Market update: Banking & Pharma shine as RBI announces term liquidity facility of Rs 50,000 crore
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.
RBI Governor Shaktikanta Das on May 5 announced new measures to tackle the economic impact of the second wave of the deadly coronavirus. Sensex, was up 305 points or 0.63% at 48,558. The Nifty 50 index was up 91 points or 0.63% at 14,587.
In the broader market, the S&P BSE Mid-Cap index was up 0.51% while the S&P BSE Small-Cap index was up 0.65%.
The market breadth was strong. On the BSE, 1693 shares rose and 833 shares fell. A total of 122 shares were unchanged.
RBI Governor Speech:
Reserve Bank of India (RBI) Governor Shaktikanta Das in his address to the media said that wide-ranging and swift actions are needed against the spread of the second COVID-19 wave. Central bank is monitoring emerging developments. Das said the global economic outlook is highly uncertain and clouded with downside risks. Financial markets regained ground on COVID vaccine optimism.
The RBI will continue to monitor the emerging situation and deploy all instruments at its command, Das said. Disruption in manufacturing units so far is minimal. Consumption demand is holding up, he added.
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
Opening of one-time restructuring for individuals, MSMEs, and small businesses. Individuals and MSMEs borrowers will be permitted one-time restructuring till September 30, 2021. Under restructuring 1.0, the period of moratorium can be extended up to a total of 2 years.
RBI Governor said individuals and small businesses with aggregate exposure of up to Rs 25 crores and those who have not taken restructuring earlier and were classified as standard as of March 31, 2021, will be eligible to be considered. The restructuring may be invoked up to September 31
Rationalization of KYC compliance norms and provide for video-based KYC for certain categories
Relaxation of the rules for availing overdraft facility for state govt up to Sept 30, 2021
Buzzing Index:
The Nifty PSU Bank index added 1.29% to 2,140.50, extending its winning run to the second trading session. The index has added nearly 5% in two days.
Union Bank of India (up 2.95%), Canara Bank (up 2.48%), Bank of India (up 2.12%), J&K Bank (up 2.06%), Bank of Baroda (up 2.06%), Bank of Maharashtra (up 2.06%), Indian Bank (up 1.4%) and UCO Bank (up 1.32%) were top gainers in PSU Bank space.
On the other hand, Nifty Pharma index rallied 2.65% to 13,585.90.