Bulls make a comeback as Sensex reclaims 31k; 4 factors leading the rally

D-Street is inching towards a photo finish for the week ended April 10. Bulls fuelled a smart rally which pushed the S&P BSE Sensex beyond 31,000 in trade on April 9, the last trading day for the week, while the Nifty50 reclaimed 9,000 levels.

Sectorally, the rally was seen in auto, telecom, consumer discretionary, finance, healthcare, and consumer durable space.

Strong global cues, and expectations of further stimulus measures from the Indian govt. as well as central bankers across the world are boosting sentiment, suggest experts.

“Market is trading on a firm note in today’s session up by 3.4% amid gains in global, and Asian peers on hopes that the COVID-19 pandemic is nearing a peak in major hotspots countries and that governments would roll out more stimulus measures,” Sundar Sanmukhani, Head of Fundamental Research Desk at Choice Broking said.

“The government is likely to unveil a second stimulus package in the coming days to focus on the help of MSME. Sectorally, all indices were trading in green with auto and pharma index leasing the rally,” he said.

We have collated a list of factors that could be driving optimism on D-Street:

Strong Global Cues:

Tracking strong close in the US markets, Asian shares also started on a firm footing on hopes the COVID-19 pandemic is nearing a peak and that governments would roll out more stimulus measures.

New York Governor Andrew Cuomo said the state’s efforts at social distancing were working in getting the virus under control in one of the biggest hotspots in the country, said a Reuters report.

Shares in China, where the novel coronavirus first emerged late last year, rose 0.42%. Australian shares were up 2.54 percent. The improved mood is seen extending to Europe, where Euro Stoxx 50 futures were up 0.85 percent, German DAX futures rose 1.04 percent, and FTSE futures gained 1.08 percent.

Investors will keep a close eye on stimulus measures likely to be announced by the government and the possibility of extension of lockdown amid rising numbers of coronavirus cases, suggest experts.

A second stimulus package India is poised to announce in the coming days will be worth around 1 trillion rupees ($13 billion) and focus on help for small and medium businesses weathering the coronavirus outbreak, two senior officials said on Wednesday, said a Reuters report.

Last month, India outlined a Rs 1.7 lakh cr economic stimulus plan providing direct cash transfers and food security measures to give relief to millions of poor hit by an ongoing 21-day nationwide lockdown.

The official which Reuters spoke to said that a separate package could be announced for bigger companies after assessing the extent of the hit they have faced due to the lockdown imposed to fight the outbreak. Although, a finance ministry spokesman declined to comment on the report published by Reuters.

One of the big factors which fuelled optimism in global markets is the comment made by the US President on opening up the economy.

U.S. President Donald Trump said on Wednesday he would like to reopen the U.S. economy with a “big bang” but that the death toll from the coronavirus needs to be on the downslope before that can happen, said a Reuters report.

Trump did not give a timeframe on when he would like to reopen the economy, but his chief economic adviser, Larry Kudlow, said on Tuesday it was possible this could happen in four to eight weeks, added the report.

After pulling out more than Rs 60,000 cr from the cash segment of the Indian equity markets, foreign investors turned net buyers in the last two sessions pouring in more than Rs 2600 cr, provisional data showed.

So far from the month of April, they have remained net sellers for about Rs 400 cr. FPI has been net sellers in the cash segment in January, February, as well as March, provisional data showed on Moneycontrol.com.