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Sensex surges 2,476 points: What drove this rally on D-Street?

Indications of an ease in lockdown and a global rally pumped the bulls.

, ETMarkets.com|
Last Updated: Apr 07, 2020, 04.07 PM IST
An overnight rally in US stocks and morning gains in Asian peers also boosted the morale of investors on Dalal Street who got back in action after three-day hiatus.
Indications of an ease in lockdown restrictions and a rally in global equity markets pumped the stock market bulls in Tuesday's session. A sharp recovery in commodity futures also reflected improved sentiments.

All but one stock in the 30-share pack Sensex gained as the index jumped nearly 2,476 points, or 8.97 per cent, to close at 30,067.21. The broader 50-share Nifty followed with gains of 702 points to 8,785.90.

Investors got richer by Rs 7.86 lakh crore in today’s rally as total market cap of BSE-listed firms rose to Rs 1.16 lakh crore.

Here are the key factors driving markets higher today:

Ease in lockdown
The news that the government could consider a phased exit from the national lockdown put smiles on the faces of market participants as businesses would resume functioning.

Authorities are studying a proposal to partially lift restrictions in low-risk states and districts while continuing with stringent curbs in areas with the maximum number of cases.

Authorities in Spain and Italy, two of the most affected countries in the world, looked to ease lockdowns after steady fall in coronavirus-related fatality rates.

$1.3 billion coming to India
Domestic investors also took positives from the news that India may attract $1.3 billion (about Rs 9,900 crore) in passive flows as the country has moved into a new regime in which the FPI limit has been increased to the sector foreign limit.

This relief comes at a time when foreign money managers have dumped Indian shares mercilessly on large scale ETF redemptions. They have withdrawn about Rs 1.25 lakh crore from Indian markets since March 1.

India lifts drug export restrictions
India lifted export restrictions on 24 drugs it imposed last month due to the virus amid indication by the US government that it will retaliate. The ban on export of Paracetamol and its formulations continues, as per a Reuters report.

India had restricted the exports of 26 ingredients and medicines, which accounted for 10 per cent of all Indian pharmaceutical exports and includes several antibiotics.

Shares of pharma companies rose following the decision. Nifty Pharma jumped 9.53 per cent led by 10-14 per cent gains in Cadila Healthcare, Aurobindo Pharma, Cipla and Dr Reddy’s Laboratories.

Global markets rally
An overnight rally in US stocks and morning gains in Asian peers also boosted the morale of investors on Dalal Street who got back in action after a three-day hiatus.

Japan's Nikkei rose 2 per cent and has erased most of last week's losses after Prime Minister Shinzo Abe promised a massive $991 billion economic stimulus package - equal to 20 per cent of GDP.

MSCI's broadest index of Asia-Pacific shares outside Japan pared early gains, but rose almost 1 per cent. U.S. stock futures eased 0.2 per cent following a 7 per cent surge on Wall Street on Monday. European shares were also likely to gain at opening.
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