Covid vaccine approval brings relief, Sensex bounces back 1.38%

After the sell-off on Monday, stock markets on Tuesday pulled back partially on short-covering and firm Asian markets. Despite weak macro numbers, the benchmark Sensex, which plunged 1,708 points on Monday, bounced back by 661 points, or 1.38 per cent, to 48,544.06 and the Nifty50 gained 194 points, or 1.36 per cent, to 14,504.80 on buying support.

Among sectors, the losers of the previous day — PSU banks, auto, metals, realty and media — gained the most, while IT and pharma lost the most. The India Volatility Index (VIX) fell 11 per cent to end at 20.46.

The sentiment got a boost following reports about the fast-tracked emergency approvals for foreign-produced Covid-19 vaccines. Reports about a fall in incremental Covid cases and higher recoveries further stabilised the sentiment. However, analysts expect volatility to continue until there is clarity over the lockdown situation and vaccine availability.

The sharp recovery certainly seems enticing, but still we advise not to get carried away as we may not be out of the woods,” he said. “Markets attempted to pull back from yesterday’s selloff, but it wasn’t that enthusiastic. IT sector broke the trend due to profit booking as initial Q4 results were in line with expectations not providing enough leeway to a highly valued sector,” said Vinod Nair, head of research at Geojit Financial Services.

The S&P 500 hit a record high on Tuesday and the Nasdaq jumped as investors flocked to technology-related stocks after the United States’ pause in the rollout of Johnson & Johnson’s Covid vaccine sparked fears of a delay in a broader economic rebound, as per a Reuters report.

At 11:56 a.m. EDT the Dow Jones Industrial Average fell 120.21 points, or 0.36 per cent , to 33,625.19, the S&P 500 gained 4.79 points, or 0.12 per cent, to 4,132.78.

Oil prices rose about 1 per cent on Tuesday on strong Chinese import data, but the rally was capped by concerns over J&J vaccine.

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