Sensex falls 260 points; Nifty at 9,050; Axis Bank, HDFC tank as RBI disappoints10 min read . Updated: 22 May 2020, 03:49 PM IST
- India's FY21 GDP growth is expected to be in negative territory, with impulses seen in second half, said RBI governor Shaktikanta Das
- Most Nifty sectoral indices were under pressure. Nifty Bank slipped 2.6% and Nifty Metal lost nearly 2%, while Nifty Auto gained 0.3%
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Indian equity market ended the week on a negative note, largely driven by banks and financial services companies, which were hit as the Reserve Bank of India (RBI) failed to meet expectations, especially that of a loan-restructuring plan.
After two days of gains, domestic equities had opened lower tracking Asian stocks, which fell due to concerns over the long-term impact of the coronavirus pandemic and as fresh US-China trade conflict strengthened the bear grip.
While the Sensex dropped 260.31 points, or 0.8%, to 30,672.59, Nifty 50 settled 67.00 points, or 0.7%, down at 9,039.25.
Amid the losses in the broader market, Infosys surged nearly 3% as the class action lawsuit filed against the firm and some of its employees in the US District Court was dismissed.
Biggest Nifty gainers, laggards
Axis Bank was the worst performer on Nifty 50, losing nearly 6%, followed by HDFC, Bajaj Finserv, Bajaj Finance and ICICI Bank, while Zee Entertainment Enterprises, Mahindra & Mahindra, Cipla, Shree Cement and Infosys gained the most.
What economists say about RBI's rate cut?
Economists believe that the 40 basis points (bps) policy rate cut was more of a signal rather than actual outcomes. As such, short-term rates have already crashed below the policy rate due to surplus liquidity, according to a Mint report.
“It (the rate cut) should ease the cost of credit further. However, in the absence of demand for credit and extreme risk aversion among banks, we remain doubtful about its effectiveness in stimulating growth," said Anagha Deodhar, economist at ICICI Securities.
Asia ends down; Hang Seng falls 5.5%
Major markets in Asia were under pressure amid rising tensions between the US and China after the latter announced plans to impose new security law in Hong Kong, where the key index Hang Seng crashed more than 5%. Japan's Nikkei 225 fell 0.8% and Shanghai Composite index in China tumbled nearly 2%.
Q4 earnings: Alembic Pharma
The pharmaceutical company's consolidated net profit increased to ₹224.6 crore in January-March of FY20 from ₹124 crore in the same period last year. Revenue from operations was at ₹1,207 crore in the said quarter, against ₹927 crore a year ago. Shares of the company were flat at ₹898.35 on the BSE.
Bear stranglehold on bank stocks
Godrej Industries Q4 profit falls sharply
The company's net profit decline to ₹102.1 crore in the March quarter of fiscal 2020 from ₹423.6 crore in the year-ago period. Revenue from operations, however, rose to ₹3,120.7 crore from ₹2,934.2 crore in the same period last year. Earnings before interest tax depreciation and amortisation, or EBITDA, margin was down at 6.8%in Q4, compared to 8.5% year-on-year.
Q4FY20 earnings: Bosch
The engineering and technology company's consolidated net profit was at ₹81 crore in the March quarter, against ₹412 crore in the same period last year, due to a one-time loss of ₹297 crore. The one-time loss on provision is towards the restructuring and asset impairment, the company informed the stock exchanges. Consolidated revenue fell to ₹2,237 crore from ₹2,730 crore a year ago. The company has announced a dividend of ₹105.
SBI's Rajnish Kumar on RBI announcements
The Reserve Bank of India’s (RBI) extension of the ongoing moratorium by another three months will take care of cashflow disruptions for borrowers even in the absence of a one-time debt recast relief, said State Bank of India (SBI) chairman Rajnish Kumar.
Kumar spoke to reporters soon after RBI governor Shaktikanta Das announced a 40-basis point (bps) repo rate cut and several regulatory measures in the wake of the covid-19 pandemic.
Nifty IT gains in a weak market
Expert view: Amar Ambani of YES Securities
"For banks, the extension of moratorium by another three months has two sides. The clarity on asset quality picture of the lenders will now emerge by March 2021 instead of September 2020. There is a risk of moral hazard issue creeping in, as borrowers who have the ability to pay, may even opt for moratorium," said Amar Ambani, senior president and head of research – institutional equities at YES Securities.
