The benchmark indices snapped their four-session losing streak as sentiment towards risky assets improved on hopes that China would take measures to boost its economy.
Gains in index heavyweights such as Reliance Industries and HDFC helped domestic indices posts their biggest jump in two weeks. Further, short-covering following successive days of losses accentuated gains, even as overseas investors’ selling exceeded buying by nearly Rs 200 crore.
The Sensex closed at 41,323, up 429 points or 1.1 per cent — the most since February 5. The Nifty closed at 12,126 — up 133 points or 1.15 per cent —recouping more than half the losses accumulated over the previous four sessions. Most Asian markets traded about 0.5 per cent higher.
Reports suggested that China was considering measures such as direct cash infusion and bail-outs for industries worst hit by the virus outbreak, like aviation. China’s central bank has already lowered interest rates and opened a medium-term lending facility for banks.
“Market sentiment turned positive after new cases of coronavirus showed a decline and Finance Minister Nirmala Sitharaman said the government would soon announce measures to deal with its impact on industry. The government also hinted at some relief for the troubled telecom sector, which uplifted the market,” said Siddhartha Khemka, head (retail research), Motilal Oswal Financial Services.
Vodafone Idea rose as much as 48 per cent on hopes that the government would offer relief on AGR (adjusted gross revenue) dues. The stock closed at Rs 4.2, up 38.3 per cent. Analysts said Vodafone Idea will continue to exhibit extreme volatility as various market forces bet on its future.
Reliance Industries rose 2.6 per cent on reports that the firm was inching close to a deal with Aramco. The stock made a 115-point contribution to Sensex gains. The broader market outperformed the benchmarks.
“The markets will continue tracking global developments around coronavirus,” said Khemka. Another key event is the minutes of the US Federal Reserve.
Market players said investors are eyeing the central bank’s plans on balance sheet expansion. Any indication to end liquidity support would be a negative, they added.