The stock markets on Tuesday (August 4, 2020) climbed back to near 11,100 points on the Nifty snapping four straight days of losses and saw 770 point spike on the Sensex. Here's what worked in the favour today. The broader markets together with Nifty Bank was up in trade by 1.6% at the time of publishing this story.
1. RBI’s approval of new CEO for HDFC Bank, RIL's rally of the same scale
The stock of HDFC Bank is the heavyweight and surge by a bounty 5.7% is enough the spur the overall market trajectory. The stock hit a day's high price of Rs. 1059.9 per share on the BSE. This is after the RBI approved of the approved the appointment of Sashidhar Jagdishan as Managing Director & CEO of the bank for a period of three years. The appointment will come into effect from October 27, 2020. Meanwhile the meeting of the bank's board will be organized for approving the incumbent's appointment replacing Aditya Puri.
On the movement, the entire HDFC pack including HDFC and HDFC Life is up in trade today.
RIL stock settled higher by a huge 7% on Netmeds deal report. Read here further on it. Also, further progress in deal with Future Retail is fuelling the conglomerate's stock price.
2. Positive global cues
Globally a host of positive sound is echoing first with the China's manufacturing activity that came in better. Also, US has reported better in fact manufacturing activity at its 1.5 year high. Also there was witnessed again a boost in tech stocks in the US which instill positive sentiment.
And in the latest The JP Morgan Global Manufacturing purchasing managers index (PMI) which provides for global manufacturing situation the index has slipped to the expansion zone.
Nonetheless, at the time of writing the report, European markets were trading in the red, with German DAX down 0.61%.
Asian stocks however maintained their upward momentum as nations like Australia maintained
3. Coronavirus vaccine hopes:
Serum Institute of India has been given the go-ahead for performing late stage Phase 2 and Phase 3 human trial for the Oxford vaccine candidate. This is thus an addition where two other candidates one each from Cadila Healthcare and Bharat Biotech are conducting Phase I and Phase II of human trials.
Though there remains a negative viewpoint as well wherein WHO on Monday remarked that there shall never a silver bullet for Covid 19 and the path to normalcy shall be longer.
4. Hopes on additional measures in Thursday's MPC Outcome is fuelling market sentiment
The market given the conundrum due to Covid 19 is hoping for additional stimulus to support the economy. There is a view that MPC can still go for rate cut this time by another 25 bps and overlook the inflation which recently came in higher than the RBI's target levels.
"We expect the MPC to cut rates by 25bps. This is because: a) Growth remains weak, India's unlocking is slow and RBI's own prognosis indicates rising asset quality stress. Thus, growth revival should be policy priority, as is the case around the world. b) Headline inflation, while currently above RBI's projected trajectory, has probably peaked out.
It should move towards 4 percent or below by December 2020. Also, RBI should look through the temporary spike in inflation as it is being driven by COVID-19-related supply disruption rather than strong pricing power/wages (which are actually worsening)," Edelweiss said.
Any additional monetary measures (operation twist, etc.) and regulatory policies for the financial sector would be keenly watched, the brokerage feels.
5. Value Buying:
As Nifty in the past 4 days has lost a staggering 400 points there is seen buying in some of the heavyweights that is pushing the indices higher.
Gains On Auto Index helped
The good sales number with likely recovery anticipated from July numbers from different auto companies also kept the sentiment higher. Stocks like Maruti, HeroMoto were all up by up to 3%