Sensex, Nifty enjoy stimulus boost; details eyed
Photo Credit: Reuters

A surge in banking stocks helped Indian shares settle higher on Wednesday after the government unveiled Rs 20 trillion ($266 billion) in stimulus measures to support a coronavirus-hit economy.

India's Finance Minister, Nirmala Sitharaman, will provide details on the stimulus package later on Wednesday, at 1600 local time (1030 GMT).

The package, announced by Prime Minister Narendra Modi on Tuesday evening, is equivalent to roughly 10% of India's gross domestic product (GDP) and is expected to benefit small and medium businesses, workers and industries.

The NSE Nifty 50 index settled 2.03% higher at 9,383.55, while the S&P BSE Sensex also closed up 2.03% at 32,008.61.

Banking stocks gained the most, and the Nifty banking index soared 4.2%. HDFC Bank Ltd and ICICI Bank Ltd were the two biggest boosts to the Nifty 50. State-run Canara Bank Ltd surged 12.8%.

The country's banks, which have already booked billions of rupees in provisions to cover future pandemic-related loan losses, are expected to get some relief should the stimulus package include credit guarantees to businesses, analysts said.

Economists said a part of the economic stimulus package was already being implemented through the Reserve Bank of India's (RBI) liquidity measures, along with the $22.6 billion package that was announced in March.

The remainder of the Rs 20 trillion package could make up more than 5% of the country's GDP, analysts at Jefferies India said, calling the scale of the package "impressive".

There will be items such as expenditure re-allocations, credit-guarantee schemes and possibly more measures from the RBI, they predicted.

India has been under a weeks-long lockdown to curb the spread of the novel coronavirus, which had as of Wednesday, infected over 74,000 people, causing more than 2,400 deaths.

Among individual stocks, Maruti Suzuki India trimmed gains sharply after a 28% slide in March-quarter profit. Shares closed up 1%.

The Nifty pharma index, the only sectoral index to see gains this year, closed down 1% even as most other sectoral indexes rose.

Shares in drugmaker Jubilant Life Sciences Ltd jumped 5% after the company signed a licensing deal with US-based Gilead Sciences to manufacture Covid-19 treatment remdesivir.

Meanwhile, fears of a second wave of coronavirus infections drove global stocks and oil prices lower on Wednesday.

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