RBI’s measures lift Sensex by 424 points; Nifty above 14,600

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Dalal Street cheered liquidity measures announced by RBI governor Shaktikanta Das. At close, the Sensex was up 424 points or 0.88% at 48,677, and the Nifty was up 121points or 0.84% at 14,617.

A liquidity window of Rs 50,000 crore with tenure of up to 3 years at repo rate being opened till March 31st, 2022. Under the scheme, banks can support entities including vaccine manufacturers, medical facilities, hospitals, and also patients. This lending will get priority sector classification till repayment or maturity. Banks will also create a Covid loan book under the scheme.

The announcements pumped up investor sentiment and fresh buying was seen in pharma and bank stocks. The Nifty Pharma index climbed over 4.12% whereas the Nifty Bank jumped 1.59%. In the pharma sector stocks like Lupin, Aurobindo Pharma, Sun Pharma and Cadila Healthcare, soared anywhere between 5-14%. Whereas in the banking & financial sector investors lapped up stocks like AU Small Finance Bank, Ujjivan Small Finance Bank, IndusInd Bank Axis Bank, IndusInd Bank, Kotak Mahindra Bank and ICICI Bank as they ended with gains of over 3%.

“The RBI Governor’s announcement did not include blanket moratorium and hence some of these fears did not come out to be true and Banking stocks did not sell-off. Small businesses and MSME borrowers have been given a chance to extend their payment schedules. Rs.50,000 cr term liquidity for the healthcare sector is welcome,” said Dhiraj Relli, MD & CEO, HDFC Securities.

Even Nifty IT, Nifty Metal, Nifty Auto & Nifty FMCG indices ended in the green. On the downside, the Nifty Realty index lost 1%.

In the broader markets, the BSE MidCap index settled over 1% higher and BSE SmallCap index gained 0.7%. Market breadth was positive as 1,198 shares advance compared to 672 stocks declining while 377 scrips remained unchanged.

Global markets:

European shares were trading higher while Asian shares were mixed on Wednesday, 5 May 2021, as sentiment took a knock from a selloff in large-cap Wall Street tech stocks.

In US, the Nasdaq fell more than 2% on Tuesday as steep declines in megacap growth stocks pushed Wall Street below record trading levels, with investors seeking shelter in more defensive parts of the market.

U.S. Treasury Secretary Janet Yellen said Tuesday that interest rates may have to rise to keep a lid on the burgeoning growth of the U.S. economy brought on in part by trillions of dollars in government stimulus spending. The former Fed chair later tempered her comments somewhat on the need for higher rates, saying she respects the Federal Reserve’s independence and was not trying to influence decision-making there.