The broader market sharply pared gains. The S&P BSE Mid-Cap index was up 0.33% while the S&P BSE Small-Cap index was up 0.56%.
The market breadth was positive. On the BSE, 1084 shares rose and 846 shares fell. A total of 135 shares were unchanged. In Nifty 50 index, 25 stocks advanced while 25 stocks declined.
RBI Action:
On the basis of an assessment of the current and evolving macroeconomic situation, the Reserve bank of India (RBI)'s Monetary Policy Committee (MPC) at its meeting today (27 March 2020) decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 75 basis points to 4.40% from 5.15% with immediate effect. Accordingly, the marginal standing facility (MSF) rate and the Bank Rate stand reduced to 4.65% from 5.40%. Further, consequent upon the widening of the LAF corridor as detailed in the accompanying Statement on Developmental and Regulatory Polices, the reverse repo rate under the LAF stands reduced by 90 basis points to 4%. The MPC also decided to continue with the accommodative stance as long as it is necessary to revive growth and mitigate the impact of coronavirus (COVID-19) on the economy, while ensuring that inflation remains within the target.
RBI said the global economic activity has come to a near standstill as COVID-19 related lockdowns and social distancing are imposed across a widening swathe of affected countries. Expectations of a shallow recovery in 2020 from 2019's decade low in global growth have been dashed. The outlook is now heavily contingent upon the intensity, spread and duration of the pandemic. There is a rising probability that large parts of the global economy will slip into recession.
RBI added that GDP growth of 4.7% for Q4:2019-20 within the annual estimate of 5% for the year as a whole, is now at risk from the pandemic's impact on the economy. High frequency indicators suggest that private final consumption expenditure has been hit hardest, even as gross fixed capital formation has been in contraction since Q2:2019-20. On the supply side, the outlook for agriculture and allied activities appears to be the only silver lining, with food grains output at 292 million tonnes being 2.4% higher than a year ago. A pick-up in manufacturing and electricity generation pulled industrial production into positive territory in January 2020 after intermittent contraction and/or lacklustre activity over the past five months; however, more data will need to be watched to assess whether the recent uptick will endure in the face of COVID-19.
As a consequence of COVID-19, aggregate demand may weaken and ease core inflation further. Heightened volatility in financial markets could also have a bearing on inflation, it added. Apart from the continuing resilience of agriculture and allied activities, most other sectors of the economy will be adversely impacted by the pandemic. If COVID-19 is prolonged and supply chain disruptions get accentuated, the global slowdown could deepen, with adverse implications for India. Upside growth impulses are expected to emanate from monetary, fiscal and other policy measures and the early containment of COVID-19.
The MPC is of the view that macroeconomic risks, both on the demand and supply sides, brought on by the pandemic could be severe. The need of the hour is to do whatever is necessary to shield the domestic economy from the pandemic.
Meanwhile, RBI also permitted that banks to allow a three-month moratorium for on payment of EMIs on all term loans that were outstanding on March 1. However, this means that the final decision to provide such a relief is in the hands of the banks.
Buzzing Index:
Auto shares were mixed after RBI slashed interest rates. The Nifty Auto index gained 0.24% at 5,073.70, underperforming the Nifty 50 index's 1.49% rise to 8,770.50.
Ashok Leyland (up 9.85%), Escorts (up 2.87%), Tata Motors (up 2.54%) and Eicher Motors (up 1.08%) gained.
However, Hero MotoCorp (down 5.39%), Bajaj Auto (down 4.41%), Maruti Suzuki India (down 2.07%), Mahindra & Mahindra (down 0.78%), declined
Stocks in Spotlight:
NTPC said it signed a share-purchase agreement with the central government to acquire North Eastern Electric Power Corporation (NEEPCO) for Rs 4,000 crore and THDC India (THDCIL) for Rs 7,500 crore. The acquisitions are subject to regulatory approvals. Shares of NTPC were trading 0.87% higher at Rs 81.20.
Yes Bank said its board has approved raising funds amounting to Rs 5,000 crore, in addition to Rs 10,000 crore cleared in January, through issuance of securities. The board of the bank has also been reconstituted. Shares of Yes Bank were up 2.81% at Rs 27.40.
Global Markets:
Overseas, most Asian markets were trading higher on Friday as investors wagered policymakers will roll out additional stimulus measures to combat the coronavirus pandemic after US unemployment filings surged to a record.
The number of Americans filing claims for unemployment benefits surged to a record of more than 3 million last week as strict measures to contain the coronavirus pandemic ground the country to a sudden halt.
In US, stocks roared higher on Thursday, closing up for the third day in a row despite a report from the Labor Department that showed unemployment claims soared to a record 3.28 million last week, as the coronavirus pandemic shut down businesses across the nation.
Investors took some comfort from the overnight passage of a historic $2 trillion economic stimulus bill by the Senate, putting it one step closer to being signed into law to mitigate the economic fallout from the outbreak
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