RBI cuts repo rate by 40bps to 4%, sees contraction in FY21 GDP growth

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Indian markets declined on Friday even as the Reserve Bank of India (RBI) slashed repo rate by 40 basis points (bps) to 4 per cent and maintained the stance ‘accomodative’. Consequently, reverse repo rate now stands at 3.35 per cent from 3.75 per cent earlier. Moreover, RBI Governor Shaktikanta Das said that the GDP growth in FY21 is expected to be in negative territory. READ MORE

Among headline indices, the S&P BSE Sensex slipped 290 points to around 30,630 levels and the Nifty50 index slipped below the 9,050 level. Infosys gained 2 per cent after the class action lawsuit filed against the company in the US was dismissed. Reliance Industries gained 1 per cent after the conglomerate said that KKR would invest Rs 11,367 crore into Jio Platforms for 2.32 per cent equity stake. READ MORE

The trends among Nifty sectoral indices was mixed. Nifty PSU Bank index, up 1.8 per cent, gained the most.

Results today: A total of 25 companies including Alembic Pharmaceuticals, IDFC First Bank, and UPL, are scheduled to announce their March quarter earnings later in the day.

COMMENT :: VK Vijayakumar, chief investment strategist, Geojit Financial Services

RBI, which has been proactive in recent times, has risen to the occasion by advancing the policy meet to cut policy rates by 40bp. Also, the unequivocal statement that monetary policy will continue to be accommodative till growth revives sends positive signals. The fact that the central bank has refrained from giving a GDP growth figure is a reflection of the complexity in giving projections with the present growth models. Extension of the moratorium announced earlier by another 3 months is a relief. A takeaway from the policy announcement is that the stress in the banking sector will continue..Read More