Markets end in the green

After a manic Monday, the markets staged a sharp recovery on Tuesday. The benchmark BSE Sensex closed 692.79 points, or 2.67%, higher at 26,674.03points, while the National Stock Exchange’s Nifty 500 ended up 190.8 points, or 2.51%, at 7,801.05 from Monday’s close.

There was mayhem on the bourses on Monday as the number of coronavirus cases globally, including India, continues to soar. The 30-share Sensex and broader Nifty 50 lost 3,934.72 points (-13.15%) and 1,135.2 points (-12.98%) each yesterday. The plunge broke the previous record of the biggest decline at close of March 9, when the respective indices lost 1,941.67 points and 538 points.

However, positive global cues and the hope of a government stimulus helped the markets recover some ground on Tuesday. In intraday trade, the Sensex jumped over 1,481 points, or 5.7%, to touch the day’s high of 27,462.87 points. Similarly, the Nifty 50 gained over 426 points, or 5.61%, to touch the day’s high at 8,036.95 points.

At the day’s low, the Sensex fell over 342 points (-1.32%) to touch 25,638.9 points, while the Nifty 50 lost over 99 points (-1.3%) to touch 7,511.1 points. Despite ending in the green, both the indices registered their new 52-week lows on Tuesday, at the day’s low. And, from their lifetime-highs on January 20, the plunge until Tuesday was 16,634 points (-39.35%) for the Sensex and 4,919 points (-39.58%) for the Nifty 50.

Ajit Mishra, vice president–research at Religare Broking, says that after Monday's sharp decline, the Indian markets witnessed healthy buying interest, led by positive global cues and rising hopes of a stimulus package from the government. At 2.00 p.m., Union finance minister Nirmala Sitharaman took part in a virtual press conference, where she listed out a host of factors, including deadlines to file income tax returns, on which the government would be lenient on account of the lockdown to contain the Coronavirus (Covid-19) outbreak.

“The announcement of relaxation of regulatory deadlines today is definitely positive; however, markets would be keenly awaiting a stimulus package from the government,” says Mishra. Later tonight at 8.00 p.m., Prime Minister Narendra Modi is scheduled to address the nation on “vital aspects relating to the menace of Covid-19”. Sitharaman, at her press conference, said that an economic package will be announced soon.

Prior to the beginning of today’s trade, overnight the global risk sentiment had recovered after the U.S. Federal Reserve (US Fed) on Monday announced stimulus measures to bail out the U.S. economy from the impact of the Coronavirus. But, according to Deepak Jasani, head of retail research at HDFC Securities, Indian markets gained the least among their Asian and European peers, continuing its underperformance even as multiple indicators suggest a bear-market trough.

Kochi-based Vinod Nair, head of research at Geojit Financial Services, echoes similar views. He opines that the market seemed to breathe a sigh of relief today after the crash yesterday, in sync with the global markets. “In addition to the huge relief package by the U.S. Fed yesterday, there were also expectations of a fiscal package by the [Indian] government,” says Nair. “The market came off its highs after no significant announcements by the finance minister, and the fact that the economic package was still in development,” Nair adds.

And, according to Manav Chopra, head of research–equity at Indiabulls Securities, though the market closed in the green, nothing much can be read by a single day up move. Chopra highlights that the market (Nifty 50) witnessed resistance at the 8,000 level. “Sustainable recovery will only materialise once the Nifty 50 closes above 8,300 for a few sessions,” says Chopra.

Going ahead, the European and U.S. manufacturing activity data, due overnight, may indicate the impact of Covid-19 on economies, and could influence markets tomorrow, says Nair of Geojit Financial Services. But, it is data on Coronavirus which will be the most tracked factor. “We believe the update on the spread of Coronavirus cases would be the single biggest factor dictating the market trend,” says Religare Broking’s Mishra.