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Stimulus package revives market sentiment; RBI call to transfer Rs 1.76 lakh cr to govt likely to extend gains

The 30-share Sensex opened over 663 points higher, but global volatility wiped out its gains as the session progressed.

Cheered by the Centre s move to withdraw additional surcharge, or super tax, on foreign portfolio investors (FPIs) and initiate measures to revive the economy, bulls charged back into the ring with renewed fervour, with the benchmark Sensex zooming by 2.16 per cent or 792.96 points to 37,494.12. The bullish sentiment also got a big boost from reports that the US and China will soon resume trade talks despite many failed negotiations in recent months.

Investor wealth, or the market capitalisation of listed companies, jumped Rs 2.42 lakh crore to Rs 140.34 lakh crore in the euphoric rally. Meanwhile the RBI s decision to transfer Rs 1.76 lakh crore pidend and surplus reserves to the government is likely to extend the gains for the markets going forward as it is expected to boost both the investment and consumption arms of the economy.

Finance Minister Nirmala Sitharaman on Friday announced a series of relief measures, including the rollback of super-rich tax on foreign and domestic equity investors, to revive the ailing economy. The NSE Nifty ended 2.11 per cent or 228.50 points higher.

Read | RBI board approves Rs 1.76 lakh crore transfer to govt

Vinod Nair, head of research, Geojit Financial Services, said, The strongest message to the market was that government is concerned about the slowing economy and intends to support the situation with corrective measures. The initial set of actions, though small, has enhanced market s sentiment and confidence to grab further sops for industries like housing and others. Market will trade in a positive bias awaiting further development regarding additional measures and US China trade talk.

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Despite recent steps, macro picture remains volatile

Even as the Sensex at the BSE rose by 793 points or 2.16 per cent on Monday following the Finance Minister s announcement on Friday to rollback the surcharge on FPIs along with other measures aimed to improve liquidity in the market and lift sentiments, the Indian rupee fell sharply and closed lower by 37 paisa against the dollar to hit 72.02 against US dollar. Despite the recent steps, the macroeconomic picture remains volatile given the domestic slowdown and global uncertainty.

The 30-share Sensex opened over 663 points higher, but global volatility wiped out its gains as the session progressed. It swung 1,052 points during the day before settling at 37,494.12. The index, however, made a comeback in the later half tracking news about US-China trade talks resumption. Broader NSE Nifty reclaimed the 11,000-level. During the day, it climbed a peak of 11,070.30 and touched a low of 10,756.55. It finally closed at 11,057.85. Both benchmarks have logged their best single-day gains in over three months, since the return of the Modi government for the second term.

Rupee falls below 72 against dollar

Mumbai: Even as the stock market saw a strong recovery, the rupee on Monday declined by 36 paise to close below the 72 level against the US currency for the first time in nine months. Hit by a flash crash in global currencies due to uncertainty over the trade front, the rupee settled down by 36 paise at 72.02 against the US dollar, the lowest closing level since November 14, 2018.

The Indian currency had fallen to a low of 72.25 in intra-day trade following a flash crash in currencies such as Turkish lira, Chinese yuan and Australian dollar against the US dollar. ENS