Indian markets jumped about 7% on Wednesday as risk sentiment was boosted by the $ 2 trillion stimulus bill in the United States. Hopes of a multi-billion dollar bailout by the Indian government have also kept investors in the mood.
The Sensex jumped 1,862 points to end at 28,536, while the Nifty50 index advanced 517 points, or 6.6%, to 8,318 – the largest day-to-day gains for benchmarks since May 2009.
Most Asian and European markets soared after American markets posted their largest one-day rise since 1933, as the Dow Jones rose 11% on Tuesday.
The $ 2 trillion package is touted as the world’s largest budget response to a crisis. It includes unemployment insurance, small business loans and distressed business loans.
“Many other countries have gone through this phase earlier in terms of total foreclosure, when things have just started to peak in India,” said Andrew Holland, CEO of Avendus Capital Alternate Strategies.
Significant gains in the domestic markets came a day after Prime Minister Narendra Modi announced a 21-day nationwide lockdown to contain the spread of COVID-19. While market players welcomed the move, they said it should be backed up by lean measures.
“We are still awaiting a recovery plan from the Indian government. The United States is about to unveil the biggest stimulus package in history, most European countries have carried out major bailouts, “said Jyotivardhan Jaipuria, founder, Valentis Advisors, adding that investors would monitor carefully developments for new indices.
At the opening, the benchmarks had slipped into the red, even as some Asian markets jumped 7%, the economic results of the blockage of 21 days weighing on sentiment.
However, significant gains in heavyweights of the index such as Reliance Industries, HDFC Bank and HDFC allowed the markets to end the day on a high note. Many stocks have seen large bulk transactions at lower levels. This led to a surge in shares of Axis Bank, ICICI Bank and Nestlé India from their daily lows.
All but four Sensex stocks closed the session with gains. Reliance Industries was the top performing Sensex action, gaining 14.6% on reports that Facebook was considering a 10% stake in Reliance Jio.