Benchmarks suffer biggest one-day fall in 2019 as RBI rate cut fails to calm NBFC jitters

Benchmark indices posted their biggest one-day drop this year Thursday after the RBI delivered a rate cut on expected lines but failed to assuage investor concerns regarding the NBFC sector.

The 30-share BSE Sensex cracked 553.82 points, or 1.38 per cent, to settle at 39,529.72, pressured by losses in banking, energy and capital goods stocks. The broader NSE Nifty plunged 177.90 points, or 1.48 per cent, to end at 11,843.75.

The previous biggest drop this year was on April 22, when the Sensex had dived 495.10 points while Nifty had lost 158.35 points.

Slashing benchmark lending rate for the third time this year, the central bank cut the repo rate by 0.25 per cent to 5.75 per cent -- the lowest in nine years -- and changed its monetary policy stance from 'neutral' to 'accommodative'.

However, the RBI lowered the economic growth forecast for the current fiscal to 7 per cent due to slowdown in domestic activities and escalation in global trade war.

RBI Governor Shaktikanta Das also said the central bank is closely monitoring the developments in the NBFC sector and will ensure that financial stability is maintained.

However, traders said the market was awaiting specific steps to shore up liquidity and address the crisis of confidence in the country's troubled shadow banking sector.

Top losers in the Sensex pack included IndusInd Bank, Yes Bank, SBI, L&T, Tata Steel, M&M, Bajaj Finance, Vedanta, Tata Motors and RIL, tumbling up to 6.97 per cent.

Bucking the negative market trend, Coal India, PowerGrid, NTPC, HUL, Hero MotoCorp, Asian Paints and Infosys gained up to 1.92 per cent.

All sectoral indices ended in the red, with BSE oil and gas, bankex, capital goods, finance, industrials, utilities and energy indices cracking up to 3.04 per cent.

In the broader markets, the BSE midcap and smallcap indices ended up to 1.77 per cent lower.

"The rate cut could not infuse positivity, and the decline steepened as focus shifted from policy rates to new emerging short-term tight liquidity situation due to issues like IL&FS, DHFL and its impending impact on other financial institutions," said Narendra Solanki, Head Fundamental Research (Investment Services) - AVP Equity Research, Anand Rathi Shares & Stock Brokers.

Lowered GDP forecast for current year and failure to get any cue from RBI on the liquidity front except general assurance of addressing the situation added to the selling pressure later in the day, he added.

The NBFC pack witnessed heavy selling pressure following the bond defaults by mortgage lender DHFL on June 4, which led to a slew of rating downgrades for the company. The stock lost more than 15 per cent Thursday.

Other losers included Shriram Transport Finance, Indiabulls Housing Finance and L&T Housing Finance, which lost up to 8.61 per cent.

The Indian rupee fell marginally to 69.28 against the US dollar.

Meanwhile, foreign investors net sold equities worth Rs 1,448.99 crore Thursday, provisional data showed.

On the global front, other Asian bourses ended on a mixed note, while Europe was trading in the green in opening deals amid US-China trade tensions.

Brent crude futures, the global oil benchmark, fell 0.76 per cent to USD 61.09 per barrel.