A rise in beaten down banking stocks helped Indian shares rebound on Wednesday as markets awaited stimulus measures to support the coronavirus-hit economy, but losses in oil refiners and ITC capped gains.
The NSE Nifty 50 index was up 1.3 per cent to 9,324.70 by 11 am, while the S&P BSE Sensex traded 1.48 per cent higher at 31,912.76. The Nifty rebounded after roughly falling 7 per cent over the last two sessions.
The Nifty bank index, which had fallen 10% over the last two sessions, climbed 1.5 per cent, with India’s top private-sector lender HDFC Bank Ltd rising 2.5 per cent.
Globally, Asian shares struggled and the yen gained, with markets in China faltering on their return from a long holiday as investors fretted over Sino-US tensions.
Analysts expect domestic markets to remain volatile until further catalysts, such as an expected fiscal stimulus to combat the economic fallout of the coronavirus pandemic, which has left many businesses and workers facing a loss in income.
“We will be taking cues from both global markets and what’s expected in terms of the (stimulus) package,” said Mayuresh Joshi, head of equity research for India at William O’Neil & Co in Mumbai. “Both these factors will keep markets at tenterhooks. Volatility is the name of the game.”
India’s chief economic adviser K.V. Subramanian told the Economic Times newspaper in an interview that a stimulus was expected “soon”, but cautioned against demands for government support similar to that provided by other nations, as the cost would be too high.
The timing or nature of further fiscal stimulus from India remains uncertain, but Reuters reported last week that India was likely to cap its overall spending on coronavirus-related relief at around 4.5 trillion rupees ($60 billion).
India late on Tuesday increased its taxes and duties on petrol and diesel, a move analysts say will raise costs for oil refining companies. Bharat Petroleum Corp Ltd fell 4.3 per cent, while Indian Oil Corp shed 3.5 per cent.
Shares in consumer goods conglomerate ITC Ltd and lender Axis Bank Ltd fell 6 per cent and 3.8 per cent, respectively, as the Economic Times reported that India’s government was planning to sell its stakes in the two companies.