Sensex rises 1,411 points on relief package cheer
MUMBAI: Extending its recovery for the third straight session, equity benchmark Sensex surged by another 1,411 points , or 4.94%, on Thursday after finance minister Nirmala Sitharaman announced a stimulus package worth ~1.70 lakh crore to cushion the impact of the coronavirus lockdown in the country. NSE Nifty also finished 3.89% higher.
MUMBAI: Indian stocks gained for the third straight day as government announced measures to address the slump during the 21-day lockdown boosted sentiments. The BSE Sensex ended at 29,946.77, up 1,410.99 points or 4.94%, while the Nifty was at 8,641.45, up 323.60 points or 3.89% on Thursday. Most Asian region markets were under pressure on Thursday as investors awaited the release of the initial jobless claims data by the US in the evening.
The Indian government announced a ₹1.7 trillion package, amounting to about 0.8% of gross domestic product (GDP), to help the poor during the 21-day nationwide lockdown. However, investors are still waiting for more relief measures for corporate India as well as small entrepreneurs and startups. In expectation of the government’s stimulus package, benchmark indices have rallied 13-15% in last three trading sessions. These gains are not enough to recover the massive losses stock markets have incurred in March, but both the Sensex and Nifty have risen 16.8% and 15.05% from the lows touched this month.
According to Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services, the markets have cheered this fiscal package and now expect relief measures for corporates, banks, SMEs, and startups, according to Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services Ltd. “It would continue to be highly volatile and would track global markets along with the trend in coronavirus cases globally and locally,” he said.
“We will know if the government steps result in controlling the spread of the virus in the next few weeks. While investor anxiety in such times is natural, investors should not panic at this stage, having lost anywhere from 30 to 50% of the values in the last few weeks even if they continue to see panic all around. History suggests that markets rebound very quickly once situation comes under control. Markets will bottom out much before the virus intensity dissipates,” said a fund manager at Principal Mutual.
However, analysts remained concerned that the pandemic in India and the consequent lockdown for 21 days pose a material risk to India’s economic outlook. The adverse effects can dwarf gains from the drop in crude oil prices, and the anticipated monetary and fiscal stimuli.