Experts point to ‘hope trade’ on the back of expectations that the pandemic will peak in May and subside thereafter
Following a global bull run, the Sensex rallied in early trade for the third consecutive session on Friday by over 400 points, tracking gains in index majors HDFC twins, Reliance Industries and TCS. This, while the pandemic continued to rage across the country, with single day rise in Covid-19 infections topping 4,14,188 and fatalities at 3,915, according to Union Health Ministry data.
The rupee also rose 18 paise to 73.60 against the dollar in early trade.
The 30-share BSE index was trading 416.43 points or 0.85 per cent higher at 49,366.19 in initial deals, while the broader NSE Nifty surged 121.10 points or 0.82 per cent to 14,845.90.
The top gainer in the Sensex pack was IndusInd Bank, which rose over 2 per cent, followed by M&M, NTPC, HDFC Bank, SBI, TCS, Asian Paints and Reliance Industries.
Bajaj Auto, PowerGrid, Bharti Airtel and Nestle India were among the laggards.
In the previous session, Sensex closed higher by 272.21 points or 0.56 per cent at 48,949.76, and Nifty ended with a gain of 106.95 points or 0.73 per cent at 14,724.80.
Foreign institutional investors (FIIs) were net buyers in the capital market as they bought shares worth Rs 1,222.58 crore on Thursday, while domestic institutional investors (DIIs) purchased shares worth Rs 632.51 crore, according to provisional exchange data.
“There is a view among many market experts that the present resilience of the market (down only around 5 per cent from February highs) is irrational when viewed from the perspective of the health crisis and pain that the nation and the economy are going through,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Vijayakumar added, “While there is logic in this view, it is important to appreciate that we are part of the global bull market and the resilience of the Indian market mainly arises from the ‘hope trade’ being fuelled by the expectation that the second wave will peak in May and the economy will quickly rebound.”
Moreover, fourth quarter results have been broadly above expectations. The market may continue to be resilient, he added.
Elsewhere in Asia, bourses in Shanghai, Hong Kong, Tokyo and Seoul were trading on a positive note in mid-session deals, as equities on Wall Street ended with gains in overnight trade.
Brent crude was trading 0.57 per cent higher at USD 68.48 per barrel.