Finance Minister Nirmala Sitharaman on Friday said the government and the Reserve Bank are closely monitoring the stock market, which is facing intense volatility amid mounting coronavirus fears.
Together with the RBI, the government is closely monitoring markets, she said on the situation arising out of a panic spread of coronavirus pandemic.
After being battered in the early session, the BSE Sensex spurted 1,325.34 points and the NSE Nifty rose 365.05 points to settle the day at 9,955.20.
Indian market saw its biggest intra-day selloff in early session, wiping nearly Rs 12 lakh crore off investor wealth in less than 20 minutes of opening trade.
As coronavirus-led recession fears triggered panic selling globally, both Sensex and Nifty plunged over 10 per cent in the opening session, hitting their lower circuit levels.
Stock exchanges halted trading for 45 minutes. Normal trading resumed at around 1030 hours.
The last circuit freeze happened in January 2008.
The Reserve Bank of India (RBI) on Friday said it is closely monitoring the current global situation and assured that it will take all steps to keep markets adequately liquid and stable. The statement comes at a day when trading on the Indian stock exchanges hit a “circuit breaker” — first time since 2008 — as soon as markets opened on Friday.
“The RBI is closely and continuously monitoring the rapidly evolving global situation and will take all necessary measures to ensure that money, debt and forex markets remain adequately liquid and stable, and continue to function normally,” the RBI said in a statement. In the currency markets, the Indian rupee recovered sharply to trade 46 paise higher at 73.82 against the US dollar. At open, the rupee fell to a record low of 74.5075 against the US dollar.
The RBI also announced to infuse an additional short-term liquidity of Rs 25,000 crore in to the system to counterbalance the domestic liquidity effects on account of dollar sell-buy swap on Friday.
It conducted Rs 25,000 crore of a variable rate repo auction with a 7-day tenor.
On Thursday, the RBI had announced to undertake six-month US dollar sell/buy swaps to provide liquidity to the foreign exchange market amid evolving financial market conditions and taking into consideration the requirement of US dollars in the market.
To start with, an amount of USD 2 billion would be offered on March 16, 2020.
The swap will be in the nature of a simple sell/buy foreign exchange swap from the Reserve Bank side.
A bank will buy US Dollars from the RBI and simultaneously agree to sell the same amount of US Dollars at the end of the swap period.
The RBI also said the minimum bid size for the swap auction will be USD 10 million and in multiples of USD 1 million thereafter.