Sensex Recovers 1,400 Points as Dalal Street Cheers Fed Reserve Surprise Amid Coronavirus Gloom

Mumbai: Equity benchmark Sensex recovered over 1,400 points in opening session on Tuesday tracking gains in Asian peers after US Federal Reserve announced limitless bond-buying programme to support the US economy.

Investor sentiment in Asia improved in anticipation of a revival in demand from the economic giant, traders said.

After rallying 1,481.63 points, the BSE barometer gave up some gains to trade 443.27 points or 1.71 per cent higher at 26,424.51.

Similarly, the NSE Nifty was trading 165.55 points, or 2.18 per cent, up at 7,775.80. Top losers in the Sensex pack included IndusInd Bank, Titan, L&T, Tata Steel, Asian Paint and ICICI Bank, while HCL Tech, HUL, Infosys and Tech Mahindra were the gainers.

In the previous session, the BSE benchmark plummeted 3,935 points or 13. 15 per cent to close at 25,981.24, while the NSE barometer Nifty cracked 1,135.20 points or 12.98 per cent to settle at 7,610.25.

According to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the US Fed is now leading from the front with its historic package which includes open-ended purchase of securities, direct loans to companies, purchase of corporate bonds, lending against student loans and credit card loans.

The Federal Reserve announced it will buy unlimited amounts of US Treasury debt -- essentially printing money for the economy -- as well as new steps to lend directly to small- and medium-sized companies that have been among the hardest-hit as economic activity dries up.

This comprehensive package for the Wall Street and the main street is unprecedented and gives the message that the world's largest central bank will do whatever it takes to mitigate the economic crisis.

Other central banks can be expected to follow suit with bold measures to ease the severely strained credit and financial markets, he said.

A major package from the government of India and the Reserve Bank can be expected shortly, he stated, adding that the market is likely to remain hugely volatile with rising possibility of V shaped recovery occasionally.

However, the calamity facing humanity is enormous," he said.

As per traders, extreme lockdown measures taken by the government of India and authorities across the world has put immense pressure in investor sentiment.

Bourses in Shanghai, Hong Kong, Tokyo and Seoul rallied up to 7 per cent.

Stocks on Wall Street, however, ended with losses after Fed announcement.

Incessant foreign fund outflow also kept domestic market participants risk-averse, traders said.

On a net basis, foreign institutional investors sold equities worth Rs 2,989.29 crore on Monday, data available with stock exchanges showed.

Meanwhile, the rupee appreciated 15 paise against the US dollar to 76.05 (intra-day).

Global crude benchmark, Brent crude futures rose 2.96 per cent to USD 27.83 per barrel.

Other Asian markets also surged while the dollar sank after the Federal Reserve unveiled an unprecedented bond-buying programme to support the US economy.

While most of the planet goes into lockdown, traders gave a massive thumbs up to the US central bank's pledge to essentially print cash in a move not seen since the global financial crisis more than a decade ago.

The Fed, which has already slashed interest rates to record lows, said it will buy unlimited amounts of Treasury debt and take steps to lend directly to small- and medium-sized firms hammered by a lockdown across the country.

The plan failed to inspire US traders, with all three main indexes on Wall Street sliding, but equities in Asia flew out of the blocks with Tokyo ending the morning 6.7 percent higher.

The Nikkei was given extra lift by a Bank of Japan decision to embark on its own massive bond-buying scheme.

Seoul was up more than six percent, Hong Kong and Singapore each rose more than four percent, and Wellington and Taipei surged more than five percent apiece.

Sydney gained three percent, while Shanghai, Jakarta and Manila were up more than one percent.

AxiCorp's Stephen Innes said the region was waking up to "the most significant monetary experiment in the history of financial markets".

"Asian investors like what they see from an all-in Fed, which is being viewed in a very impressive light for both Main and Wall Street, even as the US congress dithers," he added.

And Edward Moya at OANDA called the announcement "a game changer".