The sales volumes for May was considerably better than April which was a washout month due to complete lockdown, though less compared to a year-ago.
The equity market is trading in the green for the fifth consecutive session on June 2 driven by easing lockdowns in the country which will spur economic activity. Furthermore, May auto sales numbers also gave hope to investors that the worst of the downturn may finally be behind us.
In terms of global cues, lifting of lockdowns and slowing number of infection cases boded well for the Indian markets but rising tension between the US and China capped upside.
The arrival of monsoon on Kerala coast before time also fuelled the upside.
The BSE Sensex shot up nearly 3,000 points in five consecutive trading sessions while the Nifty50 surged over 850 points during the same period, backed majorly by banking & financials amid hope of less NPA pressure after the opening of economic activity.
At the time of writing this copy, Nifty50 rose 65.60 points or 0.67 percent to 9,891.75, and the BSE Sensex gained 231.71 points or 0.70 percent at 33,535.23.
Experts expect the rally to continue in coming days on the back of positive sentiments and see Nifty moving towards 10,500-11,000 levels.
"The rally we are seeing could be on the back of hope of more government action in terms of measures to get economy on a fast growth track. Also, the market feels that the worst in terms of pain may be behind as the pain is gradually receding, and as the lockdown gets opened gradually, the economy started working from the second half of May after two months of complete lockdown," Shailendra Kumar, CIO at Narnolia Financial Services told Moneycontrol.
"Currently we are using around 20-30 percent capacity given the lockdown, but we will take at least 4-5 months to get back to 95 percent utilisation levels across industries in India. Even China also came to strong capacity utilisation levels in May after the lockdown period since January, so we also could take 4-5 months," he said.
"Across the globe also, the worst of lockdown is behind now and everyone has been thinking of opening economy, so production will be incrementally better going forward," he added.
Experts also feel the nearly Rs 21 lakh crore financial package announced last month has also started reflecting in the economy, which will help India recover faster than later.
"Current rally has a strength to hit 10,000 on the Nifty and the hope of recovery rally can move up to 10,500-11,000 levels which is going to be a real hurdle for the market," Shailendra Kumar said.
"March quarter numbers were really good - look at Havells, cement companies (saying about price hike), Hero Motocorp started selling thousands of bikes now on daily basis, Reliance also raised ample amount of money despite lockdown, so one should not take this with a pinch of salt now," Sanjiv Bhasin, Executive VP-Markets & Corporate Affairs at IIFL told Moneycontrol said.
The government announced several measures for MSMEs, SMEs, NBFCs, agriculture, fisheries, education, digitalisation, defence etc. The opening of agriculture activities first played a key role on top of already strong rabi harvest.
The auto sales volumes for May was considerably better than April which was a washout month due to complete lockdown, though less compared to the year ago.
In May 2020, Escorts sold 6,594 units, M&M 33,901 units, Maruti Suzuki 18,539 units, Hero Motocorp 1,12,682, TVS Motor Company 58,906 units, Ashok Leyland 1,420 units, Eicher Motors 19,113 units etc clearly indicated the actual picture of opening of economic activities.
Experts feel the hope rally can not go beyond a certain point, hence till the earnings and economic growth reflect in numbers the Nifty may remain rangebound below 11,000 levels.
"To get past the 10,500-11,000, we have to have the reason for fresh growth which should be visible on the ground as before coronavirus also, the growth was decelerating," Shailendra Kumar said.
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