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Photo: Mint

Markets at 4-month high as virus vaccine hopes drive hope rally

The move in Indian markets was led by upbeat global markets which further strengthened with favourable local cues

The Indian markets traded in sync with global cues while both the benchmark indices ended at four-month high. Global equities were positive following news of encouraging trials of a vaccine being developed for covid-19. The BSE Sensex tested 36000 briefly during the day first time since March. The 30-share index ended at 35,843.70, up 429.25 points or 1.21%. The Nifty closed at 10,551.70, up 121.65 points or 1.17%

Stocks in Asia Pacific following optimism about development of a potential coronavirus vaccine. According to reports, the first of four experimental covid-19 vaccines being tested by Pfizer and its German partner BioNTech showed encouraging results in very early testing of 45 people.

The Hang Seng index in Hong Kong led gains among the region’s major markets, rising 2.85%. Mainland Chinese stocks also saw robust gains on the day, with the Shanghai composite rising 2.13%. South Korea’s Kospi rose 1.36%. Overall, the MSCI Asia ex-Japan index gained 1.94%

The move in Indian markets was led by upbeat global markets which further strengthened with favourable local cues, Ajit Mishra, VP - Research, Religare Broking Ltd said. “We are just mirroring the global markets and indications," he added.

Besides Indian markets have also been on an upmove mostly on optimism that macro economic condition will be recovering after gradual unlocking of the country. However, there are still strict lockdowns in few cities as number of new cases of coronavirus cases are rapidly rising. According to Care Ratings, the restriction on movement of people translates into fall in demand for goods and services and further exacerbates the low-consumption growth syndrome that pervaded for three years now. “Job losses and pay cuts will add to the stickiness in spending even during the festival time. It is assumed that good rural income cannot compensate for this loss of purchasing power which is topped with uncertainty. Also, in this scenario a direct fiscal stimulus has been ruled out for the year. If, however, there is a surprise package, then the forecast could change," it said.

Indian rupee on Thursday hit a three-month high against US dollar tracking the gains in the domestic equity market. The local currency closed at 75.01 against US dollar-a level seen on 27 March, up 0.78% from its previous close of 75.60.

“Positive equity markets and expectation of recovery from potential covid-19 vaccine. Progress on the vaccine front is also supportive for rupee. We expect Rupee may trade positive further and it may test 74.70 to 74.50 levels towards appreciation," Anuj Gupta, Commodities & Currencies Research, Angel Broking said.

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