1,600 points in 2 days: What triggered the Sensex rally?


Sensex today finished about 600 points higher at 32,200

Indian stock markets posted strong gains for the second day in a row, lifted optimism over reopening economies and a huge EU coronavirus recovery package. The Sensex ended about 600 points higher at 32,200, extending 2-day gains to about 1,600 points. Investors bought beaten-down banking stocks for a second day, while auto and metals gained on broader market optimism. The NSE Nifty 50 index ended up 1.88% at 9,490.
The Nifty banking index, which has fallen over 40% so far this year, ended up 2.5% today, following a 7% surge in the previous session.
HDFC Bank Ltd and Housing Development Finance Corp Ltd ended up 4.6% and 3.4%, respectively. Nifty sub indexes auto and metals rose 3.65% and 2.4%, respectively.

Here is what analysts said on today's market action:

Vinod Nair, Head of Research at Geojit Financial Services.
"Indian markets are banking on continued resumption of economic activities, inspite of still high number of new infections. Further stimulus measures are also expected to boost demand in the economy and help the most impacted sectors to recover. Market is rising on the back of expectations while there has been little change in ground realities."

Shrikant Chouhan, Executive Vice President, Equity Technical Research at Kotak Securities
“A combination of factors such as optimism in global markets and fresh financial packages from developed countries helped Indian markets close on a strong note. Technically, on an immediate basis, the level of 9550/9650 would be a major hurdle for the market and in the short term, markets are approaching towards overbought status. The strategy should be to buy on dips instead of chasing markets at higher levels. Support exists at 9400 and at 9300."
Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel Broking
"Prior to yesterday’s session, we were significantly underperforming our global peers. But finally our markets showed strength and have witnessed a decent catch up move from the key support of 9000. Yesterday’s massive rally was followed by yet another smart day of trade to conclude the May contract at the highest point of the series (on a closing basis).
Nifty has now reached to our immediate target of 9450 - 9500, but the way charts are shaped up, we expect the Nifty to enter a downside gap area of 9532-9731 created on May 04, 2020. On the flipside, 9380 followed by 9250 would now be seen as a sacrosanct support.
As we have just alluded, last two day’s rally is clearly propelled by the banking space and as we all know, whenever the banking conglomerates starts participating in any rally, it is considered to be a robust one. Hence, traders should look to use declines to go long and ideally the stock centric approach would fetch better trading opportunities as well as the higher potential gains."

Manish Hathiramani, Index Trader and Technical Analyst, Deen Dayal Investments
"The markets ended the monthly expiry of May on a positive note, not giving up any of its gains which is a good indication of what lies ahead. Every dip now becomes an opportunity to buy or go long. We should expect levels closer to 9700 during the course of the June expiry. As long as we can stay above the levels of 9000, we are in a medium-term bull market."


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