Sensex surges 780 points: Three factors behind market rally

NEW DELHI: Domestic benchmark indices followed their global counterparts and jumped in the opening trade on Tuesday as Federal Reserve’s corporate bond-buying programme boosted global investor sentiment and calmed earlier worries about the second wave of coronavirus infections.

At 09.18 am, BSE flagship Sensex was up 782 points or 2.35 per cent at 34,010, led by a rebound in financial stocks, while NSE benchmark Nifty added 175 points or 1.78 per cent to 9,998.

On Monday, Nifty closed at 9,813, down 159 points or 1.6 per cent. Daily strength indicator RSI remained in the negative terrain, but momentum indicator Stochastic turned bullish along with a positive crossover.

Nifty has opened above 9,950 which is a positive indication. If we can maintain above the levels of 10,050, we can go up to 10,300. The support for the market continues to remain at the 9700 level,” said Manish Hathiramani, a Kolkata based independent technical analyst.

In the 30-share pack Sensex, ICICI Bank was the biggest gainer, up 4.52 per cent at Rs 345.85, followed by HDFC, Tata Steel, IndusInd BankNSE 1.68 %, HDFC Bank and Bajaj Finance that gained in the range of 3-5 per cent. Sun Pharma was the only loser in the pack, down 0.03 per cent.

Broader market indices were underperforming their headline peers as Nifty Smallcap added 1.35 per cent while Nifty Midcap gained 1.42 per cent. Broadest index on NSE, Nifty 500 was up 1.83 per cent. All sectoral indices were trading in the green

Fed’s bond-buying
The US Fed said it will start purchasing corporate bonds on Tuesday in the secondary market, one of several emergency facilities launched in the wake of the coronavirus pandemic, energising investors.

The purchases will complement the other asset purchases made by the facility, which began buying shares of broad-based exchange-traded funds in mid-May.

China infections down
Even as the total number of infections across the world crossed above 8 million mark, sentiments in Asia got a further boost after health officials said there were 27 new coronavirus cases in Beijing, down from 36 new cases the previous day.

The second wave of infections in China and the US had worried the investors. The rise in new cases forced China to start a massive testing campaign in the affected clusters.

Global markets gain
Globally, Asian shares and Wall Street futures rallied. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 2.2%, its biggest one-day gain since June 1. Australian stocks rose 3.0%, while shares in China rose 1.2%.

US stock futures, the S&P 500 e-minis, were up 0.98% following a late rally on Wall Street on Monday. Treasury yields rose and the yield curve steepened.

Japan’s Nikkei stock index and shares in South Korea were both on course for their biggest daily gain in two months.