Sensex tanks 433 points, Nifty ends below 11,200; Kotak Bank, Zee Ent slip 3-5%

"RBI’s rate cut of 25 bps focuses on improving the financial health of the economy and managing inflation. We look forward to recovery in consumption levels with banks eventually passing on the benefits to both corporates and consumers. With constant rate cuts, amendments in policies and the beginning of festive season, we expect the economy to be soon in its best health."

Rupee at day's low, trades at 70.98 per dollar

The Indian rupee slipped and trading at day's low at 70.98 per dollar against previous close 70.88. The local currency has touched 71.01 intraday Friday.

The Indian rupee recovered from the day's lows and settled higher by 20 paise at 70.88 to the US dollar on Thursday, helped by weakening of the greenback overseas and easing crude oil prices.

Shares of Lakshmi Vilas Bank continued to remain under pressure as they were locked in lower circuit again on October 4, trading near 10-year low after the RBI initiated prompt corrective action (PCA) plan against the lender.

The PCA plan was initiated with effect from September 27, the bank said. The bank has reassured customers that it can transit normal business and there is no restriction on operations by depositors. The bank can also undertake lending activities to all segments except corporates and other stressed and high-risk sectors.

Strategic disinvestment process: Cabinet has approved a new process of strategic disinvestment, CNBC TV18 reported. To enable faster approvals, the strategic divestment process has been tweaked. DIPAM will be the nodal department for the strategic stake sale.

"RBI's rate cut of 25 bps by the RBI was short of our expectation of a front loaded cut of 40 bps amidst sharp downside revision of FY20 GDP growth forecast from 6.9 percent to 6.1 percent, which is reflective of further widening of the negative output gap. Basis the surplus monsoon outturn and numerous steps taken by the government in the recent past to revive growth, the MPC seems to have taken a calibrated view on incremental monetary accommodation."

"However, with CPI inflation projected to remain under 4 percent in the near to medium term, it is a welcome sign that the MPC has now decided to maintain accommodative policy stance “as long as it is necessary to revive growth. This should keep the door open for further rate cuts in the coming months."

The Indian debt and credit markets are showing signs of stress, a CARE Ratings report has said.

"Downgrades in NBFC and HFC segment due to the continuing liquidity stress are making it difficult for entities to raise finance in a timely manner as also delaying monetisation plans," CARE said.

The CARE Ratings Debt Quality Index (CDQI) improved by 0.4 percent during April 2018-March 2019. Thereafter, it increased during April 2019 due to debt issuances in the higher-rated entities but started falling from June.

"RBI has reduced the interest rate by 0.25 percent, totalling about 1.35 percent since February 2019 one of the fasted rate cuts in the recent history. This is in line with the govt motives to urgently revive growth. Lowering cost of money would certainly budge corporates to take risk and expand driving capex in the economy."

"The MPC was expected to reduce the interest rates given the global fragile environment and  slowdown in domestic economy. For stock markets this will be non-event from a short term point of view."

"The rate cut by 25 bps was expected by the market and is no surprise. I think the market will react indifferently to the statements from RBI about the expectations of the revival of domestic demand due to various measures taken by the government in the last couple of months and the assurance by the governor that the RBI will continue with an accommodative stance on monetary policy as long as needed. The downward revision of GDP for the June quarter of 2020 is not a surprise and the market is already discounting it. The market movement will not be much impacted with these measures.

The Indian rupee is trading flat at 70.89 per dollar on Friday against previous close 70.88. It recovered from the day's lows and settled higher by 20 paise at 70.88 to the US dollar on Thursday, helped by weakening of the greenback overseas and easing crude oil prices.

However, sustained foreign fund outflows and sell-offs in domestic equities put pressure on the forex market, somewhat capping the rupee gains.

