Indian markets rally on US stimulus hope

Indian stocks bounced back on Tuesday after a two-day sell-off as investors cheered the call for a much larger stimulus from US President-elect Joe Biden’s nominee to run the treasury department. Stocks soared as investors expected a larger stimulus programme to channel more liquidity into stocks, especially those in emerging markets. The gains pulled benchmark indices up by nearly 2%, the biggest daily advance since 25 November. BSE Sensex rose 834.02 points, or 1.72%, to 49,398.29. The Nifty gained 1.68% to 14,521.15. Shares across global markets climbed on Tuesday ahead of Janet Yellen’s confirmation speech as US treasury secretary. Yellen is expected to tell the senate finance committee that the government must “act big” with its next coronavirus relief package.

MUMBAI: Indian stocks bounced back on Tuesday after a two-day sell-off as investors cheered the call for a much larger stimulus from US President-elect Joe Biden’s nominee to run the treasury department.

Stocks soared as investors expected a larger stimulus programme to channel more liquidity into stocks, especially those in emerging markets.

The gains pulled benchmark indices up by nearly 2%, the biggest daily advance since 25 November. The BSE Sensex rose 834.02 points, or 1.72%, to 49,398.29. The Nifty gained 1.68% to 14,521.15.

Shares across global markets climbed on Tuesday ahead of Janet Yellen’s confirmation speech as US Treasury secretary. Yellen is expected to tell the senate finance committee that the government must “act big” with its next coronavirus relief package, according to her prepared statement seen by Reuters. “Liquidity will continue to favour the Indian market. Foreign portfolio investors are continuously buying Indian equities while the quantum of selling by domestic institutions has reduced significantly in the last few days which is a positive for overall sentiments,” said Neeraj Chadawar, head of quantitative equity research, Axis Securities.

Amid the euphoria, concerns about pandemic lockdowns in Europe and the US have receded into the background. Investors are preparing for possible positive earnings surThe prises across global markets.

In the Asia-Pacific, South Korea’s Kospi led gains among the region’s major markets, jumping 2.61%. Hong Kong’s Hang Seng index surged 2.14%, while Japan’s Nikkei 225 rose 1.39% and Taiwan’s Topix index advanced 0.56%.

According to Chadawar, foreign institutional investors (FIIs) are buying emerging markets equities because of a faster-than-expected economic recovery and improved earnings outlook. “The positive earnings momentum is likely to continue in the third quarter, but if recovery falls short, then it could be a challenge for the market to sustain at a higher multiple. This is a buy-the-dips market where sector rotation is very important to generate outperformance,” he said.