About three shares advanced for every two shares declining on the BSE, while in the Nifty, 41 stocks gained against nine declining.
The recovery that started in the late trade in the previous session continued February 19 as benchmark indices and broader markets gained a percent each amid volatility. The short-covering could be one of the reasons for the day’s rally.
The BSE Sensex climbed 429 points to 41,323 and the Nifty rose 133 points to 12,125.90. The BSE Midcap and Smallcap indices rallied 1.34 percent and 1.41 percent up, respectively, as the breadth was in the favour of the bulls.
About three shares advanced for every two shares that declined on the BSE. In the Nifty, 41 stocks gained against nine declining.
Bharti Infratel, Grasim Industries, Zee Entertainment, Coal India, HUL, Reliance Industries and Bajaj Finance were top gainers among Nifty stocks, with 2-6 percent rally. Tata Motors and Sun Pharma were the biggest losers with a loss of 1-2 percent.
Here are the five factors that lifted market sentiment:
Receding coronavirus impact
Businesses in China, the world's second-largest economy, have been forced to shut down manufacturing plants and stop services since mid-January when coronavirus cases exploded.
Mounting death toll and infections in the country have fuelled concerns for the Chinese as well as the world economy.
Now, after almost a month of extended deadlock, several factories in China have resumed work, which could be after the announcement of cost-cutting measures for businesses but it will be closely monitored as the outbreak is far from over.
More than 80 percent of state-owned enterprises' roughly 20,000 manufacturing subsidiaries have resumed work, CNBC quoted Chinese state media as saying.
In a release on February 18, the Chinese foreign ministry announced that all medium, small and micro-sized businesses will not need to make contributions to employees’ old-age pension, unemployment and workplace safety insurance plans from February to June. Larger companies will only need to pay half from February to April, the release said.
Around 2,000 people have died and more than 74,000 infected in China by the virus that causes respiratory distress.
Asian markets cheered the news of the reopening of factories in China.
Japan's Nikkei was up 0.9 percent and Hong Kong's Hang Seng gained 0.4 percent, but China's Shanghai Composite was trading 0.4 percent lower at the time of writing of this copy.
European markets also traded higher as investors continued to monitor the spread of the virus and fresh economic data. France's CAC, Germany's DAX and Britain's FTSE were up 0.3-0.5 percent.
Rally in pharma, metals and other stocks
Metals stocks rallied, with the Nifty Metal index rising nearly 2 percent, especially after the factories in China resumed work.
Pharma was the biggest gainer among sectoral indices, rising 2 percent after Aurobindo Pharma received Establishment Inspection Report with ‘Voluntary Action Indicated’ status for its Unit-IV. The stock gained 19 percent, followed by Cipla, Cadila Healthcare, Biocon, Glenmark and Dr Reddy's Labs that rose 1-2.5 percent.
Among others, the Nifty Bank index gained 0.6 percent and FMCG climbed 1.4 percent, whereas auto remained under pressure, falling 0.2 percent.
Cabinet’s boost to the rural sector
With an aim at boosting farmer’s income, the Union Cabinet today approved Rs 4,460 crore for dairy farming and also approved changes to the crop insurance scheme.
The Cabinet also decided to raise the benefit under the interest subvention scheme from 2 percent to 2.5 percent.
Finally, the Nifty formed a small bullish candle on daily charts after the bearish candle chart formation in the previous four sessions, but there was a lot of volatility at higher levels.
Overall, the index remained rangebound and 12,200 continued to be stiff resistance, while 11,900 has been acting as major support, experts say.
"12,150-12,200 is likely to act as a stiff resistance, considering the monthly as well as weekly expiry data. If it crosses 12,200 decisively, then there could be huge short covering with a target of 12,300-12,400, but I expect expiry to face some supply pressure at 12,200 levels," Rajesh Palviya, Head–Technical & Derivatives Research, Axis Securities, told Moneycontrol.Even 12,200 Put writers are still intact with their positions, which indicated that 12,200 is likely to act as stiff resistance, he said.
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