Buoyed by the RBI liquidity boosting measures announced by the RBI and firm global cues, headline indices BSE Sensex and Nifty 50 posted gains on Friday. S&P BSE Sensex jumped 986 points or 3.22 per cent to close the session at 31,589. While the broader Nifty 50 index settled at 9,266, up 275 points or 3.05 per cent. Today’s rally was led by private bank stocks such Axis Bank, ICICI Bank, IndusInd Bank and Kotak Mahindra Bank. “Markets were buoyant following RBI measures to boost liquidity and reclassify NPA norms for commercial banks. The positive global markets also added to the buoyancy. Rate sensitive stocks managed to outperform. The focus will continue to be on how far these measures will help in containing the economic fallout of the virus and also on the earnings guidance of companies,” Vinod Nair, Head of Research at Geojit Financial Services, said.
RBI Governor Shaktikanta Das pointed out that according to IMF, the world is expected to see the worst financial crisis since the Great Depression, far worse than the 2008 financial crisis. “RBI has taken right steps today to ensure that financial system is protected. It has come up with TLTRO for NBFCs and reduced reverse repo rate. The decision to cut the reverse repo rate by 25 bps today makes it less promising for the banks to park their funds with the central bank rather than they should extend it for the advances of loans of NBFCs and retailers. Being a responsible central bank, RBI has taken the cognizance of what IMF had said. RBI has taken the right steps to ensure that financial stability is maintained, liquidity is available and businesses have good prospects going ahead. That is why markets have enthused today,” Pankaj Bobade, Head of Fundamental Research, Axis Securities told Financial Express Online.
Analysts hail RBI announcements: The announcements made by Reser Bank of India amid such a challenging situation were lauded by market watchers. The central bank also announced a special refinance facility of Rs 15,000 crore to SIDBI, Rs 25,000 crore to NABARD, and Rs 10,000 crore to HFCs to support liquidity. “Given the unprecedented times we are in, it is heartening that RBI is addressing all these challenges at a war footing. We believe, the key measures announced by RBI will help inject the much-needed liquidity in the system, facilitate and incentivise credit flow and provide flexibility on regulatory forbearance. Markets are in the buying zone. Keep accumulating and increasing equity allocations gradually,” Motilal Oswal, MD and CEO of Motilal Oswal Financial Services, said.
Nestle India, HUL top Sensex losers: Out of 30 Sensex stocks, just seven scrips settled in red with Nestle India as the top laggard, followed by HUL, Tech Mahindra, Sun Pharma, Titan, HCL Tech and UltraTech Cement.
Nifty Private Bank index surged 7.8%: Except Nifty FMCG and Nifty Pharma, all the sectoral indices finished in green today. Nifty Private Bank index surged 7.76 per cent led by gains in Axis Bank, Bandhan Bank, Federal Bank and ICICI Bank.
Technical observation: Analysts see a short-term trend of Nifty to be positive. “A small negative candle was formed today with long lower shadow. Technically, this pattern indicates a formation of negative hanging man type candle pattern. Nifty as per weekly chart formed a small positive candle with lower shadow, which signals a buy on dips opportunity in the market,” Technical analyst Nagaraj Shetti, HDFC Securities, said.