However, Friday’s correction pruned weekly gains to 1.4 per cent. The India VIX index soared 4.3 per cent to 24, sparking concerns that the market could have got overheated. Mid- and small-cap indices fell in line with the benchmark indices.
Most global equities fell, while the US futures market pointed to a lower opening on Wall Street during India’s market hours.
Biden’s latest relief plan — which follows the $900-billion package announced last month — includes measures like more direct payments to US citizens and local government bodies to boost spending and revive the economy.
A Bloomberg report said optimism surrounding the US aid package had helped spur reflation trade, but the plan is far from a done deal.
The proposal could be watered down under Congressional opposition, and there’s the possibility that some taxes could rise.
Experts said investors are uncertain whether the relief measures to be rolled out by the Biden administration will be enough to spur economic growth, which has been hampered by rising Covid-19 infections during the winter.
“Biden’s big fiscal plans are out of the bag, and now the current dire situation is countering US reflation hopes. It is unlikely to get any better soon, given the currently slow rate of vaccine rollouts,” said Antoine Bouvet, a senior rates strategist at ING Groep.
“The $1.9-trillion ‘American Rescue Plan’ failed to uplift the sentiment. Investors can resort to profit booking as the near future trend of the market will depend on Budget expectations, third quarter results and foreign inflows,” said Vinod Nair, head of research at Geojit Financial Services.
IT stocks led the market fall on Friday. Tech Mahindra fell the most at 4.4 per cent followed by HCL Technologies, which declined 3.7 per cent. Bharti Airtel rose 3.8 per cent, most among Sensex components, after MSCI said it will increase the telecom major’s weightage in its global indices next month. The move follows increase in foreign investment limit in Airtel from 49 per cent to 100 per cent.
ITC, Bajaj Auto and Bajaj Finance were among the gainers on the Sensex.
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