Tracking the sharp sell-off in the Asian market, domestic bourses made a negative start. The market extended its losses due to the sharp selling witnessed in the index heavy weight banking stocks after the RBI policy announcements. While, repo rate was cut by 40 bps to 4 percent, the markets were disappointed as they were expecting some measures on the loan restructuring front.
Further, the RBI grim economic outlook also weighed on the sentiments. However buying in auto, pharma and IT brought some late session recovery in market which ended with a loss of 0.7 percent. Banking and financial indices lost the most while IT index closed with over 1.3 percent gain. Zee, M&M and Cipla ended as the top gainers while Bajaj Finance, HDFC and Axis Bank were the top laggards. Going ahead investors are likely to remain cautious on the development of COVID-19 cases and vaccines, lockdown restrictions with changing economic policies and crude oil prices movements.
The Sensex tumbled 260 points on Friday, dragged by losses in banking and financial stocks as RBI's rate cut and other measures to prop up the economy failed to meet market expectations.
After falling over 450 points during the day, the 30-share index ended 260.31 points or 0.84 percent lower at 30,672.59.
The broader NSE Nifty too settled 67 points or 0.74 percent down at 9,039.25.
Axis Bank was the top laggard in the Sensex pack, plunging more than 5 percent, followed by HDFC, Bajaj Finance, ICICI Bank, Tata Steel, Bajaj Auto, HDFC Bank and IndusInd Bank.
On the other hand, M&M, Infosys, Asian Paints, UltraTech Cement and Tech Mahindra were among the gainers.
Sumeet Bagadia, Executive Director, Choice Broking, said, "Finally, the Index settled its weekly closing at 9,039 level with the loss of 67 points only and managed to close above its 9,000-level which is a good sign for the time being. The starting session was muted on the back of Asian markets. However, afterwards there was a good rally on the hope of better announcement from the RBI. But the bliss couldn’t last for long and a profit booking was witnessed from the day high.
"Although, later the Index in the dying hours recovered its early losses and managed to close above 9,000 levels. The way the Index has been trading and the OI data placed, we may see a bounce back movement in the Index upto the level of 9,245 while downside support comes at 8,915," Bagadia said.
Earlier in the day, the Reserve Bank of India (RBI) unexpectedly slashed benchmark interest rates to their lowest levels since 2000 in a effort the revive the economy.
The repo rate was cut by 40 basis points to 4 per cent and the reverse repo rate was decreased to 3.35 per cent from 3.75 percent.
The central bank also extended the three-month moratorium on loan repayments till August 31 and raised the limit on banks'' group exposure to companies.
"However, RBI has not announced any relief on the restructuring of loans to address the risk of rising asset quality issues in the banking sector which has come as a disappointment for the equity markets," said Gaurav Dua, Sr VP, Head Capital Market Strategy & Investments, Sharekhan by BNP Paribas.
Manish Hathiramani, Index Trader and Technical Analyst, Deen Dayal Investments said, "The markets continued to be in consolidation mode with no meaningful move in either direction. This could be attributed to the upcoming long weekend, Monday being a market holiday. Even though the markets broke the level of 9020-9030, it was quick to reclaim those levels. Today's low of 8968 would play a pivotal role when markets resume on Tuesday as a break from here could take the markets southward to 8,750-8,800 levels. On the upside, we need to cross yesterday's high of 9178 to see a clear upside direction, Hathiramani said.
Along with adverse impact of COVID-19 pandemic, the additional concerns related to US-China brinkmanship is creating uncertainties and accordingly, equities are expected to remain volatile with negative bias in the immediate term, he added.
India witnessed the biggest single-day spike with 6,088 COVID-19 cases, taking the tally to 1.18 lakh. The death toll rose to 3,583, according to the health ministry.
Globally, the number of cases linked to the disease has crossed 51 lakh and the death toll has topped 3.32 lakh.
Hong Kong led a sell-off across Asian equities after China introduced proposals to enact a national security law for the city.
Bourses in Shanghai, Tokyo and Seoul ended significantly lower.
Stock exchanges in Europe were trading on a negative note in early deals.
International oil benchmark Brent crude futures slipped 4.38 percent to $34.48 per barrel.
Rupee falls 34 paise to close at 75.95 against US dollar
The rupee depreciated 34 paise to provisionally close at 75.95 against the US dollar on Friday as the Reserve Bank of India''s rate cut move failed to cheer investor sentiment.
Forex traders said weak domestic equities, strengthening American currency overseas, rising coronavirus cases in the country and US-China trade tensions also weighed on the local unit.
The rupee opened weak at 75.72 at the interbank forex market, fell further, and finally settled at 75.95, down 34 paise over its last close.
— CNBC-TV18 (@CNBCTV18Live) May 22, 2020
It had settled at 75.61 against the US dollar on Thursday.
During the trading session, it touched an intra-day high of 75.71 and a low of 75.95.
The Reserve Bank of India (RBI) on Friday slashed interest rates, extended moratorium on loan repayments and allowed banks to lend more to corporates in an effort to support the economy which is likely to contract for the first time in over four decades.
"RBI's rate cut move couldn't cheer forex traders. The 40 bps repo rate cut move was in line with market expectations, but it didn''t provide full-fledged restructuring of loans and also didn't give the FY21 GDP (outlook) figure," said Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services told PTI.
Gupta further said that "the RBI will have to take sector-specific measures to bring in this transmission".
Going ahead, the investors’ focus will be on KKR and Reliance Industries' Jio related inflows of nearly $1 billion and foreign institutional investor (FII) participation in Reliance Industries Limited (RIL) rights issue, he noted.
Meanwhile, the dollar index, which gauges the greenback''s strength against a basket of six currencies, rose by 0.35 percent to 99.72.
--With inputs from agencies
Updated Date: May 22, 2020 19:25:29 IST