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Sensex rises 748 points, Nifty reclaims 11k: Five factors behind the rally

Healthy US economic data, record-low interest rates and abundant government stimulus helped indices recover from the recent downtrend and gain momentum. Globally, traders will also keep a track of macroeconomic data by the US

Rupa Burman Roy | August 4, 2020 | Updated 18:37 IST
Sensex rises 748 points, Nifty reclaims 11k: Five factors behind the rally
Almost all sectors, barring IT closed majorly in green territory, with media ending 3.9% higher, followed by a 2% rise in private banks and financials

Benchmark indices Sensex and Nifty closed higher after four straight sessions of losses on back of upbeat global equities. Sensex ended 748 points higher at 37,687 and NSE gained 211 points to 11,102.

ONGC, followed by ITC, Asian Paints, Reliance Industries, Maruti, Bajaj Auto and NTPC were among the top gainers. On the other hand, IndusInd Bank, HCL Tech, Tech Mahindra, PowerGrid and Bajaj Finance were among the laggards. On the currency front, rupee ended at 75.05 per dollar compared to the previous close of 75.01 per dollar.

In today's session, investor's wealth has increased by Rs 2.08 lakh crore to Rs 148.23 lakh crore as of today's close, from earlier mcap of Rs 146.15 lakh crore.

Here's a look at five factors which took Sensex and Nifty higher today:

Coronavirus vaccine

Hopes that vaccines against the COVID-19 disease might be ready by the end of this year also boosted market sentiment.

WHO chief Tedros Adhanom Ghebreyesus said, "A number of vaccines are now in phase 3 clinical trials, and we all hope to have a number of effective vaccines that can help prevent people from infection. However, there is no silver bullet at the moment, and there might never be,".

The number of cases around the world linked to COVID-19 has crossed 1.82 crore. In India, the number of infections touched 18,55,745.

Positive global markets

Strong start to the Asian equities, foreign fund inflows and bullish European stocks shrugged off fears over concerns of the rapid rise in coronavirus cases globally. Asian bourses were trading with gains, following stock exchanges on Wall Street that ended on a positive note in the overnight session.

Healthy US economic data, record-low interest rates and abundant government stimulus helped indices recover from the recent downtrend and gain momentum. Globally, traders will also keep a track of macroeconomic data by the US. Efforts to hammer out a coronavirus relief bill also resumed in US to better control the virus.

Ajit Mishra, VP - Research, Religare Broking said,"Supportive global cues, after US manufacturing data and gains in tech stocks, boosted investors' sentiment in the early trade. And, as the day progressed, healthy buying in auto, banking and energy stocks further extended the rally."

In another update, China customs data showed purchases of US products accelerated recently and that China has fulfilled 5% of Sino-US energy trade deal in the first half of 2020, which helped in equities gaining buying pressure.

Q1 Earnings

Major April-June quarterly earnings announcements for the day included heavyweights such as Godrej Consumer, Tata Consumer, Apollo Pipes, Geojit Financial, Eris Lifesciences, Sun Pharma Advanced Research among others that also helped to keep the tone for the stock market bullish today. The June quarter earnings reports will provide a clear picture of the disruption caused by the coronavirus pandemic-induced lockdown.

"We believe Indian markets would continue to take cues from global peers and the upcoming RBI policy would the next major trigger. At the same time, as more companies would announce its Q1FY21 earnings, stock-specific action would continue to induce high volatility," said Ajit Mishra, VP - Research, Religare Broking on the future outlook of the domestic equity market.

Stock specific action

Almost all sectors, barring IT closed majorly in green territory, with media ending 3.9% higher, followed by a 2% rise in private banks and financials.

Index heavyweight RIL shares rose majorly today on reports that the oil conglomerate will soon acquire Chennai-based Netmeds as part of its broader consolidation in the pharma e-commerce industry. HDFC Bank shares also gained over 5% after RBI cleared Sashidhar Jagdishan's name for new CEO of the company.

"Reliance led the days to show for the Bulls, and we saw support in late afternoon trade from key pivotal like HDFC Bank & Maruti as MCAP to GDP rose to around 78%," said S Ranganathan, Head of Research at LKP Securities.

Banking stocks gained ahead of 3-day MPC outcome, scheduled to be released tomorrow.

"Going ahead, investors would watch out for any development over the US stimulus announcement and RBI credit policy for a possibility of another rate cut - which could provide some cheer to the markets," said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services.

Technical outlook

As per Reliance Smart Money, support is placed at around 11,017 and then at 10,960 levels, while resistance is observed at 11,140 and then at 11,207 levels.

Vinod Nair, Head of Research at Geojit Financial Services said,"Indian Benchmark indices ended the day with gains with positivity emerging post the RBI decision to approve the new CEO for HDFC Bank. Private Banks and RIL supported the gains in the benchmark indices. With Indian exports reaching almost the same level on a YoY basis, economic activities are showing signs of revival which offset concerns about the increasing virus infections and the uncertainties that this brings across."

On Nifty's technical outlook, Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments said,"The Nifty remained positive for the entire trading session but I would still maintain a cautious stance. For any upside to trigger, we would need to go past 11200 on a closing basis as that would be the confidence builder to reverse this short term weakness and enter back into the medium-term positive trend. Until then, traders should look for opportunities to go short on the index for a target of 10800.

Share Market Highlights: Sensex ends 748 points higher, Nifty at 11,102; RIL, HDFC Bank, ONGC top gainers

Tech Mahindra, HCL Tech, Infosys shares fall after Donald Trump bars govt agencies from hiring foreign workers

HDFC Bank stock gains over 5% after RBI clears Sashidhar Jagdishan's name for new CEO

RIL share price jumps 5% as firm likely to buy Netmeds

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