Markets plunge on poor GDPforecast
MUMBAI: Stock market benchmarkBSESensexplummetedby 434 points, or 1.14%, on Friday due to heavy losses in banking and FMCG stocks despite a 25 basis point (bps) cut in the key policyratebytheReserveBankof India (RBI), which also slashed the growthoutlookforthisfiscal.
After opening nearly 300 points higher, the 30-share index gaveupallthegainstoturnnegative shortly after the policy announcement by the Reserve Bank of India (RBI).
After gyrating 770 points during the day, the 30-share Sensex ended 433.56 points or 1.14% lower at 37,673.31. It hit an intraday low of 37,633.36 and a high of 38,403.54.
The broader NSE Nifty plunged 139.25 points or 1.23% to close at 11,174.75.
Duringthe holiday-truncated week, Sensexplummeted1,149.26 points or 2.96%, while Nifty declined 337.65 points or 2.93%.
In its fourth bimonthly policy review of this fiscal, the central bank reduced its benchmark lending rate by 0.25 percentage point to 5.15% to revive growth that hit asix-yearlowof5% in the June quarter.
The RBI also lowered its growth forecast for 2019-20 to 6.1% from 6.9% earlier and affirmed commitmenttoremain accommodative to address growthconcerns“as long as necessary”.
“Despite the rate cut and the dovishcommentary, equity market has reacted negatively, especially banks. That’s because of the RBI’s focus on quick transmission of lower interest rates wouldputpressureonmarginsof banks,” GauravDua, senior vice president and head of capital market strategy and investments, Sharekhan by BNP Paribas, said.
“Also, the economic growth outlook remains concerning despite the135bpspolicyratecuts in 2019 andthere is limited elbow room with RBI now to further takemonetaryactionstosupport the economy,” he added.
VinodNair, headofresearchat Geojit Financial Services, commentedthatdespitetheRBI’sand the government’s synchronised efforts to offset aslowdowninthe economy, investors havetakena
AFTER OPENING NEARLY 300 POINTS HIGHER, THE SENSEX GAVE UP ALL GAINS TO TURN NEGATIVE AFTER RBI ANNOUNCEMENT