Indian stocks rise for third straight day with $22.6 bn fiscal stimulus boost
After a sharp 35 percent fall from January highs, the Indian market has rebounded, rising 15-17 percent in just three straight sessions on the back of the US Senate voting in favour of the $2 trillion coronavirus bill, hopes of a major fiscal stimulus by the Indian Government to blunt the economic damage and rebound in global markets.
BSE 30-share barometer Sensex has rallied as much as 4,413 points or 17 percent, while NSE Nifty 50 has added as much as 1,138 points or 15 percent since March 24.
As Finance Minister Nirmala Sitharaman today announced a comprehensive economic package of 1.7 trillion rupee ($22.6 billion) as part of measures to ease the economic impact of the coronavirus pandemic on the poor, the Indian stock markets continued their recovery for the third consecutive session and finished in the green.
Sensex rose 1,411 points or 4.94 per cent to close at 29,947; while Nifty closed at 324 points or 3.89 per cent higher at 8,641.
In the Sensex pack, IndusInd Bank was the best performer, rallying as much as 45% intraday. The other top gainers in today’s session were L&T, Airtel, Bajaj Finance, Bajaj Auto, Kotak Bank and HeroMotoCorp.
The Finance Minister’s relief for the poor included direct cash transfers and food security measures that will shield poor families during the lockdown. She said: “(We) have come out with a package which will immediately take care of the poor.”
Wisdom Capital’s analysts observe that Ms Sitharaman has taken care of the needs of the poor, including migrant labourers and daily wagers who are at risk on account of the current pandemic using existing state-run schemes such as MGNREGA, Public Distribution System, Jan Dhan Yojna, Ujwala, Ayushman Bharat, DBT, and other schemes,
Despite the Senate in Washington D.C. finally voting in favour of the mammoth stimulus package, major Asian markets struggled today after posting hefty gains this week. Japan’s Nikkei 225 was the worst performer in the region, dropping 4.5%, the Shanghai Composite gave up 0.6% while Hong Kong’s benchmark shed 1.2%.
Veterans at Wisdom Capital feel that markets need some surety that major economies finally have the spread of the novel coronavirus under control, before risk assets look past the near-term economic hit and mount a sustained rally.
They also believe that with India under a 21-day lockdown, closing businesses will help slow the spread of the virus, but will also take cash out of the pockets of companies and workers.
For many investors, the best-case scenario is that the economic turmoil will be steep but short, with growth recovering later this year after businesses reopen with renewed enthusisiam.
Meanwhile, the Indian currency rose sharply against the US dollar, jumping around 100 paise, tracking strong gains in Dalal Street.