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Benchmarks trim losses in late afternoon session
Mar-27-2020

The Indian equity benchmarks restricted their losses in late afternoon session but markets remained in red territory. The broader indices, BSE Mid cap and Small cap are also trading lower. Buying in Axis Bank, Power Grid Corporation and SBI helped the markets to trim some losses. Traders took some relief as Reserve Bank of India (RBI) has reduced the policy repo rate under the liquidity adjustment facility (LAF) by 75 basis points (bps) to 4.40 per cent from 5.15 per cent with immediate effect. Accordingly, the marginal standing facility (MSF) rate and the Bank Rate stand reduced to 4.65 per cent from 5.40 per cent. Besides, the reverse repo rate under the LAF has been reduced by 90 basis points to 4.0 per cent. However, traders remain cautions, as the severe dent in the economic activity due to the coronavirus pandemic led rating agency Crisil to sharply cut its growth estimate for 2020-21 to 3.5%. Also, SBI Research's Ecowrap report stated that the country's economic growth is likely to fall sharply to 2.6% in 2020-21 due to lockdown amid the coronavirus pandemic. On the sectoral front, infrastructure stocks remained in focus as ratings agency ICRA stated that the government's move to stop toll collection amid the 21-days’ nationwide lockdown is set to push toll collection into the negative territory for FY 2020, while collection in April, and subsequently FY 2021, is also likely to be adversely impacted.

On the global front, European markets were trading in red, as US overtakes China for most confirmed virus cases. Back home, adding some worries, former chief statistician Pronab Sen said the country’s growth in the next two quarters will not be more than 3% due to the lockdown across the country.

The BSE Sensex is currently trading at 29688.41, down by 258.36 points or 0.86% after trading in a range of 29346.99 and 31126.03. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.53%, while Small cap index was down by 0.09%.

The few gaining sectoral indices on the BSE were Power up by 1.04%, PSU up by 0.93%, Bankex up by 0.75% and Consumer Durables was up by 0.32%, while Telecom down by 5.85%, Auto down by 2.73%, Oil & Gas down by 2.04%, Realty down by 1.70%, and Energy was down by 1.58% were the top losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 8.89%, Power Grid up by 2.62%, SBI up by 2.28%, NTPC up by 2.11% and HDFC up by 2.01%. On the flip side, Bajaj Finance down by 7.81%, Bharti Airtel down by 6.92%, Indusind Bank down by 6.42%, Hero MotoCorp down by 6.23% and HCL Tech down by 5.16% were the top losers.

Meanwhile, with an aim to counter the economic slowdown caused by the COVID-19 pandemic, the Reserve Bank of India (RBI) has reduced the policy repo rate under the liquidity adjustment facility (LAF) by 75 basis points (bps) to 4.40 per cent from 5.15 per cent with immediate effect. Accordingly, the marginal standing facility (MSF) rate and the Bank Rate stand reduced to 4.65 per cent from 5.40 per cent. Besides, the reverse repo rate under the LAF has been reduced by 90 basis points to 4.0 per cent.

The monetary policy committee (MPC) of RBI also decided to continue with the accommodative stance as long as it is necessary to revive growth and mitigate the impact of coronavirus (COVID-19) on the economy, while ensuring that inflation remains within the target. These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 per cent, while supporting growth.

As per the RBI, the growth projection of 4.7 per cent for the fourth quarter of 2019-20 and 5 per cent for the whole fiscal is now at risk from the pandemic’s impact on the economy. Turning to growth, apart from the continuing resilience of agriculture and allied activities, most other sectors of the economy will be adversely impacted by the pandemic, depending upon its intensity, spread and duration. It also said that if COVID-19 is prolonged and supply chain disruptions get accentuated, the global slowdown could deepen, with adverse implications for India.

Besides, the RBI said that the slump in international crude prices could, however, provide some relief in the form of terms of trade gains. It added that downside risks to growth arise from the spread of COVID-19 and prolonged lockdowns and upside growth impulses are expected to emanate from monetary, fiscal and other policy measures and the early containment of COVID-19. The MPC is of the view that macroeconomic risks, both on the demand and supply sides, brought on by the pandemic could be severe. It said the need of the hour is to do whatever is necessary to shield the domestic economy from the pandemic.

The CNX Nifty is currently trading at 8627.50, down by 13.95 points or 0.16% after trading in a range of 8522.90 and 9038.90. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Axis Bank up by 9.11%, Coal India up by 4.79%, Cipla up by 4.61%, UPL up by 3.42% and NTPC up by 3.08%. On the flip side, Bajaj Finance down by 7.75%, Indusind Bank down by 6.71%, Hero MotoCorp down by 6.04%, Bajaj Finserv down by 5.91% and Bharti Airtel down by 5.48% were the top losers.

European markets were trading in red, UK’s FTSE 100 decreased 162.49 points or 2.79% to 5,653.24 and France’s CAC was down by 106.97 points or 2.35% to 4,436.61.
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