“In light of the ongoing economic distress in the country, the 25 basis points cut in policy rate is short of expectation. While it is the fifth consecutive rate cut this year, it is insufficient to support the flagging consumer demand. The stressed real estate sector was looking up to a strong rate cut and sector specific lending provisions to improve both liquidity scenario and consumer spending ability. As has been witnessed so far, a cumulative 110 bps REPO rate cut over the last 6 quarters has failed to stimulate consumer demand as well as private investment in the economy. A slew of factors such as slowing economic output, rising unemployment rate and low consumer confidence have hindered the percolation of these small quantum rate cuts to the economy at large."

"On this backdrop, another 25 bps rate cut by Reserve Bank of India (RBI) comes as a disappointment, more so for the real estate sector. The aggravating non-banking financial company (NBFC) liquidity crisis is severely impacting credit availability for the industry, especially developers, as they struggle to raise even construction finance. Lack of liquidity stimulus will only worsen the situation further. Therefore, a substantial rate cut to reinvigorate end consumer demand and intervention on real estate sector specific lending provisions could have been a better intervention at this juncture."

"The central bank and the government have taken several measures to aid the supply side in the recent past. However, it is the weak consumer sentiment and spending inability that is the fundamental problem of the current economic slump. Unless meaningful initiatives are taken to propel consumer demand, these supply side interventions may not meet the desired goal of economic revival."

“RBI has once again proved to be well ahead of the curve in unleashing monetary efficacies to combat the economic slowdown, in perfectly complementing the fiscal initiatives, with the cut of 25 bps, bringing down the repo rate to 5.15 percent. In conformity with this aggressive approach, RBI is likely to continue with its campaign for more rapid transmission of the benefits to credit users, through lower rates to a large extent linked to the base rate."

"There may be further cuts in the rate in the light of the GDP growth forecast being lowered form 6.90 percent to 6.10 percent for FY 20. We need to see more action from the government for a consumption-led recovery."

Rupee and bond prices fell after the monetary policy committee of the Reserve Bank of India cut repo rates by 25 basis points to 5.15 percent on October 4. The rupee was trading flat at 70.88 per dollar, while 10-year government bond yield was at 6.62 percent, up 24 basis points. Bond yields and prices move in opposite directions.

A rate cut of 25 basis points was expected and the market had already factored it in, experts said.

“The Reserve Bank of India’s decision to reduce repo rate by 0.25% bps is a step in the right direction. This accommodative stance will help in stirring demand among homebuyers. With festive season beginning, this decision has come at a right time. Today’s announcement will help in boosting consumption, in the existing scenario when there’s an economic slowdown."

"RBI’s recent mandate on directly linking repo rate with fresh home loan rate was much needed to ensure immediate transmission of rate cut. After RBI’s decision, we request the government to take necessary steps to create housing demand across segments in this slowed economy.”

"The rate cut is on expected lines given fiscal deficit concerns. The RBI language is extremely dovish, indicating further rate cut going ahead. On the whole, it was a robust policy from RBI and the correction in equity market could be due to expectations of 40bps rate cut."

"Only change I see is governor Shaktikanta Das ensures that transmission of rate cut will go through. If he does see bond yields going up, fiscal deficit is large, then he will do open market operations so that bond market will do behave correctly."

Shares of Info Edge India gained nearly 6 percent intraday on October 4 after a media report talked about a fund raising plan from Zomato.

"Online food delivery and restaurant discovery platform Zomato is finalising a fresh $600-million round of fundraising likely to be led by existing Chinese investor, Ant Financial," The Economic Times said quoting people in the know.

The Reserve Bank of India has cut its benchmark repo rate by 25 basis points to 5.15 percent, in the fifth straight interest rate cut.

Real GDP growth for 2019-20 has been revised downwards from 6.9 percent in the August policy to 6.1 percent. The reverse repo rate has been reduced to 4.9 percent, and the bank rate stands at 5.40 percent.

Shares of Alembic Pharmaceuticals rose 3 percent intraday on October 4 after the company's joint venture received the USFDA’s approval for a spray used for treating plaque psoriasis.

Aleor Dermaceuticals (Aleor) has got the US Food and Drug Administration nod to for its abbreviated new drug application (ANDA) Clobetasol Propionate Spray, 0.05%.

