The biggest losers were Nestle India, Hindustan Unilever, Bharti Infratel, Sun Pharmaceuticals, and Tech Mahindra, down by 2.9%, 2%, 1.9%, 1.3% and 1.2% respectively.
Banking and financial stocks led the rally in equities on Friday, after the Reserve Bank of India (RBI) announced a slew of measures to improve liquidity in the system. The benchmark Sensex gained 986.11 or 3.22% to close at 31,588.72. The Nifty rallied 3.05% or 273.95 points to close at 9266.75. Nifty Bank was up by 6.6% and the top gainers on the index were Axis Bank, Bandhan Bank, Federal Bank, ICICI Bank and IDFC First Bank. Axis bank and Bandhan bank were up by 13.9% and 11% respectively. Federal Bank and ICICI Bank were up by 9.9% and 9.6%. Shares of IDFC First Bank ended the day 9.3% higher.
Dalal Street cheered the RBI’s announcement and ended the day on a positive note. However, experts said that the move to start re-investing in banking stocks would be gradual. Foreign Portfolio Investors (FPIs) remained net sellers in the Indian market pulling out $ 182.14 million from Indian equities. Domestic Institutional Investors (DII) also bought shares worth $69.9 million. Following the RBI’s announcement, the rupee ended the day stronger against the dollar at 76.42.
Gopal Agrawal, head of macro strategy and senior fund manager, DSP Mutual Fund, said that the measures would help since they are targeted but it is difficult to say whether they would solve all the issues as banks and other lenders are in a risk aversion mode. The central bank in its measures stated that it would spend Rs 50,000 crore on targeted long term repo operations (TLTROs) of which 50% would be towards mid and small-sized NBFCs. Additionally, the RBI changed the non-performing assets classification period from 90 days to 180 days.
“Financials earlier underperformed due to heightened risk aversion globally and major dislocation in bond markets following the COVID-19 pandemic and collapse in oil prices,” said Agrawal. He added that investors would start investing in banking stocks gradually after confidence returns.
Nifty Bank had been one of the worst performers in the last few weeks since the equities rout started. Banking and financial stocks have been beaten down over the last two months on the anticipation of the rise in NPAs after economic activity came nearly to a standstill due to the COVID-19 pandemic and subsequent nationwide lockdown. The NBFCs were the beneficiaries of the day’s move. Dhiraj Relli, managing director and CEO, HDFC Securities, said that the RBI was doing its part in providing reliefs in the current times but, the street could keep expecting more and there could be some concern about the time taken for the measures to reach the ground level. “For investors in banks the provision of higher liquidity and relaxation in provisioning norms are welcome, but the bar on dividend distribution and new provisioning norms are negatives for the time being,” he said.
The Indian equity markets were also supported by the global cues that remained positive after US President Donald Trump’s plans to gradually re-open the economy outweighed concerns over China suffering the worst economic contraction on record, Reuters reported. Bourses in China, Hong Kong and Taiwan were up between 0.6% to 2.1%. South Korea’s Kospi rallied 3.09%. European stocks markets were off to a positive start with bourses in the United Kingdom, Germany and France up between 3% to 4.1% at the time of press.
The biggest gainers on the Nifty were Axis Bank, Eicher Motors, ICICI Bank, Maruti Suzuki, and IndusInd Bank. The shares of Eicher Motors, Maruti Suzuki and IndusInd Bank were up by 9.9%, 8.7% and 8.4% respectively. The biggest losers were Nestle India, Hindustan Unilever, Bharti Infratel, Sun Pharmaceuticals, and Tech Mahindra, down by 2.9%, 2%, 1.9%, 1.3% and 1.2% respectively.
Stocks such as Reliance Industries, HDFC Bank and ICICI Bank contributed to 50% of Nifty’s gains. The volumes in the F&O segment and cash were Rs 7.42 lakh crore and Rs 55,393 crore respectively against the six month average of Rs 14.65 lakh crore in F&O and Rs 39,134 crore in the cash market on the NSE.
Sectorally, the biggest gainers were Nifty Private Bank, Nifty Bank, Nifty Financial Services and Nifty Realty. The only losers were Nifty FMCG and Nifty Pharma. Nifty Midcap and Nifty Smallcap also gained 2.2% and 3.3% respectively on Friday.