Market Benchmark Index Sensex plunged over 1,700 points from the day's high on Friday after RBI Governor Shaktikanta Das said that the projected annual GDP growth was at risk due to the coronavirus outbreak as he unveiled a slew of measures to support the economy during the crisis.
The Reserve Bank of India (RBI) announced its steepest interest rate cuts in more than 11 years, slashing the repo by 75 basis points to 4.4 per cent - the lowest in at least 15 years. It also reduced the reverse repo rates by 90 basis points on Friday.
Further, it reduced the cash reserve ratio (CRR) for all banks by 100 basis points to release Rs 1.37 lakh crore across banking system. It also put on hold monthly installment payments on all term loans for three months.
After opening significantly higher, the 30-share BSE barometer gave up all gains to trade 407.58 points or 1.36 per cent lower at 29,539.19 at 1130 hours. It hit a high of 31,126.03 and a low of 29,360.69.
Similarly, the NSE Nifty gave up the 9,000 level and tumbled 71.55 points, or 0.83 per cent, to 8,569.90.
Bharti Airtel was the biggest loser in the Sensex pack, tanking up to 6 per cent, followed by HCL Tech, Hero MotoCorp, Maruti, Asian Paints and Bajaj Auto.
Axis Bank SBI, IndusInd Bank, NTPC, ICICI Bank and PowerGrid were among the top gainers on the BSE.
Despite massive rate cuts, domestic market turned negative on concerns over the annual economic growth, 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." Analysts, meanwhile, hailed the measures taken the central bank.
Mr. Amit Gupta, Co-Founder & CEO, TradingBells, said, "RBI comes out with lots of measures to ensure the stability of the financial system and inject liquidity in the market amid ongoing turmoil of pandemic. Banks are being motivated to lend by the cut in both Repo rate and CRR, where LTRO money should be invested in commercial papers by banks and that will be considered as a held to maturity, therefore, there will be no issue of MTM losses. So we should expect lower yields in the corporate bond market, therefore, the bond market should rejoice to RBI policy."
Gupta added that the 3-month moratorium on all term loans is another relief for all including NBFCs, Banks, Corporate and the general public. "It is a very good policy to cheer the market but the problem is that the market has already rallied too much from lower levels ahead of policy and real trend decider for the market will be the trend in new cases of Covid-19 globally and locally," he said.
He also said that 9000 is a key psychological resistance where sellers are becoming aggressive therefore Nifty needs to sustain above 9000 mark. "For further strength otherwise we may see selling pressure towards 8450; below this we can expect further pressure towards the sacrosanct support of 8000 while if Nifty manages to sustain above 9000 mark then we can expect a rally towards 9600-9900 zone," Gupta added.
So far over 24,000 people have succumbed to the virus globally with over 3 lakh cases reported. In India, about 750 people have tested positive to the virus and 17 people have died.