"For MFIs and NBFCs catering to bottom of the pyramid customers, the risk of repayment behaviour getting disturbed is higher. On the positive side, the moratorium extension gives more time to customers (professionals, small businesses, MSMEs and Corporates) for recovery in earnings/repayment capacity in an easing lockdown scenario," Ambani said.
BSE SmallCap outperforms
Most BSE MidCap shares in the red
BSE tumbles 9% post Q4 earnings
Shares of BSE declined nearly 9% to ₹395.75 on the NSE as the company reported a net loss of ₹1.94 crore for the March quarter, against a net profit of ₹51.86 crore in the year-ago period.
Global markets down on fresh Hong Kong tensions
Hong Kong led a sell-off across world equities Friday after China introduced proposals to enact a national security law for the city, fanning geopolitical tensions and overshadowing optimism about a further easing of virus lockdowns across Europe and the US. After months of concentrating on the economic impact of the coronavirus, traders' attention flipped back to China-US tensions, already exacerbated by Donald Trump's constant criticism of Beijing's handling of the pandemic.
Lupin receives US FDA approval
The pharmaceutical major has received approval from the US Food and Drug Administration (FDA) for its Trientine Hydrochloride capsules to market the generic equivalent of Syprine capsules of Bausch Health, US LLC. The product will be manufactured at Lupin’s Nagpur (Unit 1) facility in India. Trientine Hydrochloride Capsules are used to treat patients with Wilson's disease
who are intolerant of penicillamine. Shares of Lupin rose a marginal 0.1% to ₹887.00 on the BSE.
Nifty Metal falls led by Hindalco
Indian equities are off day's lows but still under pressure as the announcements made by the Reserve Bank of India (RBI) failed to cheer investors. The Sensex was down 350.56 points, or 1.1%, at 30,582.34, Nifty 50 lost 103.25 points, or 1.1%, at 9,003.00.
Nifty top gainers, losers
Zee Entertainment, Infosys, Asian Paints, Bharti Infratel and BPCL were the top gainers on Nifty 50, while Axis Bank, Bajaj Finance, ICICI Bank, Hindalco and HDFC led the losses.
RBI extends loan moratorium till 31 August
The Reserve Bank of India (RBI) not only allowed another three months of deferment on interest payments but also permitted repayment of the accrued interest in tranches till March 2021.
RBI governor Shaktikanta Das said in view of the extension of the lockdown and continuing disruptions on account of covid-19, the moratorium on loans is being extended by another three months to 31 August. The earlier extension was scheduled to end on 31 May.
SALIC buys 30% stake in Daawat Foods
Saudi Agricultural & Livestock Investment Company (SALIC) has acquired 29.81% stake in Daawat Foods, a subsidiary of LT Foods, through its subsidiary United Farmers Investment Company. Shares of LT Foods fell 1.2% at ₹20.55 on the BSE.
Maruti Suzuki ties up with Cholamandalam Finance
India's largest carmaker, Maruti Suzuki, has partnered with Cholamandalam Investment & Finance, to provide customised auto-financing solutions to retail buyers. The new solution ‘Buy Now Pay Later Offer’ is aimed to provide customers with easy financing options amid the coronavirus-led disruptions. Shares of Maruti Suzuki fell 1.8% to ₹4,957.75 on the BSE, while that of Cholamandalam Investment was down 6.1% to ₹121.95.
Investors disappointed post RBI's staement
The Reserve Bank of India's (RBI) decision to insist a full repayment by March 2021 and absence of a loan-restructuring scheme for the troubled financial services sector disappointed investors, with all bank and non-bank stocks slipping into the red.
Nifty Bank slumps post RBI rate cut
Government bond yields fall 15 bps
Yield on the 10-year government bond fell 15 basis points (bps) after the RBI cut repo rate by 40 basis points in an unscheduled meeting. The yield on the 6.45% of government bond 2029 declined to 5.88% from its previous close of 6.033%.
RBI Governor Shaktikanta Das says
Fiscal, monetary, administrative measures announced by both the government and the Reserve Bank of India (RBI) would create conditions of gradual revival in the second half of fiscal 2021.
RBI Governor Shaktikanta Das says
-Inflation outlook is highly uncertain.
-Indian crude oil prices, metals, industrial costs may remain soft.
-Headline inflation may remain firm in H1FY2021.
