Markets give thumbs up to RBI policy, Sensex surges 362 points

By: |
August 7, 2020 9:24 AM

The Nifty Bank closed the day at 21,642.6. It, however, continued to underperform the broader markets. Since the start of the week, Nifty Bank has risen by 2.7%, compared with 2.8% for the Nifty.

Markets, RBI policy, Nifty Bank, Shaktikanta Das, repo rate, MSME loans, HDFC Securities, RBI monetary policyThe stock markets erased some of their gains towards the last hour.

The equities rallied on Thursday after the Reserve Bank of India (RBI) allowed banks a window to recast loans. The Nifty Bank, which made gains of 0.62%, indicated that the markets reacted positively to the RBI’s announcement, even though it pressed the pause button on rate cuts. The Sensex was up by 362.12 points or 0.96% to close at 38,025.45, whereas the Nifty was up by 98.5 points or 0.89% to close at 11,200.15.

The Nifty Bank closed the day at 21,642.6. It, however, continued to underperform the broader markets. Since the start of the week, Nifty Bank has risen by 2.7%, compared with 2.8% for the Nifty.

The stock markets erased some of their gains towards the last hour. RBI governor Shaktikanta Das in his announcement of the monetary policy decision announced various measures such as keeping the repo rate unchanged at 4%, increasing the loan to value ratio to 90% for gold loans offered by banks and setting up of a committee under KV Kamath for restructuring of MSME loans, among others.

Dhiraj Relli, managing director and chief executive officer, HDFC Securities, said, “Overall, the outcome of MPC meet this time around is prudent, to the point and meets the current requirements of the lending community though the borrowers may want something more. What will be crucial to watch is the challenges faced by the KV Kamath committee in making its recommendations considering the viewpoints of the parties involved and ensuring the success of the plan.”

The biggest gainers on Nifty Bank were ICICI Bank, HDFC Bank, IndusInd Bank, Kotak Mahindra Bank, and Bank of Baroda, which were up between 2.07% and 0.11%.

G Pradeepkumar, chief executive officer, Union AMC, said, “Overall, the monetary policy was good, balanced and on expected lines. While near-term inflation was expected to be high, it was expected to come down in the second half of the year which leaves enough room for rate cuts in future. The setting up of the expert committee under Kamath could open up the path for speedier resolution depending on the detailed framework that they come up with. RBI was silent on the extension of moratorium. Any extension could have an impact on the asset quality of banks and their profitability. In the absence of that, we do not see any significant change in asset quality immediately. One thing which could have been done was to lower the reverse repo rate marginally to encourage banks to lend more.”

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Bank of India gets shareholders approval for raising Rs 8,000 crore
2Karnataka farmers urge Centre to exempt ‘Bengaluru Rose’ onions from export ban
3IPO market in for a busy week; should you invest in CAMS, Chemcon Chemicals, or Angel Broking?