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Wednesday, April 14, 2021

Sensex shrugs off Covid surge on vaccination, recovery hopes

The rupee slumped 87 paise to close at 73.38 against the US dollar as rising crude oil prices and a strong greenback weighed on investor sentiment.

By: ENS Economic Bureau | Mumbai |
March 31, 2021 3:15:45 am
The unblocking of the Suez Canal and expected unveiling of an infrastructure plan from US President Biden further buoyed the sentiments on the Street.

Despite the rise in US bond yields and the fall in the rupee, domestic markets jumped by 2.30 per cent amid expectations of the recovery in the economy and vaccination drive. The benchmark Sensex rallied 1,128 points to 50,136.58 and the NSE Nifty Index gained 338 points to 14,845.10 on all-round buying support.

The rupee slumped 87 paise to close at 73.38 against the US dollar as rising crude oil prices and a strong greenback weighed on investor sentiment.

The immediate reason for the fall was a strengthening dollar and rising bond yields. This pulled down currencies across the region but the domestic currency saw the steepest fall. “Beating worries of increasing Covid cases and rising bond yields, the domestic market sparked a rally today as investors turned their focus to economic recovery supported by vaccination drives. Positive openings seen in Asian and European markets also helped in boosting optimism in the Indian market. Barring realty, all sectorial indices joined the rally with IT and pharma contributing the most,” said Vinod Nair, head-research, Geojit Financial Services.

Ajit Mishra, VP-research, Religare Broking, said the benchmark opened gap-up, led by supportive global cues and continued to inch higher as the day progressed, thanks to healthy buying in sectors such as IT, FMCG, metals and healthcare. Consequently, the Nifty ended near day’s high at 14,845 levels, up by 2.3 per cent. The broader markets too ended in positive with gains in the range of 1-1.3 per cent.

“It’s surprising the way the benchmark is showing resilience amid mixed cues. Going ahead, upcoming data — core sector and auto sales — along with global cues will remain on the participants’ radar,” he said. Needless to say, the recent deterioration of the Covid situation in India has dented sentiment and will be closely watched by the participants in the coming sessions, too.

Explained

Global cues

The Suez Canal unblocking and expected infrastructure plan from US President Biden further boosted market sentiment.

The unblocking of the Suez Canal and expected unveiling of an infrastructure plan from US President Biden further buoyed the sentiments on the Street.

The benchmark US Treasury yield hit a 14-month high as big banks shed debt holdings ahead of a March 31 regulatory change. The 10-year yield on Tuesday rose as high as 1.776 per cent in early London trade, its highest since January 2.

Meanwhile, Brent fell 31 cents, or 0.5 per cent, to $64.67 a barrel by 1511 GMT. West Texas Intermediate oil was down 47 cents, or 0.8 per cent, to $61.09.

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