Sensex zooms over 1,400 points, Nifty above 9,400-mark in opening session; Rs 20 lakh cr economic booster cheers markets
The Sensex rallied over 1,400 points in opening session on Wednesda
The markets were expected to open with a massive GAP up as the SGX Nifty was trading higher by almost 3 percent or 270 points in pre-opening session following PM Modi’s stimulus package announcement on Tuesday evening.
The stimulus package would be equivalent to 10 percent of the gross domestic product (GDP) and includes both fiscal and monetary measures, some of which have already been announced, economists said. The markets did not disappoint.
The Sensex rallied over 1,400 points in opening session on Wednesday. After touching a high of 32,845.48, the 30-share index pared some early gains to trade 818.68 points or 2.61 percent higher at 32,189.80. Similarly, NSE Nifty soared 213.50 points, or 2.32 percent, to 9,410.05. ICICI Bank was the top gainer in the Sensex pack, surging around 7 per cent, followed by L&T, Axis Bank, Bajaj Finance, Hero MotoCorp, M&M, UltraTech Cement and Maruti. On the other hand, Nestle India, Bharti Airtel, Sun Pharma and Reliance Industries were trading in the red.
In the previous session, the BSE barometer settled 190.10 points or 0.60 per cent lower at 31,371.12, and broader Nifty declined 42.65 points, or 0.46 percent, to 9,196.55. Foreign portfolio investors offloaded equities worth Rs 1,662.03 crore in the capital market on Tuesday, provisional exchange data showed. According to analysts, domestic investors cheered the government's massive stimulus package to revive the pandemic-stricken economy.
The Prime Minister on Tuesday announced massive new financial incentives on top of the previously announced packages for a combined stimulus of Rs 20 lakh crore. He said the package will be around 10 percent of the GDP and "will play an important role in the 'Atmanirbhar Bharat Abhiyan' (self-reliant India campaign).
The special economic package will have emphasis on land, labour, liquidity and laws, and will be for "our labourers, farmers, honest tax payers, MSMEs and cottage industry", Modi said.
Rupee opens strong
Meanwhile, bourses in Shanghai, Hong Kong, Tokyo and Seoul were trading with losses as fears of a second wave of coronavirus infections gripped global markets.
International oil benchmark Brent crude futures were trading 1.53 per cent lower at USD 29.52 per barrel.
In India, the death toll due to COVID-19 rose to 2,415 and the number of cases climbed to 74,281, according to the health ministry.
Globally, the number of cases linked to the disease has crossed 42.61 lakh and the death toll has topped 2.91 lakh.
Global stocks fall on renewed virus fears
Stocks and oil prices fell on Wednesday as fears about a second wave of coronavirus infections gripped financial markets.
Investors, many facing steep losses due to the pandemic-driven shakeout in assets over the past few months, have also had to contend with renewed U.S.-China trade tensions.
Leading U.S. infectious disease expert Anthony Fauci on Tuesday warned lawmakers that a premature lifting of lockdowns could lead to additional outbreaks of the deadly coronavirus , which has killed 80,000 Americans and brought the economy to its knees.
Fauci’s comments hammered Wall Street stocks overnight, underlining fragile investor sentiment which has in recent sessions swung between optimism over some easing in lockdowns globally and anxiety about a fresh spike in virus cases.
MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.4 percent. Shares in China, where the coronavirus first emerged late last year, fell 0.5 percent.
The South Korean market was down for a third session. New coronavirus infections have appeared in Seoul after the country eased restrictions last week.
Oil markets, which have plummeted this year due to a combination of a collapse in demand and a supply glut, lost further ground in Asia.
Treasury yields also inched lower amid caution before a speech by U.S. Federal Reserve Chairman Jerome Powell and rising speculation the United States could one day adopt negative interest rates.
“It looks like we’re in for another negative day of trading here in the Asia Pacific region,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney. “It’s very clear that the containment has done economic damage and the recovery will take years and not weeks,” he said.
U.S. stock futures, the S&P 500 e-minis, were down 0.4 percent in Asian trade.
In overnight trade, Wall Street shares were dragged lower after Fauci’s remarks, including his statement that a treatment or vaccine is unlikely to be in place by late August or early September.
The Dow Jones Industrial Average fell 1.89 percent on Tuesday, the S&P 500 lost 2.05 percent and the Nasdaq Composite dropped 2.06 percent.
The mood was further soured by proposed legislation by a leading US Republican senator that would authorize President Donald Trump to impose sanctions on China if it fails to give a full account of events leading to the outbreak of the novel coronavirus .
Stock markets have rebounded sharply in recent weeks as the spread of the novel coronavirus slowed in some countries in Asia and Europe, while parts of the U.S. economy began to reopen after weeks of lockdowns.
Equities and some riskier assets are starting to erase some of those gains due to worries that a rush to re-open factories and shops may be premature.
Australian shares were down 1 percent, while Japan’s Nikkei stock index slid 0.8 percent.
The yield on benchmark 10-year Treasury notes eased slightly to 0.6622 percent. The two-year yield fell to 0.1589 percent but remained above a record low of 0.1050 percent hit on Friday.
The New Zealand dollar slumped 0.7 percent to $0.6030 after the country’s central bank doubled its quantitative easing programme and said it has asked commercial banks to be ready for negative interest rates by year’s end.
The USdollar nursed losses as traders braced for Powell’s speech, which will cover economic issues and may offer a hint whether negative rates are a viable policy option.
Trump on Tuesday again pushed the Fed to adopt negative interest rates, a hot topic in financial markets since last week when U.S. money market instruments started to price in a chance of negative rates.
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