Key barometers trimmed losses in mid-afternoon trade. At 14:27 IST, the barometer index, the S&P BSE Sensex, was down 215.55 points or 0.7% at 30,717.35. The Nifty 50 index was down 107.1 points or 1.18% at 8,999.15
In the broader market, the S&P BSE Mid-Cap index was down 0.8% while the S&P BSE Small-Cap index was down 0.26%.
The market breadth was negative. On the BSE, 823 shares rose and 1339 shares fell. A total of 151 shares were unchanged. In the Nifty 50 index, 23 shares advanced while 27 stocks declined.
The Reserve Bank of India (RBI)'s Governor Shaktikanta Das briefed the media at 10 am today. RBI further extended the loan repayment moratorium for another three months up to 31 August. The EMI payments will restart only once the moratorium period expires on 31 August.
Das said that the GDP growth in India in 2020-21 is estimated to remain in the negative territory with a pick up in growth impulses in second half. However, these depend on the trajectory of the pandemic.
The RBI also raised the group exposure limit of banks to 30% from 25% for a temporary period till 30 June 2021. Group exposure limit determines the maximum amount a bank can lend to one business house. The central bank relaxed rules governing borrowing by states to help them meet their own liabilities and expenditure requirements. In order to ease the pressures of bond redemption on states, rules governing withdrawal from consolidated sinking fund (CSF) have been eased. CSF is maintained by the state governments with the RBI as a buffer for repayment of their liabilities. This change in withdrawal norms will come into force with immediate effect and will remain valid till 31 March 2021.
RBI Monetary Policy Committee (MPC) Friday unanimously decided to slash the Repo Rate by another 40 basis points to 4%. The interest rate decision was taken to revive growth and mitigate the impact of the coronavirus pandemic. The announcement came following a three-day off-cycle meeting of the MPC, held between 20 and 22 May 2020. These decisions are in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/-2%, while supporting growth.
The MPC is of the view that the macroeconomic impact of the pandemic is turning out to be more severe than initially anticipated, and various sectors of the economy are experiencing acute stress.
The impact of the shock has been compounded by the interaction of supply disruptions and demand compression. Beyond the destruction of economic and financial activity, livelihood and health are severely affected. Even as various measures initiated by the government and the Reserve Bank of India work to mitigate the adverse impact of the pandemic on the economy, it is necessary to ease financial conditions further. This will facilitate the flow of funds at affordable rates and revive animal spirits. With the inflation outlook remaining benign as lockdown-related supply disruptions are mended, the policy space to address growth concerns needs to be used now rather than later to support the economy, even while maintaining headroom to back up the revival of activity when it takes hold.
Numbers to Track:
The yield on 10-year benchmark federal paper fell to 5.965% compared with previous closing of 6.034% in the previous trading session.
In the foreign exchange market, the partially convertible rupee edged lower to 75.95 compared with its previous closing of 75.615.
In the commodities market, Brent crude for July 2020 settlement was down $1.92 to $34.14 a barrel. The contract rose 0.87% to settle at $36.06 a barrel in the previous trading session.
MCX Gold futures for 5 June 2020 settlement gained 1.43% to Rs 47,050.
The Nifty Metal index declined 1.85% to 1,710.60, snapping its three-day losing streak. The index rose 3% in three trading sessions.
Jindal Steel & Power (down 3.88%), Hindalco Industries (down 3.71%), JSW Steel (down 2.83%), National Aluminium Company (down 2.68%), Steel Authority of India (down 2.67%), NMDC (down 2.63%), Tata Steel (down 2.57%), Hindustan Zinc (down 2.39%) and Vedanta (down 1.33%) declined.
Stocks in Spotlight:
Info Edged (India) was down 2.59%. The tech firm announced that its investment vehicle, IE Venture Fund I, will invest about Rs 3.5 crore in Fanbuff Esports India and Rs 3.70 crore in Intellihealth Solutions. Fanbuff Esports India operates e-sports community engagement platform "Fanclash", and the Intellihealth Solutions operates telehealth platform "Truemeds". The IE Venture Fund will acquire 3,077 series seed compulsorily convertible preference shares at a face value of Rs 10 and a premium of Rs 11,364.70. The aggregate shareholding of IE Venture Fund I, post this investment, in Fanclash would be 20% on a fully converted & diluted basis. Fanclash is an online e-sports focused engagement and community platform. E-sports fans can watch, play, follow various games like Free Fire, PUBG, Counter Strike and engage with their favorite esports players and streamers on the platform.
Bandhan Bank dropped 5.95% to Rs 198.20 after the bank said that that the business of around 65,000 of micro banking borrowers, amounting to exposure of approximately Rs 260 crore, could be impacted due to the Amphan cyclone. Cyclone Amphan struck five districts in southern West Bengal and northern coastal Odisha starting in the afternoon of 20 May and lasting till the wee hours of the morning of 21 May. As per the initial assessment, 49 banking units (micro banking outlets) in five districts were impacted, of which 45 have resumed operations today, Bandhan Bank said in a filing. It further informed that the bank will not be able to continue services in five branches due to issues in accessibility. Bandhan Bank said it expects the Amphan affected portfolio to regularise by Q3 of FY21.
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