-Headline inflation in Q3-Q4 FY21 will fall below the target of 4%.
-FY21 GDP growth estimated to be in negative territory.
RBI Governor Shaktikanta Das says
Private consumption has been the worst-hit due to the coronavirus-led disruptions followed by investment demand, which has nearly halted. However, agriculture and allied sectors have aided growth. India's merchandise exports suffered their biggest loss in April.
RBI cuts repo rate to 4%
The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) has lowered the repo rate by 40 basis points (bps) to 4%, governor Shaktikanta Das said. The MPC, which met during 20-22 May without an unscheduled meeting, will maintain an accommodative stance till growth revives. The reverse repo rate has been reduced to 3.35% from 3.75%.
US class action lawsuit against Infosys dismissed
IT services provider, Infosys, said a class action lawsuit filed against the company and some of its employees in the United States District Court has been dismissed. The complaint, which was filed in the Eastern District of New York, was brought on behalf of a class consisting of persons or entities who purchased the firm's publicly traded securities between 7 July, 2018 and 20 October, 2019, and alleged claims for violations of the US federal securities laws. On 21 May, 2020, the plaintiff voluntarily dismissed the lawsuit without prejudice, Infosys informed the stock exchanges.
Nifty sectoral indices choppy
Sensex stocks mixed
Cylcone Amphan hits Bandhan Bank
Shares of the Kolkata-based private lender tumbled 2.4% to ₹205.70 on the BSE as the bank said cyclone Amphan has affected its loans to the tune of ₹260 crore disbursed to 65,000 micro borrowers. The bank said it expects the Amphan-affected portfolio to regularise by the December quarter of fiscal 2021.
InterGlobe Aviation rises about 2%
The stock of InterGlobe Aviation gained nearly 2% to ₹996.45 on the BSE as the company, which owns and operates IndiGo, said it will resume domestic flights from 25 May , in a phased manner, as per government directives. It will operate 97 Kerala reparation flights to West Asia.
RIL jumps on KKR investment
Shares of Reliance Industries rose as much as 3% in opening deals as the company said private-equity firm, KKR Co & Inc, will invest ₹11,367 crore to buy 2.32% stake in Jio Platforms, the digital subsidiary of the Mukesh Ambani-led company. This is fifth such announcement by the firm in a month as part of its plan to become a debt-free by the end of calendar 2020.
Indian equity market opened in the red, tracking key Asian stocks that declined amid concerns over the long-term impact of the coronavirus pandemic and fresh trade tensions between the China and the US. Auto and metal stocks weighed on domestic indices.
While the benchmark Sensex fell 253.50 points, or 0.8%, to 30,679.40, the Nifty 50 index lost 80.85 points, or 0.9%, at 9,025.40.
Stocks to watch today
Reliance Industries, Bharti Airtel, Bandhan Bank, ONGC, NTPC, Indian Oil Corporation, InterGlobe Aviation, JSW Steel, UPL and Hero MotoCorp are likely to be in focus today.
Asian equities under pressure
Asian stocks slipped, with the bulk of losses coming in Hong Kong, as China announced plans to impose a national security law on the city, threatening to further escalate tension between the US and China. Treasuries edged higher. Hong Kong’s Hang Seng fell about 3.5%. Losses were more modest in Tokyo and Seoul, while shares edged up in Sydney.
Crude oil check
Oil retreated from the highest level in more than two months as doubts over the strength of China’s economic recovery and rising tensions between Washington and Beijing ate away at its weekly advance. Futures in New York fell around 4% to below $33 a barrel on Friday, but are still up around 11% for the week.
Dow Jones, S&P 500 settle lower
The Dow Jones Industrial Average fell 100.21 points, or 0.41%, to 24,475.69, the S&P 500 lost 23.1 points, or 0.78%, to 2,948.51, and the Nasdaq Composite dropped 90.90 points, or 0.97%, to 9,284.88.
China-US trade tensions grip US stocks
Wall Street ended lower on Thursday, a day after hitting two-month highs, on a fresh wave of China-US tensions that raised doubts about the trade deal reached early this year between the world's two largest economies. President Donald Trump said the US would react strongly if China imposes national security laws for Hong Kong in response to last year's often violent pro-democracy protests. Earlier, Secretary of State Mike Pompeo criticized Beijing's handling of the coronavirus outbreak, while a Chinese official said the country will not flinch from any escalation in tensions.