Sensex, Nifty soar 1.7% on US stimulus hope; HDFC, RIL and ICICI Bank gain

Most global markets posted gains ahead of the testimony of Janet Yellen, Biden’s designated nominee for Treasury Secretary, before the Senate Finance Committee
The benchmark Sensex snapped its two-day, 1,000-point losing streak on Tuesday as investors regained their risk appetite on optimism that the US will announce more stimulus measures under the Joe Biden administration.

The index ended at 49,398, with a gain of 834 points, or 1.72 per cent — the most since November 5. The Nifty50 index rose 240 points, or 1.7 per cent, to 14,521, with 46 of its components posting gains.

Most global markets posted gains ahead of the testimony of Janet Yellen, Biden’s designated nominee for Treasury Secretary, before the Senate Finance Committee. The Street was hoping that the former chair of the US Federal Reserve will tell lawyers that the US risks a painful recession unless Congress approves another round of stimulus to help the economy.

“But right now, with interest rates at historic lows, the smartest thing we can do is act big. I believe the benefits will far outweigh the costs, especially if we care about helping people who have been struggling for a very long time,” said a copy of her prepared remarks obtained by news agencies.

US futures rose, but the dollar weakened following the report. Analysts said any signal by the US Fed to increase its bond buying programme would give a further boost to equites. They said investors were eyeing the potential size and timing of the stimulus package.

“Bulls took control after two days of massive sell-off on expectation that a bigger US stimulus will keep liquidity alive. The current market will get further boost by foreign inflow if additional US stimulus kicks in. However, recent volatility in the market has increased due to concerns over high valuations and bond yields, investors should be watchful,” said Vinod Nair, head of research at Geojit Financial Services.

Foreign portfolio investors (FPIs) were net-buyers to the tune of Rs 257 crore on Tuesday. They had pumped in over Rs 1,500 crore in the previous two sessions as well, even as the benchmark indices fell over two per cent.

The broader markets also saw a sharp rebound with the Nifty Midcap 100 index gaining 2.3 per cent, while the Nifty Smallcap 100 index rose 1.7 per cent. Overall, 2,124 stocks advanced, while only 874 declined on the BSE.

Among the biggest Sensex gainers were Bajaj Finserv and Bajaj Finance, which jumped 6.8 per cent and 5.3 per cent, respectively. HDFC, Reliance Industries and ICICI Bank had the biggest contribution of over 300 points to Sensex gains.

Market players said the earnings season has so far acted as a tailwind for the markets.

“The result season has started well. The vaccination drive is progressing well. Also, global cues have been positive with expectation of a large fiscal push in the USA. The overall sentiment is quite bullish. We expect that the market will now take its next major cue from the Budget. The multiple expansion driven returns will ease out and returns will be linked more to growth from here on,” said Mohit Ralhan, managing partner & Chief Investment Officer, TIW Private Equity.

 
The India VIX index, a gauge of volatility, cooled off six per cent to end below 23.



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