By 10 am, the BSE Sensex had jumped over 800 points, with all of its stocks, except Bharti Airtel, trading in the black. The NSE Nifty had topped 14,750. Fear gauge India VIX declined 6.14 percent to 26.41.
Here’s what led to today’s rally:
- US House approves $1.9 trillion stimulus package
- Halt in 10-year US treasury yield
- Recovery in Asian markets following Friday’s selloff
- Next phase of Covid vaccination kicks off
- India reports growth in Q3 GDP
- Global economic data
- Technical rebound
Stimulus package
On Saturday, the US House of Representatives passed a $1.9 trillion coronavirus relief package. Democrats who control the chamber approved the sweeping measure by a mostly party-line vote of 219 to 212 and sent it to the Senate, where Democrats planned a legislative manoeuvre to allow them to pass it without the support of Republicans, agencies reported.
Rally in Asia
Following the development, Asian shares climbed up to 2 per cent as calmness returned to bond markets after last week’s wild ride. The progress in the huge US stimulus package underpinned optimism about the global economy, agencies reported. MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.1 per cent, after shedding 3.7 per cent last Friday. Japan’s Nikkei rallied 2.10 per cent. Hong Kong’s Hang Seng gained 1.03 per cent while China’s Shanghai Composite added 0.5 per cent.
Halt in US bond yields
Yields on US 10-year notes came off to 1.41 per cent, from last week’s peak of 1.61 per cent, though they still ended last week 11 basis points higher and were up 50 basis points on the year so far.
“The bond moves on Friday still feel like a pause for air, rather than the catalyst for a move towards calmer waters,” Rodrigo Catril, a senior strategist at NAB told Reuters.
Next phase of vaccination kicks off
The next phase of the COVID-19 vaccination drive for people above 60 years and those aged 45 and above with comorbidities will begin from March 1 and registration on the Co-WIN2.0 portal opened at 9 am on Monday.
Citizens will be able to register and book an appointment for vaccination, anytime and anywhere, using the Co-WIN 2.0 portal or through other IT applications such as Arogya Setu.
GDP growth
Data released on Friday showed that GDP grew 0.4 per cent in the December quarter compared with a degrowth of 7.3 per cent in the September quarter. Edelweiss Securities noted that the industry moved into the expansion zone (2.7 per cent) led by construction. Though services improved, it still lingered in the contraction zone (minus 1 per cent), reflecting slower opening up.
“On demand front, private consumption and exports contracted 2.4 per cent but investments picked up pace. Larger players (BSE 500) continued to outpace overall economic growth by a wide margin,” it said.
Technical rally
Geojit Financial Services said the index could extend the gains to the 14770-900 region, but a push beyond the same could complete the upside breakout of a flag pattern that the declines from the February peak is seemingly fitting in.
“This would also mean that the 16,000-plus view is back in the radar,” said Geojit Financial Services.
Other reasons
As Reuters noted, China’s official manufacturing PMI out over the weekend missed forecasts, but Japanese figures showed the fastest growth in two years. Investors are also counting on upbeat news from a raft of US data due this week including the February payrolls report. Helping sentiment in Asia was news deliveries of the newly approved Johnson & Johnson COVID-19 vaccine should start on Tuesday.
