Sensex Rises by 424 Points, Nifty by 121 on RBI Liquidity Booster

BSE Sensex on Wednesday shot up for the first time in three days after RBI unveiled a slew of measures to support the economy facing headwinds due to the second wave of the Covid-19 pandemic, in which cases have shot up to 2,06,65,148, while the death toll stood at 2,26,188 in the Union Health Ministry bulletin released earlier in the day.

The 30-share BSE index jumped 424.04 points or 0.88 per cent to close at 48,677.55, while the NSE Nifty surged 121.35 points or 0.84 per cent to 14,617.85.

The rupee broke its two-day winning streak and closed 6 paisa lower at 73.91 against the dollar.

Banking, pharma and IT stocks led the Sensex rebound, even as a depreciating rupee capped the gains, traders said.

Sun Pharma was the top gainer in the Sensex pack, soaring 5.94 per cent, followed by Kotak Bank, Axis Bank, IndusInd Bank, ICICI Bank, Dr Reddy’s, Titan and TCS.

Only three index stocks closed in the red — Bajaj Finance, Asian Paints and HUL, slipping up to 1.75 per cent.

Earlier in the day, the RBI allowed certain individual and small borrowers more time to repay debt and allowed banks to give priority loans to vaccine makers, hospitals and Covid-related health infrastructure as it announced support measures to cushion the pandemic’s blow to the economy.

RBI Governor Shaktikanta Das also said the central bank will buy Rs 35,000 crore of bonds under the Government Securities Acquisition Programme (G-SAP) — India’s version of quantitative easing — on May 20. RBI also allowed banks to dip into their floating provisions to set aside money for bad loans.

“Domestic equities rebounded mainly supported by financials, IT and pharma. Notably, announcement of liquidity supports by the RBI Governor to tackle the challenges coming from second wave of COVID-19 crisis aided financials to rebound,” said Binod Modi, Head Strategy at Reliance Securities.

While rising Covid-19 cases and deaths in several states are matters of concern, visible modest decline in new cases in many states, including Maharashtra, Madhya Pradesh and Gujarat, offers comfort, he added. 

Sectorally, BSE healthcare, bankex, basic materials, metal and IT indices rallied up to 3.06 per cent, while realty remained in the red.

Broader BSE midcap and smallcap indices rose up to 1.05 per cent.

Meanwhile, S&P Global Ratings on Wednesday slashed India's GDP growth forecast for the current financial year to 9.8 per cent, saying the second Covid wave may derail a budding recovery in the economy and credit conditions.

India’s services sector activities eased to a three-month low in April, as the rise in business activity was constrained by the pandemic, and sentiment towards growth prospects faded, a monthly survey showed.

On the global markets front, US stocks wobbled after Treasury Secretary Janet Yellen said the US Fed may have to hike interest rates to prevent the economy overheating, though she later clarified she was “not predicting or recommending” rate hikes.

Elsewhere in Asia, bourses in Hong Kong ended on a negative note, while Seoul, Shanghai and Tokyo were closed for holidays.

Equities in Europe were trading with significant gains in mid-session deals amid positive macroeconomic data and corporate earnings.

Brent crude was trading 1.34 per cent higher at 69.80 per barrel. 

Foreign institutional investors were net sellers in the capital market on Tuesday as they sold shares worth Rs 1,772.37 crore, as per exchange data.