The benchmark indices posted their biggest single-day gains in nearly seven weeks, amid supportive global markets and sharp gains in index heavyweights Reliance Industries (RIL) and HDFC Bank. Ending its four-day losing streak, the Sensex surged 748 points, or 2.03 per cent, to end at 37,688.
Recouping all the losses made in the previous session, the Nifty50 index rose 211.25 points, or 1.94 per cent, to end at 11,102. Both the indices gained the most since June 18. More than three-fourths of the index gains, however, came from RIL and HDFC Bank. Shares of RIL jumped 7.1 per cent — the most since April 22 — on the buzz that the company is close to acquiring the retail business of Future Group.
HDFC Bank rose 3.94 per cent after the RBI approved Sashidhar Jagdishan’s appointment as managing director and chief executive officer. RIL made a 422-point contribution to Sensex gains, while HDFC Bank contributed 156 points. 19 of the 30 Sensex components ended with gains. Tech Mahindra, IndusInd Bank, and HCL Tech were the biggest Sensex losers.
In the previous four sessions, the Sensex and the Nifty shed more than 4 per cent.
Most Asian markets ended with gains, with the MSCI Asia ex-Japan index rising nearly 1.5 per cent. Global markets rose on the back of positive US manufacturing data and gains in technology stocks in the US helped neutralise investor worries about Covid-19 and the global economy. US manufacturing activity expanded at the fastest pace in more than a year in July. The Nasdaq surged to record highs on Monday amid news of Microsoft’s plans to buy TikTok’s US operations.
Resumption of talks between the Democrats and the Trump administration to bring out a coronavirus relief bill also boosted sentiment. News reports said the White House is exploring whether President Donald Trump can act on his own to extend enhanced unemployment benefits.
“In the future, the markets will see a stop-start recovery. We will see a pattern of unlocking and freeze until a vaccine is found. Progress in finding a vaccine and monetary stimulus will continue to drive markets,” said Saurabh Mukherjea, founder, Marcellus Investments.
Investors, however, remain cautious because of worries over a resurgence of Covid-19 and simmering US-China tensions.
“We believe Indian markets would continue to take cues from global peers and the upcoming RBI policy would the next major trigger. At the same time, as more companies would announce their Q1FY21 earnings, stock-specific action would continue to induce high volatility,” said Ajit Mishra, vice-president-research, Religare Broking.