Markets extend rally on stimulus boost

Sensex rebounds 15% in three days from recent lows

The Indian markets surged for a third straight day on Thursday, posting their best three-day gains in years, spurred by stimulus deals announced by policymakers around the globe to combat the economic damage caused by the coronavirus pandemic.

The Sensex rose 1,411 points, or 4.94 per cent, to end at 29,947. After dropping to 2016 levels on Monday, the 30-share index has rebounded 15 per cent. The Nifty50 index rose 323.6 points, or 3.9 per cent, to end at 8,641, up 13.6 per cent over its Monday’s close of 7,610.

The pullback has been so sharp that many on the Street are saying Monday’s levels could be the bottom for the market, and that the benchmark indices could rise further if the efforts to mitigate the spread of coronavirus disease (COVID19) were a success.

Wall Street surged on Thursday as record weekly jobless claims came in below investors’ worst fears. The Dow Jones was up 937 points, or 4.4 per cent, as on 11:30 pm IST.

Globally, investor sentiment has got a boost after the US Senate approved the fiscal stimulus legislation worth $2 trillion to prop up the American economy rattled by the pandemic.

This has helped minimise the selling by overseas funds. On Thursday, they were net sellers only to the tune of ~485 crore, as against the average selling of ~3,000 crore for this month.

India was among the best-performing major global market on Thursday, underpinned by the relief measures taken by the government.

Finance Minister Nirmala Sitharaman on Thursday announced a relief package worth ~1.7 trillion to help the economically weaker sections to tide over the 21-day lockdown and the economic impact of the COVID-19 outbreak.

Some experts, however, expressed disappointment over the lack of stimulus measures for the industrial and finance sectors.

G Chokkalingam, founder, Equinomics, said the markets were expecting there would be measures like the scrapping of long-term capital gains tax and some financial incentive for the corporate sector.

“Some measures on these lines would have given incentive to investors and would have helped mitigate the hit on corporate earnings due to COVID-19. However, giving priority to those at the bottom of the pyramid is also the right thing to do,” said Chokkalingam.