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Are bank stocks in for deeper pain?

05:27 Min | May 22, 2020, 7:52 PM IST
Tune in! Let’s talk about what happened in the market today.
Welcome to ETMarkets Watch, the show about stocks, market trends and money-making ideas. I am Amritesh Malhan and here are the top headlines at this hour.

· RBI cuts repo rate by 40 bps; extends loan moratorium till August

· HDFC Bank cuts base rate by 55 bps to 8.10%

· 2020-21 GDP growth likely to be in negative territory, says RBI Governor

· Oil prices drop over 5% on China-US tensions, demand doubts

· India plans scrutiny of new portfolio investors from China, Hong Kong

Let’s start with what happened in the market today.

RBI's bleak growth forecast and an extension of moratorium on loan repayment that signalled a possible spike in bad loans spooked bank and financial stocks on Dalal Street on Friday, causing benchmark Sensex 260 points, or nearly 1 per cent. The 50-share Nifty dropped 67 points to barely stay above the 9,000 mark. The HDFC twins, ICICI Bank and Axis Bank led the fall, while solid gains in IT majors Infosys and TCS capped the downside.

Smallcaps outperformed midcaps and largecaps. Sectorally, BSE Bankex and Metal and Realty indices ended the day in the red while the IT, Auto and TECk indices settled in the green.

In the broader market, NBFC players M&M Financial, Equitas and Shriram Transport declined over 5 per cent each, while Zee Entertainment, TVS Srichakra and Vaibhav Global gained up to 20 per cent.

So why are liquidity measures and lower interest rates not enthusing investors any more?

We caught up with Paras Bothra of Ashika Stock Broking to try and understand the market dynamics.

Welcome to the show, Mr Bothra

Why did stocks react negatively to RBI rate cut and moratorium extension?
Paras Bothra Byte 1

What is your outlook for bank stocks? Are they in for even deeper pain?
Paras Bothra Byte 2

Nifty is now rules around the 9,000 market. How much more downside do you anticipate from here on?
Paras Bothra Byte 3

In technical charts, Nifty formed a small-bodied candle on the daily scale and a bearish candle on the weekly scale. It has also been forming lower highs and lows since last three weeks. What do they mean?

We have with us Nilesh Jain of Anand Rathi to do the chart reading.

What are the technical charts telling you about the state of the market?
Nilesh Jain Byte 1

Give us a brief outlook for the forthcoming week.
Nilesh Jain Byte 2

Globally, other Asian markets ended in the red. European markets traded lower in early deals. US stock futures were traded lower in pre-market trade. Domestic equity markets will remain closed on Monday for Id-Ul-Fitr.

That’s all for now. Do check out ETMarkets.com for all the news, market analysis, investment strategies and dozens of stock recommendations. Enjoy your evening. Good bye!
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