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Positive commentary from the government and some encouraging data from Reserve Bank of India also helped the sentiments on the Street.
The broader NSE Nifty 50 index rose 0.93 percent or 113 points to 12,220.90 and the benchmark S&P BSE Sensex was up 1.01 per cent or 413 points at 41,631.91. Broader market indices were steady. Nifty Smallcap gained 0.12 per cent to 6,198 while Nifty Midcap added 0.05 per cent to 18,241. NIfty 500 jumped 0.70 per cent to 10,057.
Here are factors driving the rally on D-Street:
Virus threat reducing?
Traders took positive cues from the relatively lower number of reported cases of coronavirus in China, which suggested the peak of the threat was near.
New confirmed cases in mainland China at 2,015 on Tuesday fell to their lowest in almost two weeks, the National Health Commission said on Wednesday. New cases in epicentre Hubei province also hit January 31 lows.
Zhong Nanshan, Beijing’s senior medical adviser, told Reuters that the outbreak is hitting a peak in China this month and may end by April, basing the forecast on mathematical modelling, recent events and government action.
“Green shoots visible”
Investors took encouragement from Sanjeev Sanyal’s, principal economic adviser at the finance ministry, statement that Indian economic growth is poised to bounce back as the government has taken measures to prop up investments and consumer demand. He said ‘economic growth was set to accelerate to 6 per cent in the financial year beginning in April’ and rebuffed the coservative estimates by other agencies.
Some support also came with Finance Minister Nirmala Sitharaman’s statement that the government has taken several steps, including tax refund scheme and enhanced credit to exporters, to boost outbound shipments. She also added that green shoots of growth were already visible.
India Inc. offshore investments jump
Adding to the optimism among market participants was the Reserve Bank of India’s (RBI) data that showed investments by Indian firms in foreign countries in January 2020 rose by nearly 40 per cent year-on-year to $2.1 billion.
On a monthly basis, January investments were higher by $1.99 billion than in December 2019, showed the RBI data on ‘Outward Foreign Direct Investment (OFDI)’.
Among the major investors were Bharti Airtel, which pumped in $247.5 million in its wholly-owned subsidiary in Mauritius; Serum Institute of India $226.07 million in the Netherlands and Allcargo Logistics $88.08 million in Belgium.
Global markets buoyant
Asian shares and Wall Street futures nudged higher on Wednesday. MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.31 per cent.
Chinese shares fell 0.12 per cent, but investors in other equity markets looked past this decline. Shares in Hong Kong rose 0.57 per cent to a three-week high. Australian shares were up 0.52 per cent, while Japan’s Nikkei stock index rose 0.6 per cent.
In the overnight trade, S&P 500 and the Nasdaq inched to their second consecutive record closing highs on Tuesday. The S&P 500 gained 5.66 points, or 0.17 per cent, to 3,357.75 and the Nasdaq Composite added 10.55 points, or 0.11 per cent, to 9,638.94.
Inflation, factory output data due today
Traders are also reacting to the expectations for the inflation and factory output data that will come out post market hours. The government will release Consumer Price index (CPI) for January and Index of Industrial Production (IIP) data for December.
The factory output growth is likely to remain flat at 1.8 per cent YoY on a higher base, said Nirmal Bang Securities. CPI inflation for January is seen at 7.32 per cent, broadly unchanged from the previous month. “As per the consensus, inflation is expected to remain elevated confirming the recent action by the central bank,” said Vinod Nair, Head of Research, Geojit Financial Services.
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