Sensex, Nifty 50 lose momentum after early gains, end trade with volatility despite RBI rate cut
Earlier in the session, both indices rose nearly 4%.
The Indian benchmark indices inched back from session highs to fall 1% on Friday even after the Reserve Bank of India slashed interest rates, following other central banks, to counter the economic fallout from the coronavirus pandemic.
The BSE Sensex fell 0.4% to close at 29,815.59, while the National Stock Exchange Nifty 50 gained 0.2% to end at 8,660.25. Both the Nifty 50 index and BSE Sensex began to pare gains as RBI Governor Shaktikanta Das announced the measures. Earlier in the session, both indices rose nearly 4% but failed to keep up the momentum.
Saurabh Jain, assistant vice president of research for SMC Global Securities, told Reuters that there was a standstill in the economy and the market is not sure how long the coronavirus pandemic will sustain. “There is no certainty on how long the problem will persist and its repercussions will be there,” he added.
Top laggards on the Sensex were Bharti Airtel – which fell over 7% – along with HCL Technologies, Hero MotoCorp, Maruti Suzuki, Asian Paints and Hindustan Unilever. Yes Bank, Axis Bank, ICICI Bank, IndusInd Bank, State Bank of India, NTPC Limited and Mahindra & Mahindra gained up to 12%.
The Indian rupee appreciated by 81 paise to 74.35 against the US dollar in intra-day trade.
The RBI cut the repo rate by 75 basis points to 4.40%, exceeding market expectations for a 50-basis-point cut. The central bank said it has decided to retain its accommodative stance as long as it is necessary to revive growth and mitigate the impact of coronavirus on the economy, while ensuring that inflation remains within the target. The six-member monetary policy committee met earlier in the week to arrive at the decision.