According to reports, the Narendra Modi government is just weeks away from announcing another round of stimulus measures ahead of the festive season. The package might include an urban jobs scheme and infrastructure initiatives.
“The equity markets
recovered quite a bit of lost ground. Expectations of another fiscal package from the government ahead of the festival season is a factor that may endow the markets
with some strength,” said Joseph Thomas, head of research at Emkay Wealth Management.
In the previous six sessions, the benchmark indices had dropped nearly 7 per cent.
Market players said Friday’s gains were spurred by short-covering after the six straight days of losses. “The market had moved one-sided in the last few days. The latest gain is more of a short-covering-based rally," said Abhimanyu Sofat, head of research, IIFL.
There is scepticism about the sustainability of the rally. “The factors that were weighing on the market, such as the emergence of a second wave of the pandemic and rising geopolitical tensions, may continue to influence it in the coming weeks,” said Thomas.
Overseas investors remained net sellers despite the sharp rebound in stocks. On Friday, they sold shares worth more than Rs 2,000 crore, taking their six-day selling past the Rs 10,000-crore mark.
Experts said the strengthening of the US dollar was weighing on foreign investor sentiment. If the US stimulus comes through, it will be a boost for the markets, they said.
"All the foreign flows coming into India were connected to some stimulus package somewhere or the other. Another stimulus package will enthuse the markets, and some of it will trickle down to India. There are reports of a package by the Indian government. But last time when they announced a package, it was not appreciated by the market. The market is hoping that this time, there will be a lot more of pumping money into the economy," said U R Bhat, director, Dalton Capital India.
Domestic institutions were net buyers to the tune of Rs 2,000 crore on Friday.
All the 30 Sensex
components ended in the green, with Bajaj Finserv gaining the most, at 6.9 per cent, followed by HCL Technologies and Bharti Airtel, rising 5 per cent each.
“The steep contraction in the last couple of days has made the valuation of many companies comfortable, which was used as a buying opportunity," said Arjun Yash Mahajan, head of institutional business at Reliance Securities.
The market breadth was positive, with 1,972 stocks advancing and 682 stocks declining.
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