Mumbai, It was a roller-coaster ride for the Indian stock indices — S&P BSE Sensex and NSE Nifty50 — which hit the lower circuit limit early on Friday only to make the biggest ever intra-day recovery till date.
The Indian indices opened on a negative note in line with other global markets. Soon afterwards, trade on both the indices was halted for 45 minutes as their respective lower circuit limits were reached.
Incidentally, the Nifty hit its lower circuit after 12 years. The ‘Fear Index’ or India ‘VIX’ logged one of the steepest single day jump to 59.48, which is the highest level in the last 11 years since 2009.
However, a massive bout of value buying along with hopes of a US and domestic stimulus package on the back of the coronavirus outbreak and assurances by the regulators Sebi and RBI led to the biggest ever intra-day recovery till date in the Indian stock markets.
On Friday, the S&P BSE Sensex swung over 5,300 points between intra-day high and low points to end with gains of 1,325.34 points or 4.04 per cent at 34,103.48 points.
Similarly, NSE Nifty50 swung over 1,600 points from intra-day lows to high and ended the day’s trade with gains of 365.05 points or 3.81 per cent at 9,955.20 points.
Besides, the broader markets too recovered. All the sectors managed to close in green except media, with the sharpest recovery seen in PSU Banks which was up 11.7 per cent.
“Indian markets witnessed a sharp recovery from lows on Friday when the intra-day range was very wide. Indian markets opened down in the morning following weak US markets overnight and negative Asian markets on Friday morning, reportedly spurred by FPI basket selling,” said Deepak Jasani, Head of Retail Research, HDFC Securities.
“It later bounced following a recovery in Dow Futures in late morning. The rout in global shares eased on Friday, as central banks launched new liquidity measures to stem another punishing week of selling prompted by the coronavirus outbreak and on hopes that a US stimulus package could help limit the economic damage from the coronavirus outbreak,” he said.
Lately, massive wealth has been eroded as the markets have plummeted on the back of FPIs continuously selling for over the past two weeks.
Since February 24 or 14 trade sessions, FIIs have pulled out funds worth Rs 41,702.58 crore.
“Sharp recovery in global markets on hopes that the US is considering economic stimulus helped the domestic market to bounce back from losses with index heavyweights contributing to the gains,” said Vinod Nair, Head of Research at Geojit Financial Services.
According to Siddhartha Khemka, Head, Retail Research, Motilal Oswal Financial Services: “Buying from DIIs, bargain hunting from long term portfolio investors, some hope of recovery from other global indices, appreciation in USD/INR from its historical levels and short covering in many beaten down oversold stocks lifted the sentiments, which helped Nifty to recover by more than 1,500 points from lower levels.
“The markets would take a while to recover from this significant price damage. While volatility may continue in the coming days, we could see intermittent relief rallies. However, these are likely to be short-lived. Markets may not recover in a hurry and any bounce in the market could be sold into.”
Additionally, the Indian rupee strengthened to 73.9250 per US dollar from Thursday’s close of 74.22.
“Rupee closed higher at 73.90 on the back of RBI’s strong intervention in the morning and Nifty recovering later in the day,” said Sajal Gupta, Head, Forex and Rates, Edelweiss Securities.
“Expect rupee to trade stronger on healthy performance of global equity markets,” Gupta added.
