Bourses react negatively to RBI governor's repo rate cut announcement: Sensex ends 130 points down, Nifty holds 8,600-level at close of trading

The benchmark Sensex ended 130 points lower despite a rate cut announced by Shaktikanta Das, governor, Reserve Bank of India (RBI) on Friday morning. Sensex ended 131.18 points lower at 29,815.59; Nifty inched 18.80 points higher to 8,660.25 while the Nifty Bank up nearly 2 percent.

Coal India, Axis Bank, ITC, NTPC and Cipla were among major gainers on the Nifty, while losers were Hero MotoCorp, Bajaj Finance, IndusInd Bank, GAIL and Maruti Suzuki.

Among sectors, except auto, energy and infra all other indices ended higher. BSE Midcap index ended lower, while Smallcap index closed marginally higher.

 Bourses react negatively to RBI governors repo rate cut announcement: Sensex ends 130 points down, Nifty holds 8,600-level at close of trading

Representational image. Reuters.

Finally the Index settled its weekly closing at 8,660-level above its psychological level which suggests a positive sentiment for the time being, said Sumeet Bagadia, Executive Director, Research Choice Broking.

"During the day, we have seen an intraday low of 8522 from its day high, after the RBI’s rate cut and further announcement thereafter, which shattered the sentiment for the time being. However, during the dying hours, the Index tried to recover as much as possible with the help of few large constituents. At present level, Downside support may come at 8,500-8,300 while upside resistance comes at 8,800-9,000," he said.

During mid-session,the Sensex plunged over 1,700 points from the day's high on Friday after RBI governor Das said the projected annual GDP growth was at risk due to the COVID-19 outbreak as he unveiled a slew of measures to support the economy during the crisis, a PTI report said.

Shares inched back from session highs to fall 1 percent on Friday even though the central bank, Reserve Bank of India (RBI) unleashed an array of measures to help cope with the economic fallout from the coronavirus pandemic.

Indian brokerages say they have never signed on so many new customers so quickly, while deposits at their South Korean peers have jumped to a record high as investors hunt for bargains after a $12 trillion wipeout in world stocks.

RBI rate cut

The RBI said it has decided to retain its accommodative stance as long as necessary to revive growth and mitigate the impact of coronavirus on the economy, while ensuring that inflation remains within the target.

The six-member monetary policy committee (MPC) met earlier in the week to arrive at the decision.

It cut the repo rate by 75 basis points (bps) to 4.40%, exceeding market expectations for a 50 bps cut. The reverse repo rate was reduced 90 bps to 4%. While the entire committee favoured a cut, they differed on the size and voted in a 4-2 split to cut rates by this quantum.

“The MPC noted that macroeconomic risks both on the demand and supply side brought on by the pandemic could be severe,” Governor Shaktikanta Das said via video conference.

Gold down

Gold fell on Friday as investors booked profits, but was set for its best week since December 2008 as record high U.S. jobless claims due to the coronavirus fuelled hopes for more stimulus to stem the economic damage caused by the pandemic.

Asia's stockbrokers swamped as retail investors dive in

Crashing markets are driving the biggest rush from Asian retail investors into stocks in a decade or more, brokers say, as bargain-hunting and a fear of missing out prompts a scramble to “buy the dip”, Reuters said.

Even as global coronavirus infections and deaths continue to mount and more companies issue profit warnings, stockbroker switchboards from Sydney to Singapore have lit up with calls from erstwhile punters wanting to invest.

Indian brokerages say they have never signed on so many new customers so quickly, while deposits at their South Korean peers have jumped to a record high as investors hunt for bargains after a $12 trillion wipeout in world stocks.

“If people were waiting for a pullback, well they got it and then some,” said Chris Brankin, chief executive at brokerage TD Ameritrade in Singapore, where a 50% monthly jump in new accounts was the best since setting up there nine years ago.

“The one thing that has been difficult for us, is that as soon as people register for an account, they say ‘Can I trade now?’ I’m like...it’s a couple-day process to be able to get the account open and then get money into it.”

Driving the interest has been wall-to-wall coverage of both the coronavirus crisis and a plunge in global markets.

About a fifth of the value of world stocks has been lost in the past six weeks and no asset class has been spared. Many small investors seem to feel this is an unrivalled opportunity - particularly as markets have rallied hard in the last few days.

--With inputs from agencies

Updated Date: Mar 27, 2020 17:24:46 IST



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