Sensex drops 260 points, Nifty settles at 9,039 as RBI’s surprise announcements fail to enthuse investors

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After touching the low of 30,474.88, the 30-share index settled 260.31 points or 0.84% lower at 30,672.59 in a highly volatile session. Similarly, NSE Nifty lost 67 points or 0.74% to end at 9,039.25.

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Updated: May 22, 2020, 06:09 PM IST

Fresh economic measures announced by the Reserve Bank of India, including interest rate cut, failed to enthuse investors on Friday as equity benchmark BSE Sensex tumbled 260 points. 

Banks and financial stocks dragged the market down after RBI cut the policy rates and extended loan moratorium period by 3 more months.

After touching the low of 30,474.88, the 30-share index settled 260.31 points or 0.84% lower at 30,672.59 in a highly volatile session. Similarly, NSE Nifty lost 67 points or 0.74% to end at 9,039.25.

In the Sensex pack, Axis Bank was the top laggard, plunging more than 5%, followed by HDFC, Bajaj Finance, ICICI Bank, Tata Steel, Bajaj Auto, HDFC Bank and IndusInd Bank.

M&M, Infosys, Asian Paints, UltraTech Cement and Tech Mahindra were among the gainers.

Axis Bank, HDFC, Bajaj Finserv, Bajaj Finance, Hindalco and ICICI Bank were among the top losers in the Nifty pack. 

Zee Entertainment was the top gainer, going up by over 7% while M&M, Cipla, Infosys were other top gainers. 

In a surprise move on Friday, the RBI announced a Repo Rate cut of 40 bps to 4% and lowered the Reverse Repo Rate to 3.35% from 3.75%. It also extended loan moratorium period by another 3 months till August 31 and raised the limit on banks’ group exposure to companies. 

“Though this is a welcome step and can provide relief to the borrowers, there is a fear that the burden on the banks may further increase due to the impact of the moratorium on banks’ already huge pile of NPAs. Further RBI failed to announce any relief on the restructuring of loans to address the risk of rising asset quality issues in the banking sector,” Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd, said. 

Global markets also fell as China moved to impose a new security law on Hong Kong after last year’s pro-democracy unrest, further straining fast-deteriorating US-China ties. 

Additionally, China announced that it has dropped its annual growth target for the first time, which further added to concern about the fallout from the COVID-19 pandemic.

Disclaimer: This Article is auto generated by computer software and has not been created or edited by Sainik Welfare News. Publisher: www.dnaindia.com

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