Sensex, Nifty Gain 13% In 3 Days After 7 Weekly Losses In A Row

Domestic stock markets climbed up nearly 13 per cent in the holiday-truncated week, days ahead of the end of a 21-day nationwide lockdown to curb the spread of the coronavirus pandemic that has battered world business. In the three-day trading week, the S&P BSE Sensex index added a total 3,568.67 points to clock a gain of 12.93 per cent, whereas the broader 50-scrip NSE Nifty benchmark rose 1,028.1 points - or 12.72 per cent. Shutting shop at 31,159.62 and 9,111.90 respectively, the Sensex and Nifty indices reclaimed the best closing levels recorded since March 16.

A turmoil in the financial markets around the globe has its roots in the COVID-19 outbreak, which is threatening the world with a possible recession, say analysts.

Strong buying interest across sectors supported the gains, with all of the 11 sectoral barometres on the National Stock Exchange moving higher. The Nifty Bank, Private Bank, Auto and Pharma indices climbed up 15.45 per cent, 16.79 per cent, 23.26 per cent and 19.55 per cent respectively for the week.

Also Read | Layoffs Are Rising In Tech, But These Skills Are Helping People Unlock Better Pay

All of the 50 components in the benchmark Nifty basket finished the week higher.

Top Nifty Gainers 

Analysts say the recent gains in the domestic markets are in tandem with global peers. 

"Markets were in oversold region and the correction in our market was higher than other Asian markets. For India, in last two trading sessions, FIIs (foreign institutional investors) have turned net buyers in cash market after a very long time. That is little comforting," said Anita Gandhi, director at Arihant Capital Markets.

Foreign investors net purchased Indian equities worth $407.69 million (Rs 3,098.68 crore) on Wednesday and Thursday combined, following net outflow of $800.78 million (Rs 6,049.81 crore) in the other two trading sessions so far this month, exchange data shows.

In March alone, foreign investors net sold Indian equities worth Rs 61,973 crore as the COVID-19 disease hurt investor sentiment worldwide, after remaining net purchasers for past six months. From September to February, net FII inflows had come in at Rs 66,428 crore.

Whether the recovery in domestic markets is sustainable "will depend upon the PM's further stance on continuation of lockdown. Obviously, the decision will be based on data and control over the situation. We have to wait and watch for announcements," Ms Gandhi added. "Considering the current weak economic conditions, all rallies will attract selling at higher levels."

The sharp recovery in the markets has been broad-based. The S&P BSE 500 index - comprising stocks of 500 companies spanning major industries - soared 12.14 per cent in the three-session week, in line with mid- and small-cap segments.

Markets are risk-averse at the current juncture with investors flocking towards defensive stocks, said Sandip Sabharwal, a Mumbai-based fund manager.

"Markets are likely to be volatile for now. However the bottom made three weeks back should hold and as such markets should consolidate for some time, i.e. 2-3 weeks," he said. "Overall direction subsequently will depend more on how the government responds fiscally with a stimulus as the economy has taken a big hit."

Asked if the focus is shifting from financial stocks to pharmaceuticals in view of the coronavirus outbreak, Mr Sabharwal said: "Financials were the most over-owned and as such have taken the most beating. Pharma sector has clearly bottomed and should do well going forward. However pathlab stocks are overvalued and as such don't offer much value."

"Spectacular Week... But Worst Not Over"

It was one of the spectacular week for the market considering that it was a holiday-shortened one, said Shrikant Chouhan, executive vice president-equity technical research at Kotak Securities. "It helps in strengthening the bottom-building process. It does not mean that the worst is over for the market... Certainly, optimism is there on the D Street, but it is coupled with cautiousness," he said.

Technically, 9,400 and 9,600 are expected to be major resistance levels for the Nifty in the near term, said Mr Chouhan, adding that below the 9,000 mark, the 50-scrip index appears to find support at 8,700 and 8,500. 

The focus should be on recession-proof sectors such as pharmaceuticals, technology and fast-moving consumer goods (FMCG), he added.

The markets remained shut on April 6 for Mahavir Jayanti,and April 10 for Good Friday.

Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.