Investors put up a staunch fight against the prolonged 4-day fall on Dalal street on Friday resulting in the Sensex bouncing back almost 2,000 to 29,916 points while Nifty made its way to 8,883 points by the closing bell. In the end, all Sensex components other than Indusind Bank and HDFC were trading in green, with HDFC seeing it’s single largest drop in a decade last wednesday.
HDFC’s weak performance certainly capped gains, as it was previously leading the market recovery. However, this market rebound was solely needed and has helped put many a restless sleeper to bed.
Market Rebound Breakdown
As far as sectoral indices are concerned, all 19 BSE sectoral indices were showing a positive outlook. The Banking sector, which has been facing increasing investor scrutiny, is now showing signs of recovery with the BSE bank index trading 547 points higher at 23,443. Bank Nifty also saw a rise by 352 points to settle at 20,435.
Sectorally, IT and Oil and Gas stocks were the most prominent gainers on the Bombay Stock Exchange (BSE) as the IT index climbed 1,208 points to close at 12,598, and the BSE oil and gas index rose by 585 points to close at 9,983 points. Sensex saw ONGC (14.81%), TCS (12.33%) and HCL Tech (9.84%) leading the recovery pack.
Overall, 1,417 stocks rose against the 812 that fell, whilst 119 stayed the same, indicating that in general, market breadth remained positive.
Nifty has shown it’s biggest recovery since the 2008 financial crisis, led by the Nifty FMCG Index, which climbed 8% along with Nifty IT and Nifty Metal. Nifty IT in particular saw a number of stocks such as those of TCS, Mindtree and Wipro rallying 10-14%, whereas stocks of HCL and Infosys and Tech Mahindra rose between 8.5-9%.
In the end, all Nifty indices closed in green, sealing the stock market rebound in place.
These are some of the factors helping Stock market rebound:
- Rise in Global Markets
Stock exchanges such as the Nikkei 225, Hang seng, KOSPI and the Shanghai Composite all rose and the European market opened green.
As People’s bank of China (PBC) keeps its benchmark rates steady, there is hope that the economic situation in China that was rattled by the pandemic could soon be seen returning to normalcy. Asian markets traded significantly higher on Friday which is being seen speculated by some as the first sign of stabilisation in the global market.
However, analysts maintain that the stock rebound seen across much of the world should not be taken as a change in market sentiments but rather as a result of a technical reversal
- The Bear takes a break
Many investors are seeing the rally as an intermittent rise before an eventual fall. terming the recovery as a ‘dead cat bounce’ which signifies a temporary recovery in share prices after a substantial fall caused by speculators buying in order to cover their positions.
- Development of economic Stimulus
Countries across the globe are developing strategies to provide their nations with an economic stimulus designed to combat the market fall caused by the coronavirus. The US Senate is considering an economic relief package to stimulate stagnant economic growth to the tune of USD 1 trillion. This measure would consist of direct financial help for Americans, relief for small businesses and steps to stabilise the economy.
With China facing it’s first contraction in four decades, the state is reportedly getting ready to release trillions of Yuan in order to bolster its economy.
Economic Stimulus can be anticipated soon in the form of a relief package similar to the US for India too.
Reports say that Finance Minister Nirmala Sitharaman will holding a meeting with several key ministers, such, Animal Husbandry Minister -Giriraj Singh, Civil Aviation Minister-Hardeep Singh Puri, MSME Minister-Nitin Gadkariand Tourism Minister-Prahlad Singh Patel to assess the economic situation and come up with a sectoral policies to boost economic growth in the country.
Even though the markets have shown a respite from the continuous fall, the lack of positive stimulus for growth in the market has led many analysts to believe that the moderate rise in market is due to technical factors and not a change in market outlook.
The market is likely to continue its bearish trend till the weight of the Coronavirus and the crises in the banking and financial sector aren’t lifted from it. It is advised that investors trading in the current market to enter at dips and hold stocks for the long haul.