BENGALURU, May 18 (Reuters) - Indian shares tumbled on Monday, with banks leading the fall, as investors were disappointed by government measures to aid an economic recovery, even as domestic cases of the novel coronavirus continued to rise steadily.
A slew of announcements from India’s finance minister that concluded on Sunday, largely comprising liquidity measures, have fallen short of market expectations due to the lack of enough measures to boost immediate demand and consumption.
The package was billed by Prime Minister Narendra Modi as 20 trillion rupees ($265 billion) in fiscal and monetary measures, or about 10% of India’s gross domestic product (GDP), but economists say the direct fiscal outlay amounts to less than 1% of GDP.
“People generally were expecting immediate spends to revive the economy, which is not happening,” said Deepak Jasani, head of retail research at HDFC Securities in Mumbai. “Our (economic) recovery will be very slow and laboured.”
On Sunday, Finance Minister Nirmala Sitharaman said India would stop fresh insolvency cases for a year to avoid bankruptcies from firms hit by the COVID-19 pandemic, causing banking stocks to plunge on Monday.
“It will affect slippages and recoveries for banks in a big way,” Jasani said, referring to a fresh jump in bad loans.
Goldman Sachs on Sunday estimated that India’s real GDP would fall by 5% in 2020/21, sharply lower from an earlier projected 0.4% fall.
The NSE Nifty 50 index fell 3.05% to 8,857.90 by 0530 GMT, while the S&P BSE Sensex slid 3.09% to 30,137.63. The Nifty 50 slipped below the 9,000 level for the first time since April 22.
The Nifty banking index fell 6.25% and was on course for its worst day in two weeks. The top five drags on the Nifty 50 were lenders. HDFC Bank Ltd fell 4.7%, while ICICI Bank Ltd fell 8.1%.
Shares in drugmaker Cipla Ltd jumped 3% after March-quarter results on Friday and its filing of a new drug application for a generic version of GSK’s blockbuster lung drug Advair.
India on Sunday extended a nationwide lockdown to May 31, while easing some restrictions, but a ban on air travel and gatherings at several public places still remained.
The country’s tally of COVID-19 infections surged past 96,000 on Monday, while deaths surpassed 3,000.
Meanwhile, other Asian shares were led higher by S&P 500 futures on Monday as countries’ efforts to re-open their economies raised hopes of a pick up in economic activity. (Reporting by Sachin Ravikumar; Editing by Shounak Dasgupta and Uttaresh.V)