Top 3 reasons why Sensex bounced 793 points on Monday

On NSE, the Nifty50 index reclaimed the crucial 11,000 level to close at 11,058, up 229 points, or 2.11 per cent.

Markets witnessed sharp rally on Monday, after the government announced a slew of measures to boost economy post market hours on Friday. The S&P BSE Sensex jumped 793 points, or 2.16 per cent, to settle at 37,494, with YES Bank (up over 6 per cent) being the top gainer. During the trade, Sensex hit a high and low of 37,544.48 and 36,492.65, respectively. On NSE, the Nifty50 index reclaimed the crucial 11,000 level to close at 11,058, up 229 points, or 2.11 per cent.

Volatility index, India VIX, declined 4 per cent to settle at 16.67. 

"The strongest message to the market was that government is concerned about the slowing economy and intends to support the situation with corrective measures. The initial set of actions, though small, has enhanced market’s sentiment and confidence to grab further sops for industries like housing & others," said Vinod Nair, Head of Research, Geojit Financial Services. 

Market will trade in a positive bias awaiting further development regarding additional measures and US–China trade talk, Nair added. 

Here's a look at the three major factors that fuelled nearly 800-point rally in Sensex on Monday:

Hope of US-China trade talk resumption: Investor sentiment got a major boost after US President Donald Trump said he believed China wanted to return to the negotiating table. “China called last night our top trade people and said, ‘let’s get back to the table’, so we’ll be getting back to the table, and I think they want to do something,” Reuters reported quoting Trump as saying on the sidelines of the G7 meeting. READ MORE

Following the statement, global stocks also recovered. European stocks entered in the positive territory while Dow Futures jumped over 200 points, indicating a positive start for the US stocks today.

Trade war fears had worsened over the weekend, after Trump announced a 5 per cent additional duty on $550 billion in targeted Chinese goods, hours after China unveiled retaliatory tariffs on $75 billion worth of US products.

FM's booster dose: Finance Minister Nirmala Sitharaman, in her 'mini Budget' on Friday announced myriad measures to spur growth. The key decisions announced by the FM included the roll-back of higher surcharge on FPIs, up-fronting of Rs 70,000 capital infusion in PSU banks and a nudge to PSU Banks for lower interest rates for the customers, Rs 20,000 additional liquidity for non-banking financial companies (NBFC)/housing finance companies (HFCs), and a set of relief measures for the automobile sector to revive demand and address near-term concerns/uncertainty around BS-VI. READ MORE

Analysts and industry players across-the-board had hailed the move.

PSU banks gain big: Shares of public sector banks (PSU) saw sharp rally in the trade after the government announced that it will infuse Rs 70,000 crore upfront into state-owned banks. The Nifty PSU Bank index jumped over 3.5 per cent to settle at 2,488.45 levels. All the 12 constituents ended in the green. Indian Bank, Central Bank of India and Allahabad Bank rallied 8-12 per cent in the trade.