Sensex, Nifty rise on U.S. Fed's move to boost liquiditySensex, Nifty rise on U.S. Fed's move to boost liquidity
People walk past the Bombay Stock Exchange building in Mumbai

By Chandini Monnappa

BENGALURU (Reuters) – Indian shares rose on Tuesday, joining a global rally, after the U.S. Federal Reserve’s corporate bond buying programme boosted hopes of liquidity in domestic markets and outweighed concerns about another round of lockdowns in the face of rising COVID-19 cases.

The Nifty rose 2.03% to 10,011 by 0520 GMT, while the Sensex was up 2.02% at 33,900.64.

The Fed said it would start purchasing a diversified range of investment grade U.S. corporate bonds on Tuesday in a bid to secure companies’ access to cash and ensure credit market liquidity amid the COVID-19 pandemic.

The Fed’s announcement helped MSCI’s broadest index of Asia-Pacific shares outside Japan gain over 2%, while U.S. stock futures, the S&P 500 e-minis, were up nearly a percent.

In Mumbai trading, the Nifty banking index and the financial index jumped as much as 3.65% and 3.76%, respectively.

Global liquidity, driven mainly by stimulus in the United States and Europe, has propelled buying from foreign institutional investors in Indian markets, analysts said.

“Domestically things are not great right now but there is a possibility of the gush of liquidity continuing because of the Fed move,” said Neeraj Dewan, director at Quantum Securities in New Delhi.

India has been struggling to contain the coronavirus pandemic, with the country’s capital fast running out of hospital beds.

The number of COVID-19 cases surged well past 343,000 and deaths were over 9,900 as of Tuesday.

Meanwhile, a rebound in oil prices amid signs of improving demand and declining production also helped Tuesday’s positive momentum.

Shares of oil-to-telecoms conglomerate, Reliance Industries Ltd jumped 2.11% to hit a fresh record high. The country’s most valuable company in the recent weeks has been in the spotlight for raking up investments for its Jio Platforms.

Among losers, shares of Tata Motors Ltd slipped nearly 5% after it forecast a weak first quarter.

(Reporting by Chandini Monnappa in Bengaluru; Editing by Anil D’Silva)