SENSEX & NIFTY’S Best Single Day Gains in a Month

An Overview

The Indian stock markets saw positive action owing to the fact that equity benchmarks saw themselves account for the best one-day gains in over a month. This rise in value is owed to the boost provided by India’s biggest lenders.

If we examine the S&P Bombay Stock Exchange (or BSE’s) Sensex, it saw an addition of 1.74% added to 49,580.74, highlighting the most prominent gains since March 30. This rise was evident in the National Stock Exchange (or NSE’s) Nifty which rose by a similar value as well. It is important to recognize that a large number of banks led the way in terms of this rise which witnessed 17 of 19 sector subindexes rise.

Why did this happen?

The markets had been in a slump for the past few weeks owing to the 2^nd wave of the Coronavirus pandemic, which brought about lockdowns of varying degrees across the country.

India has been hit by the worst outbreak, and varied strains of the virus have resulted in an alarming number of cases. At their peak, the cases amounted to 4,10,000 a day whereas in the past few days the numbers have dipped to approximately 3,00,000 a day and under.

The rise in the value resulting in the highest single-day gains is owed to the fact that markets are responding to early signs of the virus having peaked and cases are now set to decline. Investors, traders and, participants alike should not read too much into this rise as it accounts for only a single day. Instead, they are encouraged to wait until the rise appears more consistent and is spread across multiple days.

Financial Performance thus far

In order to have a better understanding of the Indian stock markets, it’s important to recognize that rises in Coronavirus infections have been known to disrupt earning patterns and consumption. Therefore, the recovery processes companies might have envisioned for themselves might not have panned out as they originally intended.

This is because lockdowns limit movement, thereby impacting consumption patterns in place of which house purchases, vehicle sales, and fuel demands required for varied forms of transport are most significantly impacted.

Examining Possible Future Outcomes

Technology and Telecommunications – Sectors pertaining to technology and telecommunications have been safer bets thus far owing to their adaptable nature and scope for greater flexibility. Flexibility is of paramount importance as it allows for business models to adapt to changing market landscapes while continuing to optimize production, output, and returns. Market prices of stocks in these industries are more likely to be stable as a result despite an expectation of a more slug-paced economic activity.

Producers of Steel – Since Indian steel prices are comparatively lower than foreign markets, their exports could witness a rise as there presently exists a strong global demand for the same. Despite the fact that some companies have focused on halting a section of their oxygen production such that it can be redirected to supply medical needs, overall production has still been efficient and managed to be productive which is a positive sign.

Cement Industry – Reductions made to construction demands and general activity could impact the demand for cement. That being said, the Government of India has significant expenses directed towards infrastructure and housing demands are set to rise. Each of these factors should help offset the cutbacks made to the construction and cement industries.

Stocks that Witnessed a Rise

Read on to gain an understanding of stocks that witnessed commendable gains in the stock market as of May 17, 2021.

Adani Green – The stock price of the same rose by 5% indicative of reaching a high greater than any scored in over a month. Adani Green has risen by approximately 400% in the course of the last year which has resulted in the market value of the same amounting to USD 24 Billion.

SBI Shares – The State Bank of India witnessed its share prices rising by 6.8% and its call options were traded at a volume that quadrupled its ordinary average.

United Spirits Limited – The stock price of the same continued to rise higher than the past 10 days. This could very well lead to United Spirits accounting for the longest standing winning streak occurring since December 27, 2017.

Concluding Thoughts

While the stock markets showed signs of an upturn, it is important for all participants of the same to weigh their options carefully and make informed decisions.