Sensex snaps 3-day rally, ends 131 pts lower on recession fears

Sensex snaps 3-day rally, ends 131 pts lower on recession fears

Mumbai:  Equity benchmark index Sensex erased early sharp gains to close lower by 131 points on Friday, snapping its three-day rising streak as concerns over an impending recession heightened after the RBI said the projected annual growth was at risk due to the COVID-19 outbreak. 

In a bid to support the economy during the pandemic, RBI Governor Shaktikanta Das unveiled a slew of measures, including its steepest interest rate cuts in more than 11 years. The repo has been cut by 75 basis points to 4.4 per cent - the lowest in at least 15 years. 

Further, the Reserve Bank reduced the cash reserve ratio (CRR) for all banks by 100 basis points to 3 per cent to release Rs 1.37 lakh crore across the banking system. It also allowed banks to put on hold monthly instalment payments on all term loans for three months. 

After opening significantly higher, the 30-share BSE barometer gave up all the gains to end 131.18 points or 0.44 per cent lower at 29,815.59. It hit a high of 31,126.03 and a low of 29,346.99 in day trade. 

On the other hand, the broad-based NSE Nifty closed 18.80 points, or 0.22 per cent, higher at 8,660.25. 

Bajaj Finance was the biggest loser in the Sensex pack, tanking up to 8 per cent, followed by Hero MotoCorp, IndusInd Bank, Maruti and HCL Tech. 

Axis Bank, ITC, NTPC and M&M were among the top gainers. 

Despite massive rate cuts, domestic market turned negative on concerns over the annual economic growth amid rising uncertainty over the COVID-19 pandemic, traders said. 

Announcing the decisions of the Monetary Policy Committee (MPC), RBI Governor Das said that no projection for growth and inflation was being given in view of the uncertainty created by outbreak of the deadly virus. 

He further said that the growth projection of 4.7 per cent for the fourth quarter of 2019-20 and 5 per cent for the whole fiscal was at risk. 

Jimeet Modi, Founder and CEO, Samco Securities said, In such uncertain times, instead of fresh funds entities want to save their skin, RBI's relaxation of only 3 months instead of 6 months for moratorium on interest on loans and working capital has disappointed many. 

He added that there is no doubt that the RBI is playing every card in its pocket to prevent a crisis-like situation by giving banks the ability to lend more, but as such no direct helping hand has been given to ailing industries as of now. 

Meanwhile globally, bourses in Shanghai, Hong Kong, Tokyo and Seoul ended higher, while benchmarks in Europe were trading in the red. 

International oil benchmark Brent crude fell 2.20 per cent to USD 25.76 per barrel in futures trade. 

On the currency front, the rupee depreciated marginally to 75.20 against the US dollar in intra-day trade. 

The death toll due to COVID-19 rose to 17 in the country on Friday and the number of coronavirus cases climbed to 724, according to the Health Ministry. 

The number of deaths around the world linked to the new coronavirus has crossed over 24,000.   

Enjoyed reading The Bridge Chronicle?
Your support motivates us to do better. Follow us on Facebook, Instagram and Twitter to stay updated with the latest stories.
You can also read on the go with our Android and iOS mobile app.

No stories found.
The Bridge Chronicle