Indian markets ended lower today but for the week posted strong gains. The Sensex today lost 164 points to settle at 41,141 while the Nifty finished at 12,086. For the week, the Sensex logged gains of over 1,400 points. A week-long rally in global markets despite coronavirus fears, steps taken by RBI in its monetary policy to boost credit growth and soft oil prices helped lift risk sentiment in Indian markets. Many analysts described the yesterday's monetary policy as an extension of the Budget to boost economic growth.
This is reversal of the sharp loss witnessed in Sensex on Saturday's Budget day session when the benchmark index slumped nearly 1,000 points. But the Sensex rebounded over 900 points on Tuesday, recouping the Budget day's loss in just two sessions.
Also, boosting the sentiment on Dalal Street was positive readings from a private survey in that showed that manufacturing and services activity in India accelerated to multi-year highs in January.
Here is what analysts say on the Sensex rally:
Sanjeev Zarbade, VP PCG Research, Kotak Securities
“Global markets posted strong rally during the week including Sensex which rallied 3.6% for the week. Market participants turned optimistic on hopes that coronavirus related damage will be contained and that the FY2021 budget can arrest the domestic economic slowdown. Fall in crude prices was also taken as a positive for the Indian economy."
Vinod Nair, Head of Research at Geojit Financial Services.
"Positive Q3 result, liquidity boost and fiscal support will bring stability in the domestic market during the medium term."
“The RBI positively surprised markets with its unconventional and out of box thinking. It removed a mandatory requirement for banks to set aside cash of 4% for every new loan extended for automobiles, residential housing and loans to micro, small and medium enterprises (MSMEs).Reminiscent of the European Central Bank’s measurers, the RBI also announced LTRO (longer-term repo operations) to spur credit growth in the struggling economy. The RBI will inject up to Rs.1 trillion via one- and three-year long-term repos at the repurchase rate starting February 15. This measures will bring interest rates lower in the economy and immediately spur credit and economic growth."
Ajit Mishra, VP - Research, Religare Broking Ltd.
“The rally in the Indian markets halted today on account of profit taking as concerns regarding coronavirus resurfaced and impacted the global sentiments. While the domestic sentiments are buoyant post an encouraging monetary policy, the threat to the global economic growth due to coronavirus spread may weigh on the sentiments. However, on a positive note, China’s plan to slash tariffs by 50% on some of the US imports indicates towards diffusing trade tensions which could provide support to the markets in the coming days."
Nifty Technicals from Rohit Singre, Senior Technical analyst at LKP Securities
"Nifty has formed a doji candle on daily chart hinting uncertainty in the market any break below 12080 zone we may see more drag down in index. Immediate support for Nifty is coming near 12080-12000 zone and resistance is coming near 12190-12260 zone. The index will show good strength only above 12160 zone."