Shares of Zee Entertainment Enterprises fell more than 5 percent intraday on October 4 after global brokerage Morgan Stanley slashed its target price by 33 percent amid debt concerns.

Morgan Stanley has underweight rating on the stock. It cut the target price to Rs 248 from Rs 370 per share earlier, saying the uncertainty may continue as the promoter debt issue lingered.

Shares of Maruti Suzuki India gained more than 1 percent intraday on October 4 after CLSA maintained its buy call on the stock with a target price at Rs 7,950, implying 18 percent potential upside from current levels.

"The bringing SUV styling to compact cars should help boost market share as Indian market still lacks SUV-like products in a lower price range," the global brokerage said.

CLSA sees potential for the company to strengthen its India franchise on such launches and believes Maruti is the best way to play a potential demand recovery.

Wipro gained more than 2 percent intraday on October 4 after Goldman Sachs upgraded the stock to neutral from sell and raised the target price to Rs 226 from Rs 221 per share.

According to Goldman Sachs, the current valuation reflected its weak growth profile against its peers, while it expected the company to continue underperforming its peers on IT revenue growth.

"The stock currently trades at about 0.4 times its FY2021E book value, which reflects concerns over its business outlook. There are significant challenges before the bank, with a large stressed pool, which, at the present state of threshold capital position, is a key risk." 

"Ratings downgrade and rise in stress loans may further impact the bank’s profitability. Moreover, a delay in raising capital may result in slow growth in the interim," Sharekhan added.

Shares of private lender Yes Bank rallied 8 percent intraday on October 4 after promoter entities and Rana Kapoor reduced their stake significantly and assurance from the CEO Ravneet Gill that the fundraising plan is on track.

Gold price today: Gold prices witnessed profit-taking in December futures trade on October 4 after registering a rally of more than 1 percent in the previous trading session. However, in the international markets, prices remain firm amid expectations of a rate cut by the US Federal Reserve.

After four straight sessions of losses, shares of IndusInd Bank climbed 3 percent on BSE in the morning trade on October 4. The stock rose after the global financial firm Citi maintained a buy recommendation, with a target price of Rs 1,980, saying the asset quality was holding up but NPA coverage was likely to increase.

Rupee update: Rupee traded with mild gains ahead of RBI policy rate decision. The Indian currency traded 8 paise higher at 70.82 per dollar around 0945 hours IST.

Market update: The hopes of a rate cut by the Reserve Bank of India is keeping the Indian market aloft.  Around 0935 hours, the 30-share Sensex was 210 points up at 38,317, while the Nifty index was 53 points up at 11,367.

Market update: Equity benchmarks Sensex and Nifty traded with healthy gains, supported by bank, financial and IT heavyweights. Yes Bank shares jumped 5 percent, followed by IndusInd Bank, State Bank of India and HDFC, each trading higher by over a percent.

Market update: The Indian market opened in the green ahead of RBI's policy meet outcome. The central bank is likely to go for the fifth consecutive rate cut. Yes Bank, IndusInd Bank, ONGC and State Bank of India were among the top gainers in the Sensex index.

RBI monetary policy: The Reserve Bank of India is likely to go for yet another rate cut on October 4, the fifth in a row, as inflation is within the comfort zone and the need to boost the economy is pressing. RBI Governor Shaktikanta Das has already hinted that benign inflation provides room for further monetary policy easing while space for fiscal space is limited.

Oil price update: Oil futures edged higher on Friday but were on track for a large weekly loss on fears that slower global economic growth will hurt fuel demand, while Saudi Arabia said it has fully restored oil output after recent attacks.

SGX Nifty update: Trends on SGX Nifty indicate a positive opening for the broader index in India. Around 0810 hours IST, SGX Nifty was 0.22 percent up at 11,384.

Asian markets update: Asian stocks edged higher on Friday, thanks to gains on Wall Street, but the mood was cautious before a key US job report that could help determine whether the Federal Reserve cuts interest rates further. Wall Street stocks climbed on Thursday after data showing US services-sector activity at a three-year low fuelled expectations that the Federal Reserve would cut interest rates to stem a wider economic downturn.