Domestic equity indices rallied for a third day on-a-trot, encouraged by reports of stimulus packages by large economies in order to soften the economic blow from the lockdown of businesses and offices.
The bulls took heart from reports of India working on a $20 billion package while the US Senate passed a bill that will help American businesses and households.
The 30-share pack Sensex advanced 1,564 points to 30,099 while broader NSE Nifty jumped 397 points to 8,715.
Investors got richer by Rs 4.58 lakh crore as total market capitalisation of the BSE-listed firms jumped to Rs 1,13,04,448.08 crore.
Here are the key factors driving the market today:
US Senate's $2-trillion stimulus
Market sentiments improved after the US Senate unanimously passed a massive stimulus package meant to cushion the economic blow of the coronavirus pandemic for American workers and businesses.
The $2 trillion package includes billions of dollars in credit for struggling industries, a significant boost to unemployment insurance and direct cash payments to Americans.However, the bill still needs to be passed by the Democrats-led House, which lawmakers said will not be put to vote until Friday.
$20b package for India
Reports of India working on a similar package further boosted the morale on the Street. Reuters reported India is likely to agree to an economic stimulus package of more than Rs 1.5 trillion ($19.6 billion) to fight a downturn in the country that is currently locked down to stem the spread of coronavirus.The package, which could be announced by the end of the week, will be used to put money directly into the accounts of more than 100 million poor and to support businesses hit the hardest by the lockdown, the sources said.
Technical charts indicate sharp rally
Nifty on Wednesday closed above its 5-Day EMA of 8,254, bridging the bearish gap in the 8,159-8,178 zone, which analysts said was a positive sign.
“A phase of relief rally seems to be unfolding and once the index sustains above 8,300 zone expect a larger recovery towards 9,000. Short-covering rallies are usually sharper at least in the first phase of recovery,” said Amit Shah, Technical Research Analyst with Indiabulls Indiabulls SecuritiesNSE -4.99 %.
Milan Vaishnav, Consulting Technical Analyst and founder of Gemstone Equity Research & Advisory Services said in order for Nifty to find a temporary bottom it will have to move past 8,500. Till the time, it stays below that, weakness will be there, he added.
Value buying in banks
Banks shares ticked higher as investors rushed to accumulate stocks that had come down sharply. The heavy buying lifted benchmark indices indices higher.
IndusInd Bank that had fallen more than 80 per cent from its highs, rallied 35 per cent to Rs 406. Its peers Axis Bank jumped 13.50per cent to RS 371 while ICICI Bank advanced 10.78 per cent to Rs 351.
HDFC twins also registered smart gains as they jumped 6-9 per cent. Together they contributed nearly 500 points to Sensex’s rally.
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