Markets: Sensex plunges 433 points after RBI cuts GDP forecast; banking stocks tank 

 

Closing bell

The benchmark indices, the BSE Sensex and NSE Nifty, ended over 1 per cent lower on Friday after the RBI cut its economic growth projection for this fiscal to 6.1 per cent, from 6.9 per cent earlier.

The Sensex slumped 433 points or 1.14 per cent to close at 37,673. The Nifty finished down 139 points or 1.23 per cent lower at 11,174.

As was widely expected, the central bank's monetary policy panel cut the repo rate by 25 bps to 5.15 per cent in a bid to boost economic activity in the country.

The top gainers in the Sensex pack were TCS, Tech Mahindra, Infosys, ONGC and IndusInd Bank. The banking stocks dropped sharply, with Kotak Bank leading the decline (down 3.53 per cent), followed by ICICI Bank (3.35 per cent), Tata Motors (2.94 per cent), HDFC Bank (2.78 per cent) and Larsen & Toubro (down 2.19 per cent).

Among the BSE sectoral indices, the banking index fell 2.54 per cent and consumer durables dropped 2.2 per cent. Finance was down 1.80 per cent and capital goods fell 1.80 per cent during the session.

 

European shares rise higher on hopes of Fed action

 

European shares rose on Friday as investors were hopeful of further monetary easing from the US Federal Reserve in the wake of poor economic data, while chip stocks nudged higher after a report said Apple was increasing production of its new iPhone models. Click here to read the European markets report.

 

Crude oil weighed down by global growth concerns

 

Oil futures were higher ahead of the weekend but remained on track for large weekly losses on fears that slower global economic growth will hurt fuel demand, even as Saudi Arabia said it has fully restored oil output after recent attacks. Click here to read in full the crude oil market report .

Asian stocks edge up in cautious trade

 

Asian stocks edged up on Friday, thanks to gains on Wall Street, but signs of widening cracks in the global economy curbed the risk appetite as markets looked to a key US job report that could determine whether the Federal Reserve cuts rates further. Click here to read in full the Asian markets report .

RBI policy: Further relief for borrowers as rates move lower

 

Loans will get cheaper while depositors will have to look for other options. Bond yields remained flat given the Reserve Bank of India’s acceptance of economic slowdown.

The Monetary Policy Committee (MPC) unanimously cut the repo rate by 25 basis points to 5.15 per cent. This translates to a cumulative cut of 135 bps in CY19. That said, banks have transferred only 30-40 bps cut in their lending rates while the transfer in deposit rates was much faster. After the monetary policy in August, SBI had cut its deposit rates thrice by 25-75 bps cumulatively.

The RBI’s move to mandate the linking of floating rate loans to an external benchmark starting October 1, was well timed. Click here to read in full a news analysis on relief for borrowers as rates move lower .

Sensex, Nifty sharply lower

The equity benchmark, BSE Sensex, dropped over 300 points in the afternoon session on Friday, after the RBI sharply cut the economic growth projection for this fiscal to 6.1 per cent from 6.9 per cent.

In the fourth bi-monthly review of the policy, the central bank also reduced its benchmark lending rate by 0.25 per cent to revive growth that has hit six-year low of 5 per cent.

After opening nearly 300 points higher, the 30-share index pared all its gains to turn negative after the policy announcement by the RBI. It was trading 323 points, or 0.85 per cent, lower at 37,783 at 1330 hours. Similarly, the broader NSE Nifty stood 84 points, or 0.75 per cent, down at 11,229.

Top losers in the Sensex pack included Kotak Bank, Bharti Airtel, L&T, PowerGrid, ITC, HDFC Bank, Tata Motors, ICICI Bank, Axis Bank and HUL, shedding up to 3 per cent.

On the other hand, IndusInd Bank, M&M, Tech Mahindra, Infosys, HDFC, Sun Pharma, Hero MotoCorp and Vedanta rose up to 2 per cent.

Rate-sensitive banking stocks faced the heat, with the BSE bankex falling 1.16 per cent. BSE realty and consumer durables indices, too, turned red.

The Reserve Bank on Friday sharply cut its economic growth projection for this fiscal to 6.1 per cent from 6.9 per cent earlier, but expressed hope that the growth will recover in the second half of 2019-20.

The central bank’s estimates come in the wake of GDP growth sliding to a six-year low of 5 per cent in the June quarter, on a massive slowdown in consumption and private sector investments.

Further, the RBI’s Monetary Policy Committee cut its benchmark lending rate by 0.25 per cent to revive growth that has hit six-year low of 5 per cent, and affirmed its commitment to remain accommodative to address growth concerns ‘as long as necessary’.

The rupee was also trading flat against its previous close at 70.89 in afternoon session. Elsewhere in Asia, bourses in Hong Kong, Korea and Japan were trading on a weak note. Chinese markets are closed for a holiday week.

 Brent futures, the global oil benchmark, rose 0.42 per cent to $57.95 per barrel. - PTI

Nifty call: Go short on rallies, with a stop-loss at 11,330

 

Nifty 50 October futures (11,284)

The Sensex and the Nifty began the session on a positive note, taking bullish cues from the US markets, although the Asian markets are mixed. The Dow Jones index gained 0.47 per cent to 26,201 and the S&P 500 added 0.8 per cent to its 2,910 levels in the last session. The Nikkei 225 index is up by 0.3 per cent at 21,410 levels, while the Hang Seng index has slumped 1.4 per cent to 25,737 in today's session.  Click here to read in full the Nifty call report .

Trading Call: Alembic Pharmaceuticals (₹547):Buy

The stock of Alembic Pharma, which has been trading in the band between ₹500 and ₹550 for the past three months, broke out of the range as the company’s joint venture received approval from USFDA for one of its drugs. The stock seemed to have pulled back after the breakout and is currently trading at ₹547.

The price action looks positive for the stock, as it has been forming higher highs and higher lows recently, thereby, forming a higher base. Also, the stock is trading above both its 21-day and 50-day moving averages.

Because of the positive sentiment, the stock will most likely move upwards in upcoming sessions. Beyond ₹550, the medium-term trend will become bullish. Hence, traders can initiate long positions on dips, with a stop-loss below today’s low at ₹525, and look for a short-term target of ₹580 – the 61.8 per cent Fibonacci retracement level of the previous bear trend.

Over the medium-term, the stock has the potential to appreciate towards ₹614.

Supports: ₹520 and ₹500

Resistances: ₹580 and ₹614

 

RBI raises lending capacities of MFIs

 

Expanding the lending capacities of Micro Finance Institutions (MFIs), the Reserve Bank of India on Friday raised the household income limit for borrowers of NBFC-MFIS.

The household income limit for borrowers of NBFC-MFIs in rural areas will be hiked to ₹1.25 lakh from the current ₹1 lakh, while for urban and semi-urban areas it will be increased to ₹2 lakh from the current ₹1.6 lakh. Click here to read the report on RBI raises lending capacities for MFIs .

PMC Bank: ED raids 6 locations; slaps money-laundering charge

The Enforcement Directorate (ED) on Friday raided six locations in Mumbai and adjoining areas and registered a money-laundering case to probe alleged fraud in the  Punjab and Maharashtra Cooperative (PMC) Bank  case, officials said.

They said the raids were being conducted after a criminal compliant was filed under the Prevention of Money Laundering Act (PMLA) by the central agency.

The ED case is based on an FIR filed by the Economic Offences Wing (EOW) of Mumbai police. Click here to read in full the report on raids on PMC Bank at 6 locations .

 

RBI cuts repo rate by 25 bps to 5.15%

 

Spreading festive cheer, the Reserve Bank of India on Friday announced a cut of 25 basis points in the repo rate to 5.15 per cent. The announcement however, came on a solemn note amidst slowing growth and falling demand.

“The Monetary Policy Committee (MPC) at its meeting today (October 4, 2019) decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points to 5.15 per cent from 5.40 per cent with immediate effect,” the RBI said in a statement. Click here to read in full the report on the RBI repo rate cut .

 

 

Sensex, Nifty back in the red, RBI cuts repo by 25 bps

The benchmark indices, the Sensex and the Nifty, shed their early gains at mid-session, soon after the RBI monetary policy panel announced that it had cut the repo rate by 25 bps to 5.15 per cent.

The Sensex fell 31 points or 0.08 per cent to 38,075, while the Nifty fell 16 points or 0.14 per cent to 11,297.

The central bank also announced that the real GDP growth rate for 2019-20 had been cut to 6.1 per cent from its August forecast of 6.9 per cent.

“The Monetary Policy Committee (MPC) at its meeting today (October 4, 2019) decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points to 5.15 per cent from 5.40 per cent with immediate effect,” