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Sensex, Nifty log biggest single-session gains: What fuelled the rally today

Rupa Burman Roy     April 7, 2020

Sensex and Nifty logged their biggest single day gains (in terms of points ) as they closed nearly 9% higher on Tuesday, in line with global peers despite rising coronavirus cases in India.  Global markets were emphatic by the slowing of coronavirus cases in US, Spain and Italy.

While Sensex gained 2,476 points at 30,067, 50-share barometer NSE Nifty rose 708 points at 8,792.

Indices have recorded the best trading day in percentage terms since May 2009 and posted the biggest ever single-day gains in absolute term today.

Volatility Index, India VIX also slipped 6% intraday and closed at a one-month low of 52.6, down 3.24 points or 5.86%.

All the sector-based indices ended in green with PSU Banking gaining the most at 11%. Banking, financials and pharma ended 10% higher, followed by 8% gain in FMCG, 7.5% rise in IT and 6.5% gain in metal. Realty and media indices ended 6% higher, respectively.

All 30 Sensex and 50 Nifty stocks closed in the green. Total 14 out of 30 Sensex stocks and 21 Nifty stocks closed over 10% higher at the closing bell.

S Ranganathan, Head of Research at LKP Securities said, "Even as the GOI chose to save lives at the cost of livelihood, markets showed no mercy and finally, the bulls took the bears to task today with a salute of more than 700 points on the NIFTY."

Domestic indices followed the bullish trend from overseas as investors worldwide banked upon hopes over prospects of falling fatalities numbers due to the tightened lockdowns and random screening by governments across the world to combat the virus spread.

Wall Street rallied on account of fall in the death toll from country's  biggest virus hotspot-New York. Equity investors in Europe also were encouraged by the slowing death toll from the virus across major European nations, including France and Italy. China also reported no new coronavirus deaths for the first time.

The Dow Jones ended 7.73% higher, followed by the S&P 500 that closed 7.03% higher and the Nasdaq Composite that added 7.33% on Monday's trade. Wall Street rallied on account of fall in fatalities at biggest virus hotspot-New York.

Tracking trend from US, all the indices in Asia were gaining over 1% by Tuesday evening, while Japan's Nikkei was up 2%. European indices also opened higher on Tuesday, with Germany's DAX trading 4.2% higher, while France's CAC and London's FTSE gained over 3%.

Vinod Nair, Head of Research at Geojit Financial Services said, "Aided by the news that the infections were peaking in some of the worst affected areas around the world, the Indian markets in sync with the Global markets, witnessed a relief rally. Investors are also awaiting ease in lockdown procedures, so companies can get down to generating business. In a holiday-shortened week, any news regarding peaking infections will be bought into."

"Defensives like Pharma and FMCG, which has witnessed the least disruption in their business, will continue to be favoured, " he added.

On last Friday, the 30-share index BSE Sensex fell 674 points lower to close at 27,590 and Nifty fell 170 points to end at 8,083.

Commenting on market outlook, Ajit Mishra, VP - Research, Religare Broking said," Currently, the markets are largely being driven by developments w.r.t. coronavirus cases across the globe. A sustainable recovery would happen only when the cases start to recede in the country and the lockdown is eased gradually. We expect the next few sessions to remain volatile. Meanwhile, investors must opt for value-buying in select pockets of the Indian markets (FMCG, pharma, consumer durables) to build a long-term portfolio. On the benchmark front, Nifty has the next critical hurdle at 9,000."

On Nifty's outlook in the near term, Amit Shah, Technical Research Analyst with Indiabulls Securities said," We continue to have higher targets for the Nifty towards 9,300-9,500 zone. In the near term, 9,050 zone remains the resistance and once the index clears he mentioned resistance zone it is likely to build further momentum on the upside."

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