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Fed, Covid-19 drug hopes lift indices; monthly gains at 11-year high

Stocks opened gap-up after a sharp rally on the Wall Street overnight, and managed to hold on to most gains despite banking stocks, the index heavyweights, underperforming

Topics
Lockdown | Coronavirus | stock market

Sundar Sethuraman  |  Mumbai 

Markets
The benchmark indices ended the truncated week with 7.7 per cent gain

The benchmark indices soared on Thursday, on hopes of a breakthrough in finding a possible drug for Covid-19 treatment, as well as the US Federal Reserve’s assurances to continue with stimulus measures to revive the economy.

Stocks opened gap-up after a sharp rally on the Wall Street overnight, and managed to hold on to most gains despite banking stocks, the index heavyweights, underperforming.

The Sensex closed at 33,718, up 997 points or 3.05 per cent, while the Nifty rallied 306 points or 3.2 per cent to end at 9,860. The Bank Nifty Index gained 2.1 per cent.

Most Asian indices logged gains but European slipped, as weak corporate earnings and economic data weighed on investor sentiment.

The benchmark indices ended the truncated week with 7.7 per cent gain.

Foreign portfolio investors (FPIs) were net buyers for the third session in a row. On Thursday, they invested nearly Rs 2,000 crore, taking their three-day buying rally past Rs 2,800 crore.

Experts said policy measures taken by central banks globally have boosted sentiment and helped shrug off concerns regarding the economy.

“Global markets, particularly the US, have been helping revive sentiment in the last few sessions. There has been nothing new in India to have led to such a rise. It is liquidity and some good that has moved the markets,” said Andrew Holland, CEO of Avendus Capital Alternate Strategies.

The US Fed had on Wednesday said it would continue its aggressive policy stance till the economy was back on its feet. It reiterated its commitment to hold interest rates near zero till full employment returned and inflation got back to the long-stated goal of 2 per cent. Hopes of additional measures from the ECB, which was scheduled to meet later in the day, also kept market mood buoyant.

Investors also cheered the encouraging on Covid-19 treatment. The US’ top health advisor Anthony Fauci on Wednesday said Remdesivir has a clear-cut positive effect in diminishing the recovery time.

The indices are now up 30 per cent from their Covid-caused lows made on March 23. “Although the gains make it seem like the danger has been mitigated, the truth is that we are yet to ascertain the full impact of the damage,” said Vinod Nair, head (research), Geojit Financial Services.

The market breadth was slightly positive, with total advancing stocks at 1,342 and those declining at 1,092 on the BSE.

All Sensex components barring four ended with gains. ONGC was the best-performing Sensex stock, up 13 per cent, followed by HCL Tech and Hero MotoCorp, up 10.4 per cent and 10 per cent, respectively. HUL and Sun Pharma ended with losses of 1.6 per cent and 2.7 per cent, respectively.

First Published: Fri, May 01 2020. 01:48 IST
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