We had mentioned in Wednesday’s closing report that Nifty, Sensex wait for the Reserve Bank of India’s policy. The major indices of the Indian stock markets suffered a correction on Thursday and closed with losses over Wednesday’s close.
On the NSE, there were 457 advances, 1,310 declines and 329 unchanged. The trends of the major indices in the course of Thursday’s trading are given in the table below:
Disappointment over a less-than-expected lending rate cut by the Reserve Bank of India (RBI) dragged the S&P BSE Sensex more than 500 points lower on Thursday. The key lending was reduced by 25 basis points (bps) to 5.75% and the monetary policy stance from neutral to accommodative. According to market observers, investors were also rattled by a downward revision in the country's GDP growth rate to 7% from 7.2% in 2019-20.
Besides, lack of any supportive measures by RBI for the NBFC (Non-Banking Financial Company) sector also caused the selloff. According to reports, Dewan Housing Finance Corporation Ltd (DHFL) had missed interest payments due on Tuesday, following which rating agencies ICRA and CARE downgraded DHFL's commerical paper worth Rs 850 crore "default". We expect the market to be driven by global trends with the possibility of a further minor decline.
The BSE Sensex closed 553.82 points or 1.38% lower at 39,529.72 points, while the NSE Nifty50 was down 177.90 points or 1.48% at 11,843.75 points. Almost all sectoral indices, except consumer durables, IT and FMCG, closed in the red. Particularly impacted were the interest rate sensitive stocks such as banking, automobile and capital goods.
Shares of GAIL (India) plunged over 11% in Thursday's session after global brokerage CLSA downgraded the stock to underperform from buy while cutting the target price to Rs365 from Rs420. CLSA attributed the downgrade to the disappointing tariff revision for key pipeline against the brokerage's expectation of 15%. The government has started work on bifurcation of GAIL (India) into two divisions -- marketing and transportation units – of which one could be sold. Also, a three-way merger of power generation companies NTPC, SJVN and NHPC is on the cards.
Eros International Media shares tanked by 20% to Rs53.10 after a downgrade by rating agency CARE. CARE cited delays or likely defaults in serving debt availed from banks as rationale for the downgrade. It has lowered the long-term loan facilities to ‘D’ or default from BBB-.
The top gainers and top losers of the major indices are given in the table below:
The closing values of the major Asian indices are given in the table below: