After Monday’s sell-off, domestic markets on Tuesday made a partial recovery on the back of firm global advices. Led by IT and pharma stocks, the Sensex, which fell 1,407 points on Monday, gained 453 points, or 0.99 per cent, to close above the 46,000 level at 46,006.69 and the NSE Nifty Index soared 138 points, or 1.03 per cent, to 13,466.30 on buying support.
The rally was led by IT and pharma stocks with other sectors also supporting the firm trend. “Volatility is expected to stay high in the near-term due to strict lockdown impacting economic recovery. However, the market is expected to remain bullish in the medium to long term, backed by progress in economic activity in 2021,” said Vinod Nair, head of research, Geojit Financial services.
With FPIs resuming purchases, markets opened with an uptick amid encouraging global cues and hovered in a range in the first half. However, healthy buying in the IT and pharma majors combined with some recovery in the other sectors helped the benchmark to pare intraday losses and settle around the day’s high as well. Consequently, the Nifty ended around 13,466 levels, up by 1 per cent. The broader markets, too, witnessed recovery and both the midcap and smallcap index posted decent gains.
Analysts said markets took an unexpected positive momentum in the afternoon, during a see-saw trading day, following the positive opening of the European markets, which recovered from Monday’s sell-off. “We expect volatility to remain high in the following sessions too. Traders should proactively manage their positions and avoid unnecessary overnight risk,” said Ajit Mishra, VP-research, Religare Broking.
The rupee furthered its losses by another 5 paise to close at 73.84 against the US dollar on Tuesday in line with weaker Asian peers amid concerns over a new coronavirus strain. At the interbank forex market, the domestic currency opened at 73.95 against the US dollar and witnessed an intra-day high of 73.82 and a low of 73.95.
The local unit finally closed at 73.84 against the American currency, registering a fall of 5 paise over its previous close.
On Monday, the rupee plunged 23 paise to end at a two-week low of 73.79 against the US dollar.
Asian shares (except India and Thailand) retreated on Tuesday, extending losses on growing worries over a new, potentially more infectious strain of the coronavirus.
Meanwhile, European stocks steadied on Tuesday, after heavy losses a day earlier sparked by fears over a highly infectious new strain of Covid, as Washington approved an $892 billion pandemic relief package. The broad Euro STOXX 600 gained 1.2 per cent, on course for its biggest one-day jump in over five weeks. German and French indices both added 1.3 per cent.
In the US, the benchmark S&P 500 stock index dipped in choppy trade, despite the US Congress’s passage of an $892 billion coronavirus aid package.
On Wall Street, the Dow Jones Industrial Average fell 96.58 points, or 0.32 per cent, to 30,119.87, the S&P 500 lost 2.43 points, or 0.07 per cent, to 3,692.49 and the Nasdaq Composite added 39.71 points, or 0.31 per cent, to 12,782.22.US Treasury yields also fell as investors weighed the likelihood of increased lockdowns in response to the new Covid-19 variant.
Oil dropped towards $50 a barrel on Tuesday, adding to losses from the previous session. Brent crude was down 43 cents, or 0.8 per cent, at $50.48 a barrel by 1300 GMT, while West Texas Intermediate (WTI) crude fell 48 cents, or 1 per cent, to $47.49.
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