Sensex and Nifty closed over 2.5% higher on Tuesday in line with bullish trend from Asian equities & US stock futures. Investors also hoped that government would soon announce stimulus package for the coronavirus hit industry. While Sensex closed 692 points higher to trade at 26,674, Nifty gained 190 points to 7,801 mark.
Indices erased gains from day's high by the last hour of trading on Tuesday, as announcements by Finance Minister Nirmala Sitharaman failed to enthuse investors. FM Sitharaman announced several statutory and regulatory compliance reliefs and informed the media that the economic package to help through the coronavirus lockdown is being prepared on priority. She further added the regulators, Reserve Bank, and Finance Ministry were monitoring the developments & volatility in the stock market.
Vinod Nair, Head of Research at Geojit Financial Services said,"FM has given an extension on key deadlines related to income tax and allied finance matters in her announcement with respect to regulatory and compliance matter. However, the need of the hour is a well-defined finance package which has been already promised by the Finance minister. We believe the market to stay focused on fiscal action from the government rather than these regulatory actions in the near term ."
Overseas, European indices FTSE, CAC and DAX opened higher today and followed the bullish trend from Asian equities & US stock futures.
Santosh Meena, Senior Analyst, TradingBells said," Global markets are showing some signs of strength where if the exponential curve of coronavirus cases flattens out amid lockdown in India as well as around the world then we can expect a smart recovery in the market in the coming days."
Overseas, the trend turned bullish post announcement by US Federal Reserve as they promised to support the struggling economy after Congress delayed action on a $2 trillion coronavirus aid package. In its latest step, the Fed offered to buy unlimited amounts of assets to steady markets and expanded its mandate to corporate and muni bonds.
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services shared his views on the major announcement from Fed and said," This comprehensive package for the Wall Street and the main street is unprecedented and gives the message that the World's largest central bank will 'do whatever it takes' to mitigate the economic crisis. Other central banks can be expected to follow suit with bold measures to ease the severely strained credit and financial markets. A major package from the GOI and RBI can be expected shortly. Markets are likely to remain hugely volatile with rising possibility of V-shaped recovery occasionally. However, the calamity facing humanity is enormous."
In line with global equity markets, commodity and emerging market currencies also benefited from the Fed's announcements today. US Futures traded 4% higher on Tuesday, rising 877 points. On the commodity front, Gold surged 1.7% at $1,578.45 per ounce from a low of $1,484.65 recorded on Monday. Brent crude firmed 97 cents or 5% to $28.00.
The rupee recovered marginally on Tuesday after rising 18 paise to 76.02 against US dollar, although later declined 8 paise to 76.09 per US dollar. Indian Rupee has fallen 6.96% since the beginning of this year.
Coronavirus fears continued to create panic among investors due to the disruption of businesses and forced lockdowns and kept market sentiments volatile. In terms of global key indices, Dow Jones and DAX have declined over 34% each since the start of the year 2020, while Japan's Nikkei and Hong Kong's Hang Seng have dropped 23%. Shanghai index has dropped 16.77% in the same period. Compared to this, Indian equity indices Sensex and Nifty have dropped 37% year-to-date.
As per today's closing figures, Sensex has fallen 13,571 points or 33.6% in a month. Similarly, Nifty has declined 4,076 points or 34.36% during the period.
The rising number of cases has also caused an unabated outflow of foreign investment from the domestic equity market. FIIs have sold USD 6,698 million worth of equities in the March. Since the beginning of the year, foreign investors have offloaded USD 4,911 million worth of domestic equities.
S Ranganathan, Head of Research at LKP Securities said today,"Emerging markets have already witnessed outflows of $83 billion since the beginning of the crisis and although the asset purchase program of the Fed is commendable the markets shall see improvement only when the economy is allowed to come back to life."
Worldwide, there are currently 379,080 confirmed cases and 16,524 deaths from the coronavirus COVID-19 outbreak as of March 24, 2020. In India, panic escalated as coronavirus (Covid-19) cases rose to 499. The death toll from coronavirus has risen to 10 in the country.
In terms of technical outlook, Nifty has closed above at 7,800 level and an upside break of 7,750 could signal for a move towards 8,100 mark, suggested experts.
Manav Chopra, CMT, Head Research - Equity, Indiabulls Securities said,"Market witnessed resistance from our mentioned zone of 8,000. Sustainable recovery will only materialize once Nifty closes above 8,300 zone for few sessions." He further suggested Nifty's support at 7,500-7,200 & Resistance around 8,000-8,300 level.
Yesterday, Sensex and Nifty logged their highest losses ever after rising number of coronavirus cases in India and the resultant lockdown in a majority of states took a heavy toll on the financial markets today. On Monday's close, Sensex lost 3,934 points to 25,981, Nifty closed 1,135 points lower at 7,610. During the session, Sensex hit a fresh 52-week low of 25,880 and Nifty fell to 7,583.