Banking stocks fuel indices' steep jump amid retreat in US bond yields

Asian rally too helps Indian markets' biggest surge in 2 weeks

The domestic markets on Monday posted their biggest jump in nearly two weeks, led by gains in banking stocks and the rally in Asian markets amid a retreat in US bond yields. The drop in Covid-19 tally in Mumbai over the weekend also boosted sentiment, although cases continued to mount across the country.
 
The benchmark Sensex closed at 48,386, with a gain of 508 points or 1.06 per cent—most since April 13. The Nifty ended the session at 14,485, with a gain of 143 points, or 1 per cent.
 
Strong earnings by private sector lender ICICI Bank buoyed banking stocks. Shares of ICICI Bank rose 3.6 per cent, Axis Bank surged 4.4 per cent, and State Bank of India gained 2.4 per cent. Index heavyweight Reliance Industries rose 1.74 per cent after it commenced production from the second deep-water gas field.
 
Overall, 194 stocks hit their 52-week high, and 367 were locked on the upper circuit on the BSE. The market breadth was positive, with 1,867 stocks advancing and 1,132 declining. Four-fifths of the Sensex constituents gained. Axis Bank was the best performing Sensex stock and rose 4.4 per cent. ICICI Bank and Ultratech Cement rose 3.6 per cent each. Realty and metal stocks were the biggest gainers, and their sectoral indices rose 3.7 and 2.1 per cent, respectively.

 
“Buying interest was broad-based, led by banking, realty, and metal stocks, with a hope that we are nearing the peak of infection. Bank­ing stocks outshone ot­her major sectoral indi­ces due to the positive beginning of quarterly results,” said Vinod Nair, head of research at Geojit Financial Services.
 
The 10-year US Tre­asury yield has dec­lined nearly 20 basis points this month. This has boosted prospects for the emerging markets. However, global investors have been cautious due to the renewed surge in Covid-19 infections.
 
“Upbeat global cues combined with supportive earnings are helping the index hold at higher levels despite Covid challenges. The recent news of various countries extending help to India in the fight against Covid further boosted sentiment. Banking, metal, and pharma are showing tremendous resilience and should be preferred for long trades on dips,” said Ajit Mishra, VP- rese­arch, Religare Broking. Analysts expect the markets to remain volatile amid rising Covid-19 tally, derivatives expiry, the upcoming meeting of the US Federal Reserve, and a slew of corporate results.
 
A persistent rise in Covid-19 cases across the nation and enhanced economic restrictions have dented investors sentiment over the last couple of weeks, with the benchmark Sensex declining more than 8 per cent from its peak.
 
Further, a sharp rise in the number of deaths over the last week is emerging as a major cause of worry for state and central governments, raising speculations of wider economic restrictions.