Indian Indices Erase Gains; Telecom Stocks Under Pressure

Fri, 27 Mar 12:30 pm

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After logging gap-up opening, share markets in India turned volatile and erased most of the early morning gains, even after the RBI in its MPC meet cut the repo rate by 75 bps to 4.40%.

Investors turned cautious after RBI Governor Shaktikanta Das said that there's a rising probability that large parts of the global economy will slip into recession.

The BSE Sensex is trading up by 110 points, while the NSE Nifty is trading up by 76 points.

The BSE Mid Cap index is trading up by 0.2%, while the BSE Small Cap index is trading up by 0.5%.

Sectoral indices are trading mixed with stocks in the banking sector and finance sector witnessing buying interest, while telecom stocks are witnessing selling pressure.

Note that, since the coronavirus outbreak, all BSE indices and NSE indices are down in the range of 25-35%.

Speaking of sectoral impact, in the article titled: Worst Hit Indian Sectors Amid Coronavirus Pandemic: 10 Points to Know, we dive deeper and look at how the impact has been on individual sectors...

The rupee is currently trading at 74.80 against the US$.

Gold prices are currently trading down by 0.4% at Rs 43,387.

A few days ago, we asked you to participate in Equitymaster's "State of the Markets" poll.

The poll asked you to vote on what holds next for the Indian stock markets amid the gloomy economy and coronavirus fears.

Many of you voted for the same and we thank you for participating. The numbers are in and here are the results.

In news from the banking sector, Yes Bank on Thursday said it has increased its fundraising size to Rs 150 billion from Rs 100 billion.

In a late evening release, the bank said it will raise the additional amount through shares, ADRs, GDRs or convertible bonds.

Yes Bank has already raised over Rs 100 billion from State Bank of India (SBI) and other key banks and financial institutions through sale of equity under its reconstruction plan approved by the government and the Reserve Bank of India (RBI).

The RBI has also extended a Rs 600-billion credit line to the private lender for meeting obligations.

Yes Bank share price is presently trading up by 3.7%.

In one of the articles, we have written about the entire timeline of how YES Bank went from a stock market darling to a pariah. Read the article here: How the YES Bank Collapse Unfolded - 10 Points.

Moving on to news from the macroeconomic space, the Reserve Bank of India today, lowered the key repo rate by 75 basis points (bps) to 4.4%, to help arrest the economic slowdown in the wake of the coronavirus outbreak.

The reverse repo rate now stands at 4%, down 90 bps, falling to the lowest ever. Before this, it had hit the lowest point of 4.74% in April 2009 in the wake of the global financial crisis.

The six member Monetary Policy Committee (MPC) voted 4-2 in favour of the reduction of the repo rate by 75 bps, RBI Governor Shaktikanta Das said in an address to media.

Meanwhile, liquidity adjustment facility (LAF) has been reduced by 90 bps to 4% while cash reserve ratio (CRR) has been slashed by 100 bps to 3%.

The central bank advanced the policy review and the MPC met over March 24, 25 and 26 to analyze the situation caused by the unprecedented lockdown of the nation and all business activities.

The RBI also allowed banks and other lending institutions to extend the repayment schedule and moratorium by three months to avoid large NPAs and reduce risk weights.

Earlier, the US Federal Reserve had lowered the interest rates, bringing it near zero, in another emergency move to help shore up the US economy amid the rapidly escalating global coronavirus pandemic.

The Fed had cut interest rates by half a percentage point on March 3, too, in its first emergency cut since the financial crisis of 2008.

Many other central banks have been taking the same measures to control coronavirus.

For instance, the Reserve Bank of New Zealand (RBA) slashed interest rates by 75 bps to a record low. The Reserve Bank of Australia poured US$ 3.6 billion in liquidity into Australia's financial system and said it was prepared to buy government bonds.

We will keep you updated on all the news from this space. Stay tuned.

Note that the coronavirus threat has meant sharp losses for global stock markets.

We have written a piece around how deep this impact has been felt in the global financial markets. You can check out the same here: Worst Week for Global Stock Markets: Coronavirus Impact in 10 Points

Speaking of the Indian economy, with the RBI cutting rates by a whopping 75 points, the focus of market participants has now shifted to whether the RBI's rate cut will translate into better economic activity in the near term.

