Sensex rose nearly 1000 points in last two sessions; here are three key reasons

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Published: August 9, 2019 6:45:57 PM

Reversing the bearish trends, the benchmark equity indices -- Sensex and Nifty -- rallied in the last two trading sessions with investors buying heavily across sectors and broader markets.

The Nifty50 jumped 77.20 points to close at 11,109.70.

Reversing the bearish trends, the benchmark equity indices — Sensex and Nifty — rallied in the last two trading sessions with investors buying heavily across sectors and broader markets. It comes after markets saw continuous days of decline, owing to weak domestic and global factors. The BSE Sensex rose 254.55 points to 37,581.91, taking two-day gains to nearly 900 points. The Nifty50 jumped 77.20 points to close at 11,109.70. Here are the three key reasons that re-ignited the bullish sentiment in the markets:

FPI surcharge 

On Thursday, the government finally showed intent to roll back the surcharge on Foreign Portfolio Investors imposed by Finance Minister Nirmala Sitharaman in her maiden Budget 2019 in July. Following the announcement, the benchmark indices Sensex and Nifty went soaring. The new levy on FPIs had become the scourge of Indian stock markets, with the foreign investors withdrawing money in droves, with the Sensex and Nifty in continuous downfall since the announcement.

“Refusal to roll back the FPI surcharge tax and absence of a fiscal stimulus to beleaguered sectors like autos & NBFCs are the principal reasons for the plunge in Indian equities. Any move to offer a generous relief on both these counts can lead to a massive short covering by speculators and a strong rally due to buying from FPIs and domestic Institutional investors,” Ajay Bodke, CEO PMS, Prabhudas Lilladher told Financial Express Online.

Sitharaman’s meeting with industry

In the meeting held on Thursday, industry leaders apprised Finance Minister Nirmala Sitharaman about a need of a stimulus package of over Rs 1 lakh crore to kick-start investment cycle and revive the economy. The government also showed signs of considering the proposal while preparing a  roadmap to revive the sluggish economy. This also had a positive effect on the markets, according to experts.

Technical reasons

Nifty extended its rebound and posted decent gains, thanks to favourable local cues and supportive global markets, said Ajit Mishra, VP- Research, Religare Broking. “We expect some consolidation in the index around the current levels prior to further up move. We’re now eyeing 11,250 in the Nifty and 10,950-11,000 zone would act as a cushion, in case of any decline. Having said that, the trend has not reversed yet so we advise keeping a positive yet cautious approach and maintaining extra caution in the stock selection,” he added.

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