The stock market in India staged on Friday a spectacular recovery in tandem with the let-up in the sell-off in global markets amid the air of “gloom and doom” caused by the coronavirus outbreak.

The market in India also recorded the biggest-ever intra-day recovery. Experts said Friday’s market miracle was most likely worked by measures announced by governments around the world to tackle the pandemic. The U.S. Fed has declared it would infuse $1.5 trillion to tackle coronavirus-related disruptions.

The Sensex closed at 34,103.48 points—1,325.34 points (+4.04%) higher than its previous day close. The Nifty 50 gained 365.05 points (+3.81%) over its Thursday to close Friday at 9,955.2 points.

Markets were in a strong bear grip on Friday morning following Thursday’s record decline at close of 8.3% and 8.18% each on the Nifty 50 and the Sensex. Following a 10% fall in the Nifty 50 at 9.20 a.m., which triggered lower circuit filters, trading was halted.

Compared to Thursday’s close of 32,778.14 points, the Sensex, at the day’s low of 29,388.97 points, had lost 3,389.17 points (-10.34%), while the Nifty 50 had lost 1,035 points (-10.79%) to touch the day’s low of 8,555.15 points compared to Thursday’s close.

Friday was the 39th trading session since January 20 when the Sensex and Nifty 50 recorded their life-highs at 42,273.87 points and 12,430.5 points, respectively. At Friday’s low, the Sensex lost 12,884.9 points, while the Nifty 50 lost 3,875.35 points from their January life-highs.

When trading resumed at 10.20 a.m., stocks started inching upwards and gradually the bulls made a strong comeback. The Sensex, at Friday’s high of 34,769.48 points recovered by 5,380.51 points (+18.31%) compared to the day’s low of 29,388.97. The Nifty 50 at day’s high of 10,159.4 points gained 1,604.25 points (+18.75%) from the day’s low of 8,555.15.

Talking about the biggest intra-day recovery in the benchmark indices, Ajit Mishra, vice president, research at Religare Broking, says that global and domestic markets took a breather for the moment on hopes of further easing measures from central banks and governments.

“However, the downside risk for the Indian markets cannot be ruled out in the near term given uncertainty across the globe,” says Mishra. In his view, the improvement in domestic macro data (IIP and easing CPI) is a good sign, however, growth recovery still remains evasive and therefore there are high expectations that the Reserve Bank of India may cut rates in its next policy meet to offset the impact of coronavirus as well as an economic slowdown. “Meanwhile in the near term, we expect volatility to remain high and maintain a cautious stance,” Mishra adds.

The substantial market recovery, after hitting the lower circuit filter, is an extremely healthy signal for Indian equities, opines Amar Ambani, senior president, and institutional research head at YES Securities. “Fundamentally, the market was looking attractive, even at yesterday’s close, but irrational sentiment can override fundamentals in the short term,” says Ambani who also added that whether the worst is over, will depend on effective tackling of coronavirus, in India and around the world.

“But what is certain is that the year 2020 is likely to be a volatile one, on account of U.S. equities losing steam, poor global economic numbers, possible credit crunch overseas and our own challenges back home,” Ambani warns. “From these levels, we’re sanguine on Indian equities from a 24-36 month perspective,” Ambani adds. “We believe monetary and fiscal stimulus will come through soon, low price of crude and cheap valuation will favour investment.”

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