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Sensex jumps 522 pts, posts longest winning run in 7 months on hopes of economic recovery

Market analysts, however, see some amount of profit-booking going ahead.

, ETMarkets.com|
Last Updated: Jun 02, 2020, 05.02 PM IST
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Barring BSE FMCG index (down 0.54 per cent), other sectoral indices on the exchange ended higher.
NEW DELHI: Hopes of economic recovery following ease in lockdown measures and firm cues from global peers took the benchmark equity indices higher for the fifth straight session on Tuesday. Both of the headline indices also registered their longest winning longest run since November 4.

Sentiment also got some support after Prime Minister Narendra Modi stated that coronavirus might have slowed down India’s speed but the country has now moved ahead with phase one of unlocking, stressing that getting economy back on track is one of the highest priority.

Market analysts, however, see some amount of profit-booking going ahead as Nifty approaches the 10,000-mark.

"The benchmark has gained over nine per cent in the last five sessions and trying to be in sync with global peers. We may see some consolidation or profit-taking ahead, however, the buoyancy in banking would help the index maintaining a positive tone," said Ajit Mishra, VP - Research, Religare Broking.

Traders ignored Moody’s Investors Service's downgrade of India's sovereign rating to ‘Baa3’ from ‘Baa2’. The global rating agency said there will be challenges in the implementation of policies to mitigate risks of a sustained period of low growth and deteriorating fiscal position.

BSE barometer Sensex gained 522 points or 1.57 per cent to settle at 33,825 with financial counters including HDFC, Kotak Mahindra Bank, HDFC Bank, ICICI Bank and Bajaj Finance contributing the most to index's gain. Bajaj Finance led the charge with a 8.64 per cent rally. Private sector lender Kotak Mahindra Bank followed next, as it rose 7.56 per cent.

Agencies
BSE snip 2cc
Sensex heatmap (Source: bseindia.in)

The 50-share Nifty settled 152.95 points or 1.56 per cent higher at 9,979.

Vinod Nair, Head of Research, Geojit Financial Services said, “Indian markets shrugged off news regarding Moody’s credit rating downgrade, which was trumped by the expectation of the economy opening up. The government has again reiterated its commitment to continued reforms to strengthen the economy.”

Overall, market breadth remained in favour of the bulls as 1,733 stocks ended the day in the green on the BSE, while 725 stocks settled in the red. However, 153 stocks were unchanged.

The broader market continued to rally with BSE midcap and BSE smallcap indices rising 1.20 per cent and 1.83 per cent, respectively, taking their winning run to the sixth day in a row.

Barring BSE FMCG index (down 0.54 per cent), other sectoral indices on the exchange ended higher. The BSE Realty, Bankex, Consumer Durables and Consumer Discretionary advanced up to 5 per cent.

In a scrip specific development, Kotak Mahindra Bank rallied nearly 8 per cent as promoter Uday Kotak will offload 2.83 per cent stake in the lender to comply with an RBI mandate.

Motherson Sumi Systems gained over 5 per cent even as the automobile components major reported a 68.4 per cent fall in consolidated net profit to Rs 135.66 crore in Q4FY20, mainly affected by the coronavirus pandemic.

InterGlobe Aviation settled 0.83 per cent down at Rs 945.55 ahead of Q4 results. However, the aviation major post market hours posted a net loss of Rs 873 crore against a net profit of Rs 589.5 crore in the same period last year.

Majority of Asian peers also ended higher as re-opening of regional economies overshadowed global concerns ranging from flaring Sino-US tensions to violent protests in American cities.

MARKET AT A GLANCE
  • Headline indices post best winning run in 7 months on lockdown exit
  • Sensex up 522 points or 1.57% at 33,825, Nifty gains 152.95 points or 1.56% at 9,979
  • 24 Sensex stocks close higher
  • Bajaj Finance top Sensex gainer, up 9%; Kotak Bank 7.50%; IndusInd Bank 6%
  • Maruti Suzuki down 1.74%, ITC 1.69%, NTPC 1.23%
  • Bulls rule the charts, advance-decline ratio 2:1
  • Broad-based rally; BSE Midcap index up 1.20%, BSE Smallcap 1.83%
  • Except FMCG, all sectors on BSE settle higher
  • Realty top sectoral gainer, up 4,57%; Mahindra Life gains 9.345%, Prestige 7.59%
  • Bankex 2nd best sectoral gainer, up 3.92%; Kotak Mahindra Bank 7.52%, IndusInd Bank 6.05%
  • BSE Finance gains 3.12%; IFCI 19.93%, IDBI Bank 19.92%
  • Select hotel stocks also rally up to 20%

WHO MOVED MY MARKET
  • Hopes of economic recovery
India’s phased exit will see malls, restaurants and places of worship reopening as of June 8, igniting hopes of economic recovery. PM Modi's assurance that economic revival remains the government's top priority also helped the sentiments.

"The bulls continued to maintain their firm grip on the markets, led by positive global cues. It further gained momentum, encouraged by the PM’s speech at CII session that India’s economy would get back on track as the government is working towards systematic reforms which boosted investors’ sentiments," said Mishra.

  • Firm global markets
World stocks climbed towards three-month highs on Tuesday as the global coronavirus recovery effort won out over US-China tensions and the worst civil unrest in the United States in decades, according to Reuters.

  • Liquidity
Some buying by institutional investors for the past few days also kept the momentum high in the domestic equity market. In the latest update, FIIs bought shares worth Rs 1,575 crore on Monday, according to NSE data.

WHAT TO WATCH OUT FOR?
  • Market participants should keep an eye on the worst ever civil unrest in the US in the decade, Sino-US tension
  • Pace of rising coronavirus cases in India will also be keenly watched.
  • Nifty surpassing the 10,000-mark is a crucial one for the market for further upside.

(What's moving Sensex and Nifty Track latest market news, stock tips and expert advice on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds.)
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