During the holiday-shortened week, markets remained choppy and traded higher on optimism of the second stimulus package.
Indian share market rallied on Friday after Reserve Bank of India (RBI) announced liquidity boosting measures to support the economy amid coronavirus pandemic. The rally in BSE Sensex and Nifty 50 was supported by the gains in banking and financial stocks which surged up to 21 per cent in Friday’s trade. During the holiday-shortened week, markets remained choppy and traded higher on optimism of the second stimulus package. By the close of the week, RBI announced a slew of measures to help to revive the economy. Both the headline indices Sensex and Nifty50 gained nearly 3 per cent during the week. S&P BSE Sensex jumped 986 points or 3.22 per cent to close the session at 31,589, while the broader Nifty 50 index settled at 9,266, up 275 points or 3.05 per cent. “The announcement from the RBI has triggered a surge in the banking space which was underperforming for quite a sometime now and sustained recovery in the auto pack further added to the buoyancy,” Ajit Mishra, VP – Research, Religare Broking Ltd, said, hailing the RBI’s move for the Indian markets as well as the economy.
Financial stocks rally: The BSE Finance index surged 5.44 per cent in Friday’s trade. Equitas Holdings share price zoomed 21.15 per cent, Shriram Transport Finance Company shares gained 20 per cent, shares of J&K Bank soared 19.95 per cent and Indiabulls Housing Finance went up by 17.61 per cent. Similarly, Dhanlaxmi Bank share price jumped 17.51 per cent, DCB Bank shares traded 16.54 per cent higher, shares of Ujjivan Financial Services were up 14.54 per cent and Cholamandalam Investment and Finance Company gained 11.33 per cent.
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S&P BSE BANKEX jumped 7%: Axis Bank surged 13.45 per cent, ICICI Bank rose by 9.89 per cent, IndusInd Bank gained 9.13 per cent, Federal Bank shares were up 9 per cent, City Union Bank share price gained 5.39 per cent and Kotak Mahindra Bank shares traded 4.96 per cent higher on the BSE.
Rupee to surge past 77-mark soon: The Indian rupee ended 48 paise higher at 76.39 against the US dollar on Friday buoyed by RBI measures to prop up the economy battered by coronavirus pandemic. “Currently, the concerns around the coronavirus and the consequent economic distress is weighing on the rupee, which along with outflows from local equities will push the rupee sub-77 mark soon. Market participants are looking forward to a second round of stimulus from the federal government, and that could trigger some gains in the rupee. The domestic unit is likely to trade in the 75.30 – 78.00 band in the next two weeks,” Sugandha Sachdeva VP-Metals, Energy & Currency Research, Religare Broking Ltd, said.
Event of the week: The Reserve Bank on Friday conducted the fourth and the final tranche of the Rs 1 lakh crore targeted long term repo operation (TLTRO) by infusing Rs 25,000 crore into the system, PTI reported. “There is relief on the NPA recognition and stressed asset reclassification for Banks. A 25bps reduction in the fixed reverse repo rate will encourage banks to lend more and improve liquidity in the system,” Jimeet Modi, Founder & CEO, SAMCO Securities & StockNote, said.
The week ahead: Market analysts expect volatility in the markets following the corporate earning announcement. “In the coming weeks, corporates are expected to announce their quarterly earnings performance and it would be advisable to investors not to make any estimates or guesstimates basis this quarterly performance. Thus, assessing Q4FY20 numbers would be an exercise in hindsight as what is lying ahead of us is unknown and uncertain. Hence, this earning season would generate volatility but no meaningful price direction,” Jimeet Modi said.