India’s stock markets have recouped all their budget-led losses, and then some. On Tuesday, the 30-share benchmark Sensex and the 50-scrip Nifty surged 2.3% each. Both the indices had made meagre gains on Monday, after Saturday’s Union budget prompted a sell-off. Tuesday’s gains were driven by a variety of global and domestic factors.
Indian stocks, buoyed by nascent signs of a manufacturing revival, joined a China-led Asian rally after Beijing welcomed assistance from the US to contain the spread of the deadly coronavirus, which had earlier battered Chinese equities. Back home, inflation worries may have receded, as the virus scare could hit air travel and depress global oil prices that tend to influence our local price trends. Cheaper crude imports would also help narrow the current account deficit. This should make the central bank’s job easier. Retail inflation had risen to 7.35% in December, and if its volatile elements such as fuel and food show moderation, the central bank’s efforts to ease credit need not get thwarted. Interest rates need to stay low to aid an incipient growth uptick, and that looks likelier than before.