Market takes a breather with Sensex gaining 1,800pts; 6 key factors that are at play

A fresh wave of across-the-board buying engulfed the Indian equity market, pushing the benchmarks higher on March 25.

Sensex jumped 2,116 points whereas Nifty topped 8,376 in intraday trade. Eventually, Sensex closed 1,862 points, or 6.98 percent, up at 28,535.78 and Nifty was 517 points, or 6.62 percent, up at 8,317.85.

BSE Midcap and Smallcap indices underperformed the benchmarks, ending 3.53 percent and 2.84 percent higher, respectively, at that time.

Among the sectoral indices, BSE Energy index surged over 10 percent while the Bankex and Finance indices jumped 9 percent. All sectoral indices ended in the green.

Here are 6 key factors that lifted the market into higher zones:

Optimism about stimulus: Experts believe the market is riding the optimism about a stimulus package by the government. On March 24, the Finance Minister said that an economic package was being worked upon and it may come soon.

Deutsche Bank expects fiscal stimulus to be about 2 percent of India’s GDP.

Rate cut hopes: Experts and brokerage believe RBI will go for a rate cut of at least 60 bps in the coming policy meet.

A 50 bps rate cut by the RBI is expected but easing monetary conditions will need to be accompanied by regulatory forbearance, JP Morgan said.

Deutsche Bank expects RBI to cut rates by 100 bps in the coming months. Barclays expects RBI to cut rate by 65 bps in April and added that an additional 100 bps cut is required between June-August to stabilise sentiment.

Firm global cues: Major markets of the world climbed higher as stimulus measures by the governments to mitigate the impact of coronavirus pandemic on the economies underpinned sentiment.

Asian shares gained on Wednesday in the wake of Wall Street’s massive rebound as U.S. senators and Trump administration officials reached an agreement on a giant economic stimulus bill to alleviate the economic impact of the coronavirus outbreak, reported Reuters.

Governments bring in economic sops: As per a report by Reuters, US senators and Trump administration officials have reached an agreement on a massive economic stimulus bill to alleviate the economic impact of the coronavirus outbreak.

The Senate will vote on the $ 2-trillion package later in the day and the House of Representatives is expected to follow suit soon after, the report said.

Rally in heavyweighhts: Gains in shares of heavyweights, including Reliance Industries, HDFC Bank, HDFC, Kotak Mahindra Bank and ICICI Bank added fuel to the market.

Shares of Reliance Industries surged up to 22 percent after media reports indicated that Facebook may pick up stake in Jio.

The social media giant Facebook Inc is in talks to buy a 10 percent stake in billionaire Mukesh Ambani’s telecom and internet services venture Reliance Jio, said a Financial Times report on March 24.

Technical factor: Nifty on March 24 managed to survive above the level of 7,500, which had acted as a major support to the market during the period of 2015-16.

The formation of the market was indecisive, that too, at the bottom of the current selloff. Such formation generally acts as a positive reversal for the market, said Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities.

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