Like this chart shows, RBI rate cuts have always had a big gap with bank lending rates.

Yet Another RBI Rate Cut May Not Result in Lower Lending Rates

Here's what Tanushree Banerjee wrote about it in one of the editions of The 5 Minute WrapUp...

• It will be a while before lower lending rates stoke the economy.
  
  Therefore, hoping for an immediate revival in the economy is futile. The RBI has no magic wand to do this.
  
  Rather look for stocks that can outperform irrespective of the RBI policy.
  
  I believe the cement sector may be a good place to start.
  
  One of my recent recommendations from the sector is a typical Rebirth of India stock.
  
  And I won't be surprised if it repeats its 2002-2006 performance.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

Read the latest Market Commentary

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INDICESBSE (Rs 0 to 1)BSE (Rs 1 to 2)BSE (Rs 2 to 4)BSE (Rs 4 to 10)BSE (Rs 10 to 20)BSE (Above Rs 20)BSE - AllBSE-30BSE-100BSE-200BSE-500BSE AutoBSE BankexBSE Capital GoodsBSE Consumer DurablesBSE FMCGBSE HealthcareBSE ITBSE MetalBSE Oil & GasBSE PSUBSE TeckBSE RealtyBSE PowerBSE A GroupBSE B GroupBSE Mid-CapBSE Small-CapBSE Basic MaterialsBSE Consumer DiscretionaryBSE IndustrialsBSE UtilitiesBSE Sensex 50BSE Sensex Next 50BSE Bharat 22BSE 150 MidCapBSE 250 SmallCapBSE 250 LargeMidCapBSE 400 MidSmallCapBSE AllCapBSE LargeCapBSE SmallCap SelectBSE 100 LargeCap TMCBSE InfraBSE ManufacturingBSE CPSEBSE Private BankBSE Diversified FinancialsBSE MomentumBSE Low VolatilityBSE QualityBSE Enhanced ValueBSE Divident StabilityS&P BSE IPOBSE SMEIPOBSE 100 ESGBSE CarbonexBSE GreenexNSE (Rs 0 to 10)NSE (Rs 10 to 20)NSE (Above Rs 20)NSE - AllNSE-50NSE ITNSE Nifty Midcap 50NSE JR. NiftyNSE Bank NiftyNIFTY Next 50NIFTY 100NIFTY 200NIFTY 500NIFTY MidCap 100NIFTY SmallCap 250NIFTY SmallCap 50NIFTY SmallCap 100NIFTY LargeMidCap 250NIFTY MidSmallCap 400NIFTY AutoNIFTY Consumer DurablesNIFTY FinanceNIFTY FMCGNIFTY MediaNIFTY MetalNIFTY PharmaNIFTY Private BankNIFTY PSU BankNIFTY RealtyNIFTY Oil & GasNIFTY SME EmergeNIFTY CommoditiesNIFTY CPSENIFTY EnergyNIFTY India ConsumptionNIFTY InfraNIFTY MNCNIFTY PSENIFTY Serv SectorNIFTY100 Liquid 15NIFTY Midcap Liquid 15NIFTY Midcap 150 Quality 50NIFTY50 Equal WeightNIFTY100 Equal WeightNIFTY100 Low Volatility 30NIFTY100 Alpha 30NIFTY Alpha 50NIFTY Dividend Opportunities 50NIFTY High Beta 50NIFTY Low Volatility 50NIFTY200 Quality 30NIFTY 500 Value 50NIFTY 100 Quality 30SECTORSAgricultureAirlinesAluminiumAsset Management CompaniesAutomobilesAuto AncillariesBanks (Private)Banks (PSU)BankingCementChemicalsDefenceDiagnosticsDronesEngineeringElectric VehicleElectric Vehicle BatteryEnergy SourcesESGEthanolFertilizersFintechFMCGFoodGreen HydrogenHotelsInfrastructureInsuranceInvestment and FinanceInvITIT (Large)IT (Others)LogisticsMediaMetalMiningIndia's Big Tech StocksIndian PharmaMNC PharmaPSUPaintPaperPlasticPowerRating AgenciesReal EstateREITsRenewable EnergyRetailingSemiconductorShippingSteelSugarSupply ChainTelecomTextilesTravel Support Services

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