HT Estates

Markets plunge on poor GDPforecas­t

IN RED

- Press Trust of India feedback@livemint.com

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

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