India's Nifty ends higher on rate cut but logs sixth week of declines
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BENGALURU — India’s Nifty blue-chip index closed slightly higher on Friday after wild swings late in the session, as the country’s central bank slashed interest rates to counter the economic damage from a 21-day lockdown aimed at curbing the spread of coronavirus.
The NSE Nifty 50 index closed 0.2% higher at 8,660.25, while the S&P BSE Sensex finished the session 0.44% lower at 29,815.15.
Still, both indexes recorded their sixth straight week of declines amid historic sell-offs in global stock markets as the virus locks down several countries, raising fears of a deep recession.
The Reserve Bank of India joined several other central banks across the world in slashing interest rates. It cut the repo rate by 75 basis points to 4.40%, exceeding market expectations for a 50 basis point cut
Both the Nifty and Sensex, which rose over 4% in early trade, fell over 1% after the central bank announcement.
“Market is trying to find its feet after the RBI announcement,” said Mayuresh Joshi, head of equity research at William O’Neil & Co in India.
“Markets are going to assess until what extent these measures are going to help and to what extent growth is impacted … it is a very volatile time.”
According to a Reuters poll, under a worst-case scenario, the economy was forecast to grow by a median 0.5% in April-June, with one economist predicting a 20% contraction. Still, only about a quarter of those who answered this additional “worst-case” question said the economy would shrink.
While the markets are still down, coordinated stimulus action from governments around the world has offered some respite.
On Thursday, the Indian government announced a $22.6 billion stimulus plan that provides direct cash transfers and food security measures to help the poor amidst a countrywide lockdown.
The number of coronavirus cases in India stood at 724 as of Friday, of which 17 people had died.
The rupee, which bounced a bit earlier in the day, was 0.34% weaker at 75.2675 against the dollar by 1025 GMT.
The benchmark 10-year bond yield dropped as low as 5.98% in the immediate aftermath of the announcement before rising to 6.1411% by 1025 GMT. It had closed at 6.22% on Thursday.
In Mumbai, the NSE Bank index, which had surged nearly 8% in the morning, trimmed gains as the RBI governor spoke. It finished the session 1.81% higher. (Reporting by Chandini Monnappa in Bengaluru; Editing by Shounak Dasgupta and Saumyadeb Chakrabarty)
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