The benchmark indices rose on Thursday, buoyed by the easing of restrictions in India and hopes of the US announcing a stimulus package. The Sensex ended the session at 38,697, a gain of 629 points or 1.6 per cent. The Nifty gained 169 points or 1.5 per cent to end the session at 11,417. Both ended the truncated trading week with gains of close to 3.5 per cent.
On Wednesday, the central government announced guidelines to ease restrictions outside containment zones, allowing cinema halls, entertainment parks to open from October 15.
The number of additional Covid-19 cases has eased to the lowest in a month even as the nation remains on track to overtake the US with the most infections in the world.
Moreover, Indian businesses are counting on a pick-up in consumer spending from this month with the start of the festive season.
Auto stocks rose on the back of robust sales in September. Maruti Suzuki, the largest automaker, reported a 30.8 per cent rise year-on-year (YoY) in September. However, analysts said this could be due to a low base.
“The announcement of Unlock 5.0 guidelines gave the markets a temporary boost. Global indices were also positive on renewed hopes of a US stimulus package, which can also ensure continued liquidity for emerging markets like India. Rising cases of infections, seemingly high valuations, and geopolitical tensions are still worrying for markets,” Vinod Nair, head of research, Geojit Financial Services.
On Wednesday, US Treasury Secretary Steven Mnuchin said talks with House Speaker Nancy Pelosi on the stimulus package made progress. The lawmakers from the Democratic Party have delayed a vote on their own $2.2 trillion stimulus package to give more time for negotiations with the Trump administration.
Last month, economists and US Federal Reserve officials had warned that the recovery in the US was likely to be weaker without a further relief package. Further, the lack of a stimulus could lead to a rise in bankruptcies, dwindling job growth, and long-term damage to the labour market, they added.
“Positive global cues led by US stimulus hopes sent Indices off to a flying start today. A 10 per cent month-on-month rise in GST collections, coupled with Unlock guidelines, lent strength to the rally with financials leading the way,” said S Ranganathan, head of research, LKP Securities.
Market breadth was positive, with a total of 1,501 stocks advancing and 1,183 declining on the BSE. Barring five, all Sensex components ended the session with gains. IndusInd Bank was the best performer and ended the session with a gain of 12.4 per cent. Bajaj Finance, Axis Bank, and ICICI Bank were other big gainers, rising over 4 per cent each.
Barring two, all the BSE sectoral indices ended the session with gains. Banking and finance stocks rose the most, and their gauges rose 3.7 per cent and 3.03 per cent, respectively.