 basis point cut by the Fed in March while Australian markets are pricing in a quarter-point cut at the RBA’s Tuesday meeting.

#CNBCTV18Market | Asian indices reverse early losses, now trading in the green; Nikkei climbs 430 points from lows pic.twitter.com/BM4Ru8PiwS

— CNBC-TV18 (@CNBCTV18Live) March 2, 2020

Also helping calm market nerves, Bank of Japan Governor Haruhiko Kuroda said on Monday the central bank would take necessary steps to stabilise financial markets.

In equities, Chinese shares opened higher with the blue-chip index up 1.5 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan advanced 0.4 percent, turning around from a loss of about 0.3 percent earlier in the day.

E-minis for the S&P500, which were down more than 1 percent at one point, were last up 0.3 percent while Japan’s Nikkei, which opened 1.3 percent lower at a six-month trough, climbed 0.4 percent.

Australia’s S&P which had tumbled 3 percent, was last off 1.8 percent.

Benchmark US 10-Year Treasuries hit a fresh record low of 1.0750 percent. Despite some stability in the market, analysts still expect volatility to persist.

“Any signs that new cases are beginning to taper could be seen as a positive catalyst for the market especially given that some of the market complacency has reduced with equity valuations much lower vs few weeks ago,” Nomura analysts wrote in a note.

“In the very near term until 1Q reporting results, we expect Asian equities may remain quite volatile,” they added.

“However, on a medium-term basis we believe the risk-reward is now getting favorable, assuming the virus does not take the form of a virulent global pandemic.”

Leaders in Europe, the Middle East and the Americas rolled out bans on big gatherings and stricter travel restrictions over the weekend as cases of the new coronavirus spread.

The epidemic, which began in China, has killed almost 3,000 people worldwide as authorities race to contain infections in Iran, Italy, South Korea and the United States.

Both official and private surveys, released on Saturday and Monday respectively, showed China’s factory activity collapsing to its worst levels on record as the virus crippled broad areas of the economy.

“It is now highly probable that the coronavirus will spread globally,” Citi analysts said in a note. “Financial markets may over-react until they have visibility on the actual impact.”

Investor panic last week sent bonds soaring and stocks plunging. The S&P 500 index fell 11.5 percent, only its fifth double-digit weekly percentage drop since 1940.

On Monday, oil extended losses before steadying on expectations OPEC may cut production.

Brent crude last traded at $50.41 per barrel and U.S. crude at $45.30 per barrel.

In currencies, investors sought shelter in Japanese yen, which jumped to a 20-week high on the dollar in tandem with the massive shift in money markets to price U.S. rate cuts.

All of this leaves just about every major asset class on edge and few analysts sounding optimistic.

“So it was right not to ‘buy the dip,’” said Michael Every, Rabobank’s senior strategist for the Asia-Pacific.

The yen was last up 0.1 percent at 107.98.

The Aussie huddled near an 11-year low at $0.6527, while the New Zealand dollar slipped 0.1 percent to $6238.

The euro was up 0.3 percent at $1.1054.

That left the dollar index a shade weaker at 97.911.

A further set of manufacturing surveys from around the world due later on Monday will provide investors more detail on the virus’ impact on the global economy.

Later in the week, central bank meetings in Australia, on Tuesday, and Canada, on Wednesday, will be closely watched.

--With agency inputs