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Last Updated : May 22, 2020 06:41 PM IST | Source: Moneycontrol.com

Taking Stock: RBI surprise repo cut fails to cheer D-Street, financials take a hit

Financial stocks that hit a fresh 52-week low included Bajaj Finserv, Bajaj Finance, Shriram City Union Finance, SBI Cards, SBI, M&M Financial and Union Bank of India.


The Reserve Bank of India (RBI), which slashed interest rates by 40 bps on May 22, failed to lift D-Street sentiment. The S&P BSE Sensex recouped some of the losses towards the close but failed to hold onto 31,000 while the Nifty50 breached 9,100.

The Sensex ended the session 260 points lower at 30,672 while the Nifty50 slipped 67 points to 9,039.

Close

On a weekly basis, the Sensex fell 1.3 percent and the Nifty50 was down by 1.06 percent.

“Post the out-of-turn MPC meeting, the RBI has cut policy rates by another 40 bps since the macro impact of the prolonged lockdown is much severe than the initial expectations,” said Gaurav Dua, Sr VP, Head Capital Market Strategy & Investments, Sharekhan by BNP Paribas.

“More importantly, the moratorium period has been extended by another three months, total six months now, with provision to convert interest during moratorium period into a term loan.”

The RBI didn't announce any relief on the restructuring of loans to address the risk of rising asset quality issues in the banking sector, which disappointed equity markets, Dua said.

Sectorally, the damage was seen in banking and financials. The Nifty Financial Services was the top losers among sectoral indices, followed by the Nifty Private Bank which was down 2.8 percent, and the Nifty Bank was down 2.5 percent.

Financial stocks that hit a fresh 52-week low included Bajaj Finserv, Bajaj Finance, Shriram City Union Finance, SBI Cards, SBI, M&M Financial and Union Bank of India.

The action was seen in the Nifty IT, which was up 1.4 percent, followed by the Nifty Media which gained 1.1 percent, and the Nifty Pharma closed with gains of 0.84 percent.

Stocks & Sectors

Top Nifty gainers included Shree Cements, Cipla, M&M, and ZEE Entertainment.

Top Nifty losers included ICICI Bank, Bajaj Finance, Bajaj Finserv and Axis Bank.

A volume spike of more than 100 percent was seen in PFC, Petronet LNG, MRF, NIIT technologies and Idea Cellular.

Long Buildup was seen in stocks like TCS, M&M, Wipro and Dr Reddy’s Laboratories.

Short Buildup was seen in stocks like MRF, Adani Ports, Dabur India, Cummins India and Equitas Holdings.

Stocks in news

Banking and financial stocks fell after RBI Governor Shaktikanta Das extended the three-month moratorium for all term loan repayments to August 31.

SpiceJet rose 5 percent while IndiGo pared gains, a day after the Civil Aviation Ministry allowed resumption of domestic flights from May 25.

Reliance Industries (RIL) share price pared gains and closed in the red as investors preferred to book profits after the recent rally. The company announced the selling of further stake in its digital arm Jio Platforms.

PVR share price fell more than 3 percent after Moneycontrol reported that the Ajay Bijli-owned firm was looking to raise around Rs 300 crores via the rights issue route.

Technical View

The Nifty50 formed a Doji pattern on the daily charts

The index is hovering around 20-day EMA. On the upside, 9,150 is likely to act as a crucial hurdle for the index.

If the Nifty manages to sustain above 9,150, there is a possibility of a bounce towards the 9,300-9,350 zone.

On the flip side, support is placed at 8,888 then 8,800, say experts.

India VIX moved down by 1.85% to 32.38 levels.

The Bank Nifty failed to hold its crucial support of 17,400 and slipped towards 17,100 levels. “It formed a Bearish candle on a daily and weekly scale which suggests complete dominance by the bears,” Chandan Taparia of Motilal Oswal Financial Services Limited said.

“Now, as long as it holds below the 18,000 zone, selling pressure is likely to continue to witness further decline towards 17,000 then 16,500-16,300 zones while on the upside hurdle is seen at 18,250 then 18,500 levels,” he said.

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First Published on May 22, 2020 04:58 pm
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