Investors were able to improve slightly over the weekend, with large national indices rising by around 6%, helped by a series of support measures announced by politicians around the world to cushion the economic shock of the coronavirus pandemic.
Markets in Asia and Europe rose, with the price of Brent exceeding $30 a barrel, while the US dollar weakened. Sensex closed with 29,916 points, an increase of 1,628 points or 5.8%, while Nifty closed with 482 points or 5.83% and reached 8,745 points, the largest one-day increase since May 2009 for both indices. This growth allowed the market to reduce its weekly losses to 12.3%, the worst result since October 2008. Without the 6% increase on Friday, the market would have experienced its worst weekly decline ever.
Sensex and Nifty fell into intraday trading from Thursday to 26,714 and 7833, the last time in November 2016 after they were dismantled.
In order to prevent a global recession, most central banks have announced measures worth USD 1 trillion. The US Federal Reserve, the European Central Bank and the Bank of England have launched programs to buy bonds, lower interest rates and use currency swaps to turn the crisis around.
Some skeptics say that these measures have helped to improve sentiment, but it is not possible to say with certainty that the markets have bottomed out.
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The latest recovery came after markets experienced a continuous 30% decline. After such a decline, markets tend to recover in the coming sessions. However, there may be another sale after this correction, said Deeepak Jasani, head of retail research at HDFC Securities.
In the course of the next two quarters, profit development weakened and global risk appetite declined. As a result, investors at higher levels may move to higher valuation levels and decide to reduce their interests, Jasani added.
Many experts have expressed concern about the spread of the coronavirus in India and its possible economic consequences. Concerns were also expressed as to whether India’s stagnant public health infrastructure could cope with the increase in coronavirus cases. On Thursday, Prime Minister Maudie called on citizens to stay at home to protect themselves against a virus that is spreading rapidly.
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Friday’s meeting was synchronised with the Asian and European markets and looked more like a technically motivated rescue meeting than a fundamental change in predictions, said Vinod Nair, research director at Geojit Financial Services. India’s VIX index, which measures market volatility, fell by 7% to 67, a level still considered high.
Despite the rally, 587 shares reached their lowest level in 52 weeks and 351 were blocked at the bottom of the track on Thursday. The size of the market was slightly positive: The total number of outstanding shares was 1,426, while BSE accounted for 1,031 of the outstanding shares.
All but two Sensex components ended the session with a victory. CGSB was the most efficient company of Sensex and grew by 18% thanks to the recovery of oil prices. The Reliance Industries Heavyweight Index rose by 11%. Nearly 12 Sensex components are combined with 8% or more. The two maturing shares were HDFC Bank and IndusInd Bank, which closed the meeting with a loss of respectively 1.4% and 0.9%. However, both stocks have risen sharply from their lowest intraday levels.
All the BSE industry indices ended the meetings with a victory. Energy reserves and oil and gas reserves grew the most, with increases of 10% and 9% respectively. So far, foreign investors almost have Rs. 50,000 of the shares in March and reduced the Sensex by 22%. This is the worst month in history when it comes to international flows.
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