Stock Market Closing Bell: Sensex tanks over 400 points; Nifty slides below 11,200 despite RBI rate cut

Indian stock markets witnessed a drop around 1 per cent despite RBI rate cut on Friday. The BSE Sensex corrected 434 points or 1.14 per cent to settle at 37,673.31, while the Nifty 50 closed below 11,200. The markets on Friday extended losses for the straight fifth day, despite the apex bank announced a 0.25% rate cut in its repo rate. The central bank has also reduced the GDP growth forecast to 6.1 per cent for the financial year 2019-20 (FY20), thereby raising concerns over slowing economic growth hitting investor sentiment.

The indices majorly had a hit due to losing sectors like auto and banking. The financial stocks led the decline with HDFC Bank, ICICI Bank, and Axis Bank falling up to over 3 per cent. On a weekly basis, Sensex shed nearly 3 per cent while Nifty50 lost 2.93 per cent.

Sujan Hajra, Chief Economist and Executive Director, Anand Rathi Shares told Zee Business Online, ''Despite the 25 bps rate cut today being at the lower bound of expectations, RBI remains concerned on growth and guided for continued accommodative monetary policy stance. While RBI continues to expect growth revival in the second half of FY20, growth rates have been reduced for both FY20 and Q1FY21. In line with these, RBI maintains an expansionary stance on the liquidity side also."

Talking about Asian stocks, they had a green trade on Friday due to gains on Wall Street. MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4 per cent. Japan's Nikkei stock index rose 0.22 per cent, and Australian shares rose 0.54 per cent. The pan-region Euro Stoxx 50 futures were up 0.44 per cent, German DAX futures 0.33 per cent higher and FTSE futures advanced 0.69 per cent.

Hajra further added,'' We now expect that rather than 5%, the repo rate in this cycle would bottom out at 4.5%. RBI's stance coupled with recent government measures bonds well for the equity market. We also feel that the likely deeper policy rate cut coupled with the focus of the RBI on the transmission of a policy rate cut in the credit market would result in bond yields softening more than earlier expected.''