Sensex posts biggest jump since March 30, gains 2% to close at 50,540

India's m-cap on brink of $3 trillion mark as benchmark delivers best weekly show since Feb 5

The benchmark Sensex on Friday posted its biggest single-day gain since March 30, propelling India’s market capitalisation (m-cap) towards the $3-trillion mark.

The index closed at 50,540, with a gain of nearly 2 per cent, or 976 points, to cap its best week since February 5, amid strong global cues, following better-than-expected economic data and earnings. The Sensex is now just 3 per cent below its all-time high made on February 15.

A rally in the broader market has lifted the m-cap of all companies listed on the BSE to a record high of Rs 218 trillion, or $2.99 trillion. The conversion rate being Rs 72.83.

Friday’s surge was underpinned mainly by gains in the banking stocks, which have a significant weight on the Sensex and Nifty indices. 

The improvement in asset quality at State Bank of India (SBI) propped up sentiment towards the banking pack, with the Bank Nifty index surging nearly 4 per cent. The Nifty50 rose 1.8 per cent to close at 15,175.

The share price of SBI rose 4.3 per cent and was the second best performing stock on the Sensex after HDFC Bank, which rose 4.5 per cent. 

The top six contributors were all banking stocks and accounted for 70 per cent of the Sensex gains.

The steady decline in new daily coronavirus infections in the country this week and favourable global cues have seen the domestic markets jump nearly 4 per cent during the week.

The decrease in the number of cases has made investors hopeful that the worst of the second wave is behind us, and the restrictions imposed by states may soon start easing.

Hopes of a fresh stimulus and the transfer of surplus of Rs 99,122 crore by the Reserve Bank of India to the Union government also lifted sentiment, said experts.

India reported 259,000 new Covid cases in the last 24 hours, taking its tally to 26 million. India has been reporting under 300,000 daily cases over the previous four days. Mumbai's positivity rate dropped to 4.84 per cent - the lowest in over two months.

"The fall in Covid cases improves the visibility for future recovery. Everyone is acknowledging that the June quarter results will not be as good because of the lockdown. But the hope is that if cases keep coming down, it is a matter of time before we get back to normal. Everyone thinks the current lockdown is a temporary aberration and in four to eight weeks, the economy will bounce back,' said Jyotivardhan Jaipuria, founder, Valentis Advisors.

Most global markets rallied on Friday after a drop in the US initial jobless claims shifted investor focus back on prospects for a global economic recovery.

In the previous two sessions, the markets had seen a fall amid fears of inflation and the minutes of the Federal Reserve's meeting in April raising the possibility of tapering stimulus measures.

The March quarter earnings in India, which did not spring any negative surprise, has also enthused investors. Moreover, the management commentaries of companies and their outlook have been largely optimistic, despite the lockdowns affecting broad swathes of the economy.

Foreign investors bought shares worth Rs 510 crore, while domestic investors made purchases worth Rs 650 crore.

Investors are also hoping that vaccine shortages will be resolved in some months as vaccine manufacturers ramp up supplies. The entry of new vaccines is also expected to iron out supply kinks.

“The Indian market has started to outperform the development market, which is expected to continue due to a fall in Covid cases. High cases were the reason behind India's underperformance. The rupee has started to appreciate. The entry of new vaccines and a steady decline in new cases are factors boosting investor confidence in the market,” said Vinod Nair, head of research, Geojit Financial Services.

Overall, 327 stocks hit their 52-week highs, and 440 were locked in the upper circuit on the BSE. The market breadth was positive, with 1,952 stocks advancing and 1,167 declining.