Markets end two-month lows, helped by Biden’s Covid-19 vaccination target

The Sensex and the Nifty on Friday bounced off their two-month lows, helped by global cues. Most Asian and European markets rose after revised US vaccine targets boosted optimism and revived hopes of global growth.

The Sensex ended the volatile week at 49,009, up 568 points, or 1.17 per cent, while the Nifty added 182 points, or 1.27 per cent, to finish at 14,507. In the previous two sessions, both the indices had tanked more than 3 per cent to end at their lowest level since January 29. Rising Covid-19 infections and setbacks in the vaccination program had raised concerns over the pace of economic recovery.

US President Joe Biden’s commitment to double his vaccination target in the first 100 days of his administration to 200 million doses helped revive investor sentiment.

ALSO READ: Use any market correction to stock up on cyclicals, says Chris Wood

“I know it’s ambitious. Twice our original goal. But no other country in the world has even come close,” Biden said in his first press conference since taking office.

“While the speed of the equity rally may see some moderation in the coming months, an extreme drawdown is unlikely. We believe that markets will continue to be underpinned by the combination of a faster vaccination rollout and strong corporate earnings rebound,” said Hou Wey Fook, Chief Investment Officer, DBS Bank.

Stocks were also boosted by positive comments from the US Federal Reserve Chairman Jerome Powell. He acknowledged the fiscal help from the US Congress and accelerated vaccine distribution. Powell said this has helped in faster-than-expected recovery in the US.

ALSO READ: Improved outlook, vaccine progress lift emerging east Asian bond markets

Experts said the supply chain disruption caused by the Suez Canal blockage was a cause of concern and could weigh on the markets in the coming days. Some reports suggested that the clearance could take weeks. The longer-than-expected closure has disrupted global supply chains with billions of dollars worth of goods waiting to be transported. International oil prices climbed 2 per cent because of the blockage.

Some experts attributed Friday’s gains to technical factors.

“It is a technical bounce. Markets were oversold and due for a bounce. Secondly, global cues helped with major markets rising and India participated in the rally. We believe that the markets will undergo time and price correction. Indices will remain range-bound for the next few months,” Jyotivardhan Jaipuria, Founder Valentis Advisors.

The market breadth turned positive after two days with 1,658 stocks advancing and 1,296 declining on the BSE. Barring four, all Sensex component ended with gains. Bajaj Finserv, Asian Paints and Titan gained the most at over 4 per cent each. All the 19 sectoral indices of the BSE ended with gains led by BSE Metal index which rose 3.5 per cent.

The Sensex has now posted back-to-back weekly losses. From its peak of 52,154, the index is down 6 per cent. Rising bond yields in the US and more lately the resurgence in Covid cases have weighed on the market performance.

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