Sensex gains 986 points as RBI unveils steps to fight Covid-19 crisis, financials rally

Sensex and Nifty closed on a bullish note Friday, as the second set of measures from the central bank and positive global peers kept investors optimistic. Extending gains for the second straight session, BSE Sensex ended 986 points higher at 31,588, while NSE Nifty closed 298 points higher at 9,291.

Earlier, market indices opened higher awaiting financial cues by RBI's Cheif Shaktikanta Das. Gains in Asian and European counterparts further helped benchmark indices close higher for the week. Sensex and Nifty have gained 1.38% and 1.70% higher this week.

RBI announced another round of stimulus package to minimise the effect of the coronavirus pandemic on the economy. Major highlights included reverse repo rate cut by 25 bps, refinancing packages of Rs 50,000 cr allotted for NABARD, SIDBI, NHB combined.

Most sectors witnessed strong bullish momentum and closed in green territory on Friday, barring pharma and FMCG. NBFCs and banking stocks rose sharply today as RBI Chief announced measures related to bank credit flows, NPA recognition and stressed asset reclassification. Top gainers on NSE Nifty and BSE Sensex included Axis Bank, ICICI Bank, HDFC, IndusInd Bank and Bajaj Finance each rising over 5%.

Ajit Mishra, VP - Research, Religare Broking said," Amongst the sectors, Banking stocks outperformed led by strong measures by the RBI and ended higher by 6.8%. Other sectors like Auto, Realty, and Capital Goods too ended healthy gains. The defensive sector including FMCG and Healthcare ended with losses.

One year extension on loans given to the real estate sector and banks requiring to invest a significant portion of the TLTRO with NBFCs & MFIs, was also big relief in these distressing times, suggested experts.

Expressing views over RBI's announcements, Vishal Kampani, Managing Director, JM Financial Group said," The RBI Governor has announced some commendable measures and acted swiftly to offer Rs.1 lakh crore liquidity window and cut the reverse repo rate to support NBFCs and that promptness signals a strong intent of the RBI to turn the wheel of the economy.

European markets opened 3% higher, backing the global bullish trend. In Asian indices, SGX Nifty, Nikkei and Kospi gained over 3% each, followed by 2.15% rise in Taiwan index. Strait Times and Shanghai index were trading marginally higher. Asian indices climbed higher on Friday, tracking cues from US indices as the prospect of the countries getting back to work and encouraging news on potential coronavirus treatments kept investors buoyed.

Wall Street ended at record highs yesterday, with Dow Jones Industrial Average rising 0.14%, the S&P 500 gaining 0.58% and the Nasdaq Composite adding 1.66%. Investors worldwide were optimistic over slowing of new virus cases, with the death toll in countries considered corona hotspots also signalling signs of slowing down.

Vinod Nair, Head of Research at Geojit Financial Services said, "Markets were buoyant following RBI measures to boost liquidity and reclassify NPA norms for commercial banks. The positive global markets also added to the buoyancy. Rate sensitive stocks managed to outperform. The focus will continue to be on how far these measures will help in containing the economic fallout of the virus and also on the earnings' guidance of companies.

Additional measures from RBI certainly helped the local currency Rupee, that closed 48 paise higher at 76.39 against the US dollar today. The local currency closed at a record low of Rs 76.86 per US dollar yesterday. The domestic currency benchmark has been hitting record lows recently due to high demand for the dollar, amid the global virus outbreak.

Expressing technical trend views on Nifty's outlook, Sameet Chavan (Chief Analyst-Technical and Derivatives, Angel Broking) said, 'The index now seems to be undergoing a consolidation phase amidst a stock-specific action in the broader market. For the near term, 8800 is the crucial support to watch whereas 9260-9320 is the immediate resistance zone. A move beyond the above-mentioned range of 8800 - 9320 could then lead to some directional move.'

Motilal Oswal, MD and CEO of Motilal Oswal Financial Services said,"Given the unprecedented times we are in, it is heartening that RBI is addressing all these challenges at a war footing. We believe, the key measures announced by RBI will help inject the much-needed liquidity in the system, facilitate and incentivise credit flow and provide flexibility on regulatory forbearance. Markets are in buying zone. Keep accumulating and increasing equity allocations gradually."

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