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Bulls defy India lockdown: Sensex surges 1,862 points; what's behind the rally

The Finance Ministry is working with officials to finalise the stimulus plan.

, ETMarkets.com|
Last Updated: Mar 26, 2020, 12.06 AM IST
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Investors got richer by Rs 4.23 lakh crore as total market capitalisation of the BSE-listed firms jumped to nearly Rs 108 lakh crore.
NEW DELHI: The stock market bulls strengthened their hold on Dalal Street in Wednesday's trade amid firm global cues and rally in world markets, shrugging off the 21-day nation-wide lockdown announced by PM Narendra Modi that will have a bearing on businesses across the country.

Investors got richer by Rs 4.70 lakh crore as total market capitalisation of the BSE-listed firms jumped to nearly Rs 1,08,40,165.20 crore.

At close, the 30-share pack Sensex was up 1,862 points or 6.98 per cent at 28536 while broader NSE Nifty jumped 497 points to 8,298.

Here are the top factors that may be pushing the market higher:

Heavy buying in RIL, HDFC twins
Heavy buying in Reliance Industries and HDFC twins was the biggest factor lifting benchmark indices up. These three scrips alone contributed nearly 1,100 points.

Shares of Reliance Industries (RIL) advanced 21 per cent to Rs 1,141 in Wednesday’s trade after reports that social media giant Facebook is in talks to buy a 10 per cent stake in Reliance Jio, billionaire Mukesh Ambani’s telecom and internet services venture.

HDFC Bank was up 9 per cent at Rs 835 and HDFC 8.85 per cent at 1634 on low-level buying.

US stimulus
Market sentiment on Dalal Street improved after US senators and Trump administration officials reached an agreement on a massive economic stimulus bill to alleviate the economic impact of the coronavirus outbreak.

The Senate will vote on the $2-trillion package later in the day and the House of Representatives is expected to follow suit soon after.

The package would rush checks to help Americans pay bills during job layoffs related to the outbreak, expand unemployment insurance and deliver emergency loans to small businesses.

Global markets, US futures jump
Following the news, Dow futures jumped over 2 per cent, signalling another green day for Wall Street. Nasdaq and S&P 500 futures were also trading with gains of about a per cent. The Dow Jones Industrial Average soared 11.37 per cent on Tuesday, its biggest one-day percentage gain since 1933. Nasdaq and S&P 500 jumped 8 and 9 per cent, respectively.

Asian shares gained in the wake of Wall Street's massive rebound. MSCI's broadest index of Asia-Pacific shares outside Japan gained 3.4 per cent while Japan's Nikkei surged 6.9 per cent.

European markets also opened with gains. UK’s FTSE was up 1.56 per cent whiel French CAC creeped 2.07 per cent up. German DAX was up 2.65 per cent. This helped the sentimenst back home.

India to announce stimulus soon
The Finance Ministry is working with officials to finalise the stimulus plan, ET NOW reported quoting agencies.

The report said the cabinet may discuss a broad economic support package to cushion those hurt by Covid-19. It is also likely to discuss direct transfer of aid to those whose livelihood hurt due to Covid-19.

Report said the government may stagger announcement of relief package and it awaits clarity on the needs of those hit. It may also seek to conduct quick survey of those impacted by virus outbreak.

Another ET Now report said the government was mulling a market stabilisation fund with a corpus of RS 50,000 crore. It will act as SVP investing in equities. It may also be used to increase government stake in quality PSUs. The discussions on the fund are at a nascent stage.

Tech outlook
On the daily chart, both Nifty and Bank Nifty are showing positive divergence, which analysts saw as an early sign of reversal.

“We may see a relief rally on Wednesday if the current lows are held. Support for Nifty is at 7,600-7,500 while the immediate resistance is in 8,050-8,200 zone,” said Rohit Singre, Senior Technical Analyst at LKP Securities.

A relief rally towards 9,000 is possible, said Manav Chopra, CMT, Head Research - Equity, Indiabulls Securities.
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