India Stocks Post Best Day Since ‘09 on Signs of Waning Pandemic

(Bloomberg) -- Indian stocks soared as trading resumed after a holiday, outpacing gains in equities across Asia, on optimism that the deadly coronavirus pandemic may be waning in some key global hot spots.

The benchmark S&P BSE Sensex rose 9%, the most since May 2009, while the NSE Nifty 50 Index advanced by a similar amount. China said it didn’t have any new deaths for the first time since the pandemic emerged, while New York Governor Andrew Cuomo said the virus-related fatality rate was effectively flat for two days.

“We are drawing cues from the global markets where the pace of new cases has reduced and the worst appears to have been factored in,” said Umesh Mehta, head of research at Mumbai-based Samco Securities Ltd. “There is also the possibility of government stimulus for sectors.”

The infection curve has yet to flatten in India, however. A total of 4,778 people in India have been infected with 136 deaths, according to data compiled by John Hopkins University. The nation is also seeing a sharp uptick in infected cases as the administration ramps up daily testing. A lock-down through April 14 was imposed to try prevent transmission of the virus in the world’s second most populous country.

“Market participants are now focusing on the peak of the pandemic even as economic conditions have worsened,” said Chokkalingam G, head of investment advisory at Equinomics Research & Advisory Pvt. in Mumbai. “A three-week lockdown means no business activity for a quarter of a three-month period, which will have a substantial impact on earnings.”

Trading volumes have fallen and volatility remains high with most dealers working from home with limited flexibility. The Nifty index closed at 8792.2 on Tuesday and Abhimanyu Sofat, head of research at IIFL Securities Ltd., said more positive news on the domestic front regarding the virus is needed for the gauge to surge past the 9,000 level.

Sovereign bonds were lower as states ramped up debt supply during the week. The benchmark 10-year bond yield was up 11 basis points to 6.42%. The rupee advanced 0.7% against the dollar.

Bond and currency markets today begin reduced trading hours from between 10 a.m.-2 p.m. in Mumbai until April 17 due to market volatility, the Reserve Bank of India said last week.

Lockdown Stress

The disruption has already beginning to show signs of pain. Lender Bajaj Finance Ltd., said in an analyst call on Monday that the company has lost 47.5 billion rupees ($625 million) in assets under management in the last 10 days, BloombergQuint said in a report. The firm also said that small and medium -sized businesses were under severe strain and asked the central bank to consider further economic relief measures, according to the report.

Companies will start announcing their results for the January-March quarter this month. Kotak Institutional Equities expects a 14% decline in profits for the companies under its coverage with a double-digit drop in net income for sectors like autos and construction material as economic activities suffered in March.

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