Key indices witness biggest 1-day gain ever on strong global cues

Indian equity benchmarks witnessed biggest single-day gain ever in absolute terms on Tuesday by rallying over eight and half percent in the session, tracking gains in Asian markets, even as domestic Covid-19 cases continue to rise in the country. Key gauges opened with a strong gap on the upside and traded jubilantly for whole day as traders took encouragement with report that the Finance Ministry is working on a second relief package for the Indian economy hit hard by the coronavirus outbreak and the 21-day nationwide lockdown imposed to curb the contagion. Some solace also came in as to ensure adequate liquidity in the system, especially in the corporate bond market, the Reserve Bank of India (RBI) announced the third targeted long-term repo operation (TLTRO) on April 7 for Rs 25,000 crore.

Markets continued their strong bullish momentum in late trade as the commerce ministry designed an online platform for issuance of a key document required for exports to those countries with which India has trade agreements, with a view to facilitate shipments during the COVID-19 crisis. Traders ignored Fitch Ratings’ statement that it has slashed India's growth forecast for the current fiscal to a 30-year low of 2%, from 5.1% projected earlier, as economic recession gripped global economy following the lockdown due to COVID-19 pandemic. Investors also paid no heed towards a report that India’s services sector growth contracted in March after registering the strongest rise in business activity for over seven years in February, as the covid-19 outbreak dented client demand, particularly in overseas markets. Services Purchasing Managers’ Index (PMI) fell to 49.3 from 57.5 in February.

On the global front, Asian markets ended mostly higher on Tuesday, while European markets were trading in green, amid signs of slowing coronavirus spread and on expectations of more central bank and government stimulus to counter the economic fallout from the pandemic. Back home, stocks related to Pharma sector ended higher after the government relaxed export curbs on 24 pharma ingredients and medicines, including vitamin B1 and B12. Easing of curbs on 24 APIs and its formulations assumed significance as certain pharma companies have raised concerns over these restrictions. Besides, cement sector stocks were in focus, as cement demand in India is expected to fall sharply by 20-25 per cent in the current fiscal year if the COVID-19 pandemic is not contained by May, and construction activities begin only in the second quarter. 

Finally, the BSE Sensex gained 2476.26 points or 8.97% to 30,067.21, while the CNX Nifty was up by 708.40 points or 8.76% to 8,792.20.   

The BSE Sensex touched high and low of 30,157.65 and 28,602.31, respectively and all 30 stocks advancing on the index.     

The broader indices ended in green; the BSE Mid cap index rose 5.40%, while Small cap index was up by 4.13%.

The top gaining sectoral indices on the BSE were Bankex up by 10.70%, Energy up by 10.02%, Auto up by 9.49%, Telecom up by 9.40%, Healthcare up by 8.95%, while there were no losing sectoral indices on the BSE.

The top gainers on the Sensex were Indusind Bank up by 22.60%, Axis Bank up by 19.41%, Mahindra & Mahindra up by 14.44%, ICICI Bank up by 13.82% and Hindustan Unilever up by 13.51%.

Meanwhile, Fitch Ratings has cut India's growth forecast to a 30-year low of 2 percent, from 5.1 percent projected earlier for the current financial year (FY21), as economic recession gripped global economy following the lockdown due to COVID-19 pandemic. It also said micro, small and medium-sized enterprises and the services segment are likely to be among the most affected amid reduced consumer spending.

It further stated that NBFCs' business borrowers are typically smaller with more limited cash buffers, and any material fall in earnings is likely to affect their ability to repay their loans directly. The challenges for India's non-bank financial institutions (NBFI) will intensify as local measures to contain the spread of the coronavirus exert pressure on their operating performance and financial profiles.

Government-imposed activity restrictions in India will raise operational complications for the NBFIs, while any escalation in local infections would deal a blow to economic sentiment. It said ‘these developments threaten to derail the incipient recovery in India's credit environment following the NBFI crisis in 2018-2019, and Fitch has taken negative action on our rated Indian NBFI portfolio in light of these risks.’

The CNX Nifty traded in a range of 8,819.40 and 8,360.95 and there were all 50 stocks advancing on the index.

The top gainers on Nifty were Indusind Bank up by 25.00%, Axis Bank up by 20.14%, Grasim Industries up by 15.00%, Dr. Reddy's Laboratories up by 14.40% and Hindustan Unilever up by 13.69%.

European markets were trading in green; UK’s FTSE 100 increased 123.81 points or 2.22% to 5,706.20, France’s CAC rose 127.93 points or 2.94% to 4,474.07 and Germany’s DAX was up by 359.83 points or 3.57% to 10,435.00.

Asian markets ended mostly higher on Tuesday following Wall Street’s overnight gains after the reported death tolls in some of the world's corona virus hot spots showed signs of easing over the weekend. Expectations of more central bank and government stimulus to counter the economic fallout from the pandemic too supported investors' sentiment. Chinese shares ended higher as the country reported zero new corona virus deaths for the first time since January. Further, Japanese shares ended sharply higher after reports suggesting that the Cabinet will approve a corona virus stimulus package totaling 108 trillion yen, or equal to 20% of Japan's GDP, while investors awaited the government's decision to declare a state of emergency.