Equities stage smart rally on fiscal stimulus hopes

FPIs net buy ₹1,738 crore in shares

Equity benchmarks gained strong ground on Thursday with the Nifty closing above the psychological 9,000-mark for the first time since March 16. The gains were primarily due expectations that the government might soon announce a stimulus package. A positive trend in Asian economies on hopes that the COVID-19 pandemic might be peaking acted as a strong catalyst.

The 30-share Sensex gained 1,265.66 points, or 4.23% to close at 31,159.62. Stocks like M&M, Maruti Suzuki India, Titan, Hero Motocorp, Bajaj Finance, HDFC, Kotak Mahindra Bank, ICICI Bank and Axis Bank all gained over 7% each on Thursday.

On an overall basis, more than 1,800 stocks gained as against 538 that declined.

The broader Nifty moved up 363.15 points or 4.15% to close at 9,111.90. The India VIX index dropped a little over 5% on Thursday. Earlier in the day, global financial major Bank of America Securities said that it expects the government to announce a second set of financial stimulus package to address the growth slowdown and fiscal deficit concerns. “We expect the MoF (Ministry of Finance) to announce a second fiscal stimulus of 0.3% of GDP atop 35 basis points done. The choice is between a fiscal stimulus to support recovery and a higher fiscal deficit on falling growth,” stated the report.

“The fiscal package could focus on subvention for MSIs (micro and small industries) and real estate and recapitalizing PSU banks as slowdown raises NPLs (non performing loans),” it added. Meanwhile, Asian markets rose on hopes that the coronavirus pandemic might be peaking as data showed that the daily incremental rise in the number of cases slowed in some countries.

The benchmarks of China, Hong Kong, Indonesia, South Korea and Singapore among others gained ground on Thursday. Foreign portfolio investors (FPIs) continued to be net buyers at ₹1,738 crore while their domestic counterparts sold shares worth ₹466 crore.

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Printable version | Jun 5, 2020 6:43:03 AM |

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