Nifty reclaims 10,000-mark, a first in 3 months

The benchmark indices gained for a sixth consecutive session, with the Nifty ending above the 10,000-mark for the first time in nearly three months. Strong risk-on sentiment globally helped markets overlook concerns such as the US civil unrest, an imminent cyclone threat in western India, and worsening relations between Washington DC and Beijing. Brent crude prices also moved past the $40/barrelmark for the first time in three months, underscoring investors’ appetite for risk.

The Nifty ended the session at 10,062, gaining 0.83 per cent, or 83 points. The Sensex, on the other hand, rose 284 points, or 0.84 per cent, to end the session at 34,110. In the past six sessions, the benchmark indices have rallied 11.4 per cent. The last time the Sensex had advanced for more than six consecutive sessions was in November 2019. Back then, it had gained only 3.3 per cent.

Experts said hopes of further fiscal and monetary stimulus in the coming days, especially in Europe, has kept the investor sentiment bullish. The European Central Bank is expected to top up its rescue programme with an additional ^500-billion asset purchase at a meeting on Thursday.

China’s monthly purchasing managers’ index for the service sector rose for the first time in four months. The PMI came in at 55 points for May, compared to 44 in April. Any figure above 50 means that the sector is growing. Analysts said the rebound in economies would be swift compared to earlier recessions, as both governments and central banks are pumping vast amounts of stimulus. The Indian government, too, has pledged to take more stimulus measures.

Lockdown easing in India, the timely onset of monsoon, and forecasts of adequate rainfall also cheered investors. The Indian government on Saturday came up with a three-phased plan to ease the threemonth lockdown. According to the plan, almost all economic activities will resume outside of containment zones.

“Favourable global cues, expectations of a good monsoon, and the hope that things will slowly get back to normal, all played a part in this relief rally. In spite of the optimism, the economic data served as a gentle reminder and showed that there was a sharp contraction in business activity in May due to the lockdown,” said Vinod Nair, head of research, Geojit Financial Services.

India’s meteorological department had predicted the rainfall to be about 102 per cent of the long-period average. Analysts said a normal monsoon would mitigate the economic impact of the lockdown on the Indian economy. Monsoons are significant, as most of India’s rainfall occurs during this period and plays a huge role in the farm output and rural demand.

However, some market players expressed concerns that the jubilation over stimulus packages may not be sustainable, and said that the easing of the lockdown is not a major positive as the top-15 cities are still under some form of lockdown. A large portion of economic activity happens in these cities.

“A fresh bout of unknown negatives can puncture the current sentiment. Also, a reality check about the level of the market versus the economic conditions may induce some profit-taking. Globally, if the tide turns downward in equity markets because of geopolitical or financial reasons, then we may see risk-off trade in India resulting in a correction,” said Deepak Jasani, head of retail research, HDFC Securities.

The market breadth was positive, with 1,658 stocks advancing and 860 stocks declining on the BSE. Almost two-thirds of the Sensex components ended the session with gains. Mahindra & Mahindra was the best-performing stock and rose 5 per cent. Thirteen of the 19 sectoral indices of the BSE ended the session with gains. Realty and banking stocks rallied the most, and their sectoral indices rose 3.1 percent and 2.1 per cent, respectively.