The Indian market extended losses to end lower on Thursday, dragged mainly by banking and financial stocks after the Reserve Bank of India (RBI) cut repo rate by 25 basis points for the third time in a row. The indices posted the biggest one-day fall in 2019.
The RBI cut its key interest rate by 25 basis points in a widely expected move and shifted its policy stance to “accommodative” from “neutral” to boost a slowing economy. The six-member monetary policy committee (MPC) cut the repo rate or the rate at which the RBI lends money to commercial banks to 5.75 percent.
The Sensex ended 554 points lower at 39,530 while the broader Nifty50 index fell 178 points to end at 11,844. Among broader markets, the Nifty Midcap and the Nifty Smallcap indices were down 1.7 percent and 1.9 percent, respectively.
Coal India, Titan, HeroMoto Corp, NTPC, and Power Grid Corporation were among the top gainers on the key indices, whereas GAIL, Indiabulls Housing Finance, IndusInd Bank, Yes Bank, and SBI led losses.
All sectors ended the day in the red. Nifty PSU Bank index was the worst performing sector, down over 5 percent followed by Nifty Private Bank and Nifty Bank, which fell over 2 percent each. The Nifty Media, Nifty Realty, and Nifty Pharma indices also declined over 1.5 percent each.
PSU banks were under pressure post the RBI policy announcement and amid worries of exposure in the DHFL crisis. Allahabad Bank, Syndicate Bank, Bank of Baroda, Union Bank of India, and Bank of India fell in the range of 6-7.5 percent.
Shares of DHFL plunged 16 percent after rating agencies Crisil and ICRA downgraded the company's Rs 850 crore commercial paper (CP) to “D” from "A4+" and "A4" respectively. Care Ratings also downgraded its Rs 17,655 crore non-convertible debentures from 'BBB-' to 'D'.
Other NBFC's also fell on worries of the DHFL crisis accelerating. Shriram Transport Finance, Indiabulls Housing Finance, Edelweiss, Indiabulls Ventures an M&M Finance were also down in the range of 3.5-7.8 percent.
GAIL India's shares fell 11.5 percent on Thursday after global brokerage firm CLSA downgraded the stock to 'underperform' from 'buy' on disappointing tariff revision for the company's HVL pipeline.
Globally, Asian markets were also in a muted mood on fears that US trade tussle with Mexico would further depress global growth. MSCI’s broadest index of Asia-Pacific shares outside Japan was off 0.2 percent in very thin trade. Japan’s Nikkei ended all but flat and Shanghai blue chips eased 0.6 percent.
-Inputs from Reuters
First Published: Jun 6, 2019 3:58 PM IST
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