Markets rally on hopes of peaking virus outbreak
BENGALURU: Indian stocks closed over 4% higher on Thursday on early signs that the coronavirus pandemic was nearing its peak globally and expectations that the government may ease the 21-day lockdown put in place to contain the outbreak.
Sentiment was also boosted by expectations of more stimulus to thwart a global recession, with European Union finance ministers set to resume talks on a halfa-trillion support package later in the day.
The NSE Nifty 50 closed 4.15% higher at 9,111.90, while the S&P BSE Sensex ended up 4.23% at 31,159.27.
Both the indices snapped seven consecutive weekly losses and finished the holiday-shortened week nearly 13% higher. Indian financial markets are closed on Friday and were shut on Monday for a local holiday.
“Global positive cues and expectations of more stimulus measures are supporting the rally,” said Siddhartha Khemka, head of retail research at Motilal Oswal Securities.
World stocks were in the green with the MSCI’S All-country World Index, which tracks shares across 49 countries, inching 0.5% higher. US stock futures were up 1% and the MSCI’S broadest index of Asia-pacific shares outside Japan rose 1.56%.
Meanwhile, the Indian government was considering easing an ongoing 21-day lockdown in some areas while extending it some hot spots such as Delhi, Mumbai and parts of the south.
As of Thursday, India had reported over 4,500 infections and nearly 150 deaths.
Stocks rallied across the board on Friday. The Nifty bank index closed nearly 5% higher, while the Nifty PSU bank index finished the session up over 3%.
The Nifty auto index saw its biggest single-day gain since September, closing over 10% higher.
Analysts said the sector had been a laggard in the recent rally.
Pharma stocks closed in positive territory for a third straight session, with the Nifty Pharma index advancing nearly 5%.
Meanwhile, the rupee recovered from record low levels to settle 6 paise higher at 76.28 against the US dollar tracking gains in equity markets and foreign fund inflows.
NEW DELHI: The government may set up a fund with a corpus of about ₹50,000 crore to ₹75,000 crore to revive industries, particularly labour-intensive small and medium units, as part of an economic stimulus package currently under consideration to revive growth in the post-covid-19 era, two officials aware of the plan said.
The corpus, which is yet to be finalised, is expected to be partly funded by a cess proposed to be levied on certain commodities such as fuels, and partly from budgetary support, the officials said, requesting anonymity.
“The purpose of the fund is to provide low-cost money to industrial units, particularly micro, small and medium enterprise (MSMES), for their immediate working capital requirements so that they can expeditiously complete pending orders and receive payments. This will ensure synchronised movement of the wheels of the economy,” one of the officials said.
The second official said the fund can also be accessed by other stressed industrial sectors and exporters. “Nuances are being worked out. However, it (the creation of a fund) is one of the several proposals under consideration. A comprehensive stimulus package is on the drawing board. It is a work in progress and will be announced at an appropriate time,” he said.
Economic growth had already been slowing and several key sectors were in stress even before the onset of the coronavirus disease, which is expected to take a heavy toll. The federal budget presented in Parliament on February 1 had forecast an economic growth of 5% in the year to March 2020, the slowest pace in 11 years.
Analysts and economists say it could miss that number by a bit. There is also broad agreement that the Indian economy will expand at its slowest pace in years in 2020-21. Fitch Ratings expect it to grow by 2%, the slowest in 30 years. The minority view, however, is that it could actually contract.
According to the officials cited above, the government’s priorities are containment of the spread of the disease, ensuring food and basic amenities for the poor, and restarting the engine of the economy. “While the first two are immediate priorities, the third can wait for some time. However, protecting livelihoods is equally important and an economic stimulus package is a certainty. It is expected to be announced after a decision on the lockdown is taken,” the first official said.