Market tanks 1,069 pts in thumbs down to stimulus’
Goldman Sachs predicts major recession in India
The equity market tanked on Monday sending clear signal about the participants’ disappointment over the stimulus package announced by the Government even as global investment firm Goldman Sachs saw India slipping into a major recession. The market fell for the third consecutive day, each day responding to the separate tranches of stimulus announced by the Finance Minister.
Benchmark Sensex crashed 1,069 points tracking massive selloffs in banking and auto stocks. The 30-share BSE index ended at 30,028.98, while the broader NSE Nifty plunged 313.60 points to 8,823.25.
IndusInd Bank was the top laggard in the Sensex pack, cracking around 10 per cent, followed by HDFC, Maruti Suzuki, Axis Bank and UltraTech Cement. On the other hand, TCS, Infosys, ITC and HCL closed with gains.
Traders and investors remained on edge as the Home Ministry extended the lockdown for another two weeks till May 31 to contain the spread of coronavirus, said Narendra Solanki, Head Equity Research (Fundamental), Anand Rathi.
The relief package announcements appeared falling short of meeting market expectations on any demand side reforms, triggering an intense selloff in the domestic market, he noted.
The Government, in its first four tranches of the stimulus package, focussed on credit line to small businesses and new fund creations to be shouldered by banks and financial institutions with very little extra budget spending.
In the last set of measures, the Centre on Sunday announced plans to privatise PSUs in non-strategic sectors and suspend loan default-triggered bankruptcy filings for one year, and also gave a Rs 40,000-crore hike in allocation for the rural employment guarantee scheme to provide jobs to migrant workers.
Meanwhile, in a research reports published on Sunday Goldman Sachs has said the economic package announced over the past few days is unlikely to have an immediate impact on growth. It now estimates real GDP to fall by 5 per cent in fiscal year 2021.
“There have been a series of structural reform announcements across several sectors over the past few days. These reforms are more medium-term in nature, and we therefore do not expect these to have an immediate impact on reviving growth. We will continue to monitor their implementation to gauge their effect on the medium-term outlook for the Indian economy,” said Goldman Sachs in its report.
Tuesday, 19 May 2020 | PNS | New Delhi
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