Sensex turns green after paring opening losses, jumps over 250 points; Nifty above 11,700, Hindustan Unilever jumps over 4%

Hindustan Unilever was the top gainer in the Sensex pack jumping 4.73 percent followed by Asian Paints, Nestle India, IndusInd Bank, ICICI Bank, Maruti, Bajaj Auto and NTPC.

FP Staff February 03, 2020 10:54:20 IST
Sensex turns green after paring opening losses, jumps over 250 points; Nifty above 11,700, Hindustan Unilever jumps over 4%
  • After swinging over 300 points in the early session, the 30-share BSE index was trading 260.79 points higher at 39,996.32

  • ITC was the top laggard in the Sensex pack plunging 4.89 percent, while HCL Tech, Infosys, HeroMoto Corp and HDFC Bank

  • In the previous session, Sensex logged its biggest single-day plunge in more than a decade on Saturday after the Union Budget failed to live up to market expectations

Market benchmark Sensex regained over 250 points in the morning trade on Monday after starting on a choppy note in the opening session as investor sentiment took a beating after the Union Budget failed to meet expectations.

After swinging over 300 points in the early session, the 30-share BSE index was trading 260.79 points or 0.66 percent higher at 39,996.32, and the broader NSE jumped too 82.65 points, or 0.71 percent, to 11,744.50 at around 10.30 am.

Hindustan Unilever was the top gainer in the Sensex pack jumping 4.73 percent followed by Asian Paints, Nestle India, IndusInd Bank, ICICI Bank, Maruti, Bajaj Auto and NTPC.

Sensex turns green after paring opening losses jumps over 250 points Nifty above 11700 Hindustan Unilever jumps over 4

Representational image. Reuters.

ITC was the top laggard in the Sensex pack plunging 4.89 percent, while HCL Tech, Infosys, Hero MotoCorp and HDFC Bank.

In the previous session, Sensex logged its biggest single-day plunge in more than a decade on Saturday after the Union Budget failed to live up to market expectations of growth-boosting measures and fiscal discipline.

Sensex settled 987.96 points or 2.43 percent lower at 39,735.53, and Nifty plunged 300.25 points or 2.51 percent to close at 11,661.85.

At the National Stock Exchange (NSE), most sectoral indices were in the green. Nifty Bank moved up by 0.42 percent, auto by 0.74 percent, IT by 0.35 percent and metal by 0.44 percent. However, Nifty FMCG was down by 0.20 percent.

Meanwhile, on a net basis, foreign institutional investors (FIIs) sold equities worth Rs 1,199.53 crore, while domestic institutional investors purchased shares worth Rs 36.64 crore on Saturday, data available with stock exchanges showed.

According to analysts, the market is disappointed as the budget lacked any significant measure to stimulate demand and did not provide any relief on capital gains tax as expected from the Budget.

Presenting the Union Budget for 2020-21 in Parliament, Finance Minister Nirmala Sitharaman pegged the fiscal deficit at 3.8 percent for the current fiscal, compared to the earlier target of 3.3 percent of Gross Domestic Product (GDP).

She also proposed lower income tax slabs for those foregoing various exemptions, and removed dividend distribution tax on companies, effectively shifting the tax burden to the recipients.

Further, volatility in the market also heightened after Chinese stocks opened after an extended break, traders said.

Rupee slips 34 paise to 71.66

The rupee opened on a weak note and declined by 34 paise to 71.66 against the US dollar in opening trade on Monday, after the Budget 2020 disappointed market participants.

Forex traders said rupee weakened amid concerns of fiscal slippage and rising coronavirus outbreak fears.

Asian shares stumble, oil skids on virus fears

Asian shares stumbled on Monday, oil skidded and commodities on Chinese exchanges plunged on their first trading day after a long break on fears the coronavirus epidemic will hit demand in the world’s second-largest economy, Reuters said.

Aiming to head off any panic, the Chinese government took a range of steps to shore up an economy hit by travel curbs and business shut-downs because of the epidemic, including cutting its key interest rate.

Despite the measures, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.4 percent, on track for its eighth straight day of losses.

Chinese shares slumped at the open with the blue-chip index down about 7 percent.

Japan's Nikkei stumbled 0.9 percent while Australia's benchmark index skidded 1.2 percent, while New Zealand shares dropped 1.5 percent.

“Until the rate of new cases peaks, equities are in limbo – too late to sell, too early to buy,” said Sean Darby, Hong Kong-based strategist at Jefferies.

A total of 361 people have died in China from the coronavirus with the first death out of the mainland reported on Sunday in the Philippines.

In a bid to cushion the impact on China’s economy, the country’s central bank cut reverse repo rates by 10 basis points and injected 1.2 trillion yuan ($173.8 billion) of liquidity into the markets on Monday.

Beijing also said it would help firms that produce vital goods resume work as soon as possible, state broadcaster CCTV reported.

Still, analysts expect Chinese onshore equity markets to remain under pressure as the number of infections is still likely to increase in the weeks ahead.

Economists at Citigroup said the steps taken by Chinese authorities were “unlikely to be sufficient to curtail a sharp downturn in Q1.”

“As most employees won’t return to work until Feb. 9, the output losses are likely to be larger than expected, and incoming economic activity data will continue to prompt the authorities to take more actions in order to reduce the adverse impact of the Wuhan coronavirus on the economy,” they noted.

Citi revised its full-year forecast for China’s GDP growth to 5.5 percent in 2020 from 5.8 percent. It also cut first-quarter growth expectations to 4.8 percent, compared with 6 percent in the fourth quarter of 2019.

JPMorgan shaved its forecast for global growth by 0.3 percentage points for this quarter.

There was still some glimmer of hope.

“We still believe that economic activities should recover swiftly once the number of new cases comes under control, and subsequently market sentiment should also improve,” said JPMorgan Asset Management Asia Chief Market Strategist Tai Hui.

“This could take time to play out, but this underpins our long-term optimism in the A-share market despite a challenging time ahead.”

E-Mini futures for the S&P500 added 0.6 percent, pointing to a positive start for Wall Street on Monday.

As Chinese markets opened after the 10-day break, Shanghai copper hit limit down as did Shanghai crude oil while yields on the country’s 30-year government bonds traded in the interbank market were down 18.5 basis points.

Dalian soymeal plunged 4.1 percent while Dalian iron ore hit limit down with steel prices tumbling too.

On Friday, the Dow fell 2.1 percent, the S&P 500 declined 1.8 percent and the Nasdaq Composite dropped 1.6 percent as economists tempered their outlook for China while cconomic data out of the United States and Europe together with a mixed batch of corporate earnings also added to the gloom.

In currencies, the safe-haven Japanese yen held near a 3-1/2-week high against the dollar at 108.57 after adding about 1.5 percent in the last two weeks.

The risk-sensitive Australian dollar, which is often traded as a liquid proxy for the Chinese yuan, tumbled 2 percent last week to hit a four-month trough of $0.6683. It was last up 0.2 percent at 0.6701.

The dollar index, which measures the greenback against a basket of major currencies, was a shade higher at 97.475.

Gold, which posted its best month in five in January, slipped 0.5 percent to $1,582.70, while yields on US debt lingered near five-month lows as the United States, Japan and other countries tightened travel curbs to China.

Oil futures came off lows after skidding sharply earlier in the session on concerns the coronavirus outbreak would hit China’s oil demand. Brent crude was last down 31 cents at $56.31 a barrel after falling more than $1 at one stage. US crude slipped 5 cents to $51.51.

—With inputs from agencies

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