Indian stock markets rebounded strongly today to finish 6% higher, driven by gains in IT stocks. Global markets today made a partial comeback from a rout as policymakers across the world launched fresh efforts to stem the economic fallout of the coronavirus pandemic. The Sensex settled 5.75% or 1,627 points higher at 29,915, the most in a single session since May 2009. But on a weekly basis, the Sensex slumped 12%, its worst week in over 10 years.
The broader Nifty closed up 5.83% at 8,745. Both Nifty and Sensex logged their worst week since 2008. Analysts remain cautious despite today’s rebound.
“Tracking positive sentiments in the global markets, Indian indices closed up by around 6%. It was in sync with Asian and European markets and was more of a relief rally driven by technicals rather than any fundamental change in outlook. Hopes of further stimulus from central banks across the world to contain the economic damage boosted global markets. The broader market indices were also up by around 4%,” said Vinod Nair, head of research at Geojit Financial Services.
Central banks in Europe, Japan, Australia and the US have announced new stimulus to help businesses battered by a near halt in economic activity due to the virus outbreak.
“It was the fourth consecutive week of big pain for the stock market investors but there was a minor relief on the last day. Coronavirus has become a black swan event which is resulting in both life and financial crisis and this is the main reason for the steepest fall in the market. If the situation improves from here then we can expect a bargain buying in the market which may lead a smart rally in the coming days but if the situation worsens from here then the pain will continue for the market players,” said Santosh Meena, senior analyst at TradingBells.
“Technically, Nifty has an important support area of 8400-7900 because 8433 is 100-Months simple moving average and in 2008 market made a bottom at 100-months average whereas 7900 is low at the time of demonetization. On the daily chart, Nifty has formed a kind of morning star candlestick pattern which is a ray of hope that the market has made bottom but it is very difficult to say about the bottom with confidence because levels have become meaningless in current uncertainty. In the upside 9000 will act as an immediate resistance,” he added.
Shares of ONGC were among the top gainers on the Nifty 50, closing 18.5% higher as oil prices bounced back. The Nifty IT index today settled up 9.0%, with shares of Infosys ending the day more than 7% higher.
Shares in India’s largest private-sector lender HDFC Bank slid as much as 7.9% and closed down 1.4% after Bernstein downgraded the stock. (With Agency Inputs)