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Nifty reclaims 10,000; 4 factors that are driving the sentiment

The S&P BSE Sensex rallied more than 600 points, while the Nifty50 jumped nearly 200 points to trade above 10,000-levels in early trade.

June 16, 2020 / 10:19 AM IST

Indian market started trading with a gap on the upside on June 16 tracking positive trend in other Asian markets.

The S&P BSE Sensex rallied more than 600 points, while the Nifty50 jumped nearly 200 points to trade above 10,000-levels in early trade.

At 09:38 am, the S&P BSE Sensex was up 730 points, or 2.2%, while Nifty rose 214.70 points, or 2.19%.

We have collated four factors that could be fuelling rally on D-Street:

Close

Strong global markets:

After falling more than 1 percent in the previous trading session, India market woke up to positive trend in global markets. All three major U.S. stock indexes reversed losses, and closed in the green.

Australian S&P/ASX 200 futures were up 2.46 percent, while Japan’s Nikkei 225 futures rose 0.36 percent, and Hong Kong’s Hang Seng index futures rose 1.65 percent, said a Reuters report.

US Fed launches Main Street lending program:

The Federal Reserve said on Monday it had opened registration for lenders interested in participating in its Main Street Lending Program, said a Reuters report.

The program, targeted at companies that were in good shape before the pandemic but may now need financing to retain workers and fund operations, will offer up to $600 billion in loans through participating financial institutions to U.S. businesses with up to 15,000 employees or with revenues up to $5 billion.

Oil prices ease as coronavirus infections rise:

Oil prices dipped on Tuesday on jitters that a rise in coronavirus infections around the world could hurt fuel demand, but hopes that production cuts could be extended kept declines in check, said a Reuters report.

Coronavirus cases rose to more than 8 million worldwide by Monday, with infections surging in Latin America, while the United States and China are dealing with fresh outbreaks, said a Reuters report.

Another rate cut on cards:

Wholesale prices in India witnessed a deflation of 3.21 percent in May due to sharp decline in prices of fuel and power even as food articles turned expensive which leaves room for another rate cut by the MPC, suggest experts.

Due to the nationwide lockdown imposed since March 25, the ministry had released truncated WPI inflation data for April, with figures of food, primary articles and fuel and power.

"The extent of the disinflation in the WPI in May 2020 was deeper than we had pencilled in. While the rise in prices of some commodities like crude oil, may arrest the fall in the WPI going ahead, easing food price pressure portend a welcome moderation in retail food inflation," Aditi Nayar, Principal Economist, ICRA Ltd told Moneycontrol.

"The minutes of the MPC's last meeting revealed a considerable degree of alarm from some of its members. Accordingly, we expect the MPC to continue to prioritise alleviating the pain caused by the fall in economic activity, over management of inflation that will almost certainly turn out to be moderate in the near term," she said.

Nayar expects another 25 bps cut in the repo rate, whenever the MPC chooses to meet next. Nevertheless, the efficacy of further repo rate cuts in the current environment remains uncertain.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Moneycontrol News
first published: Jun 16, 2020 09:44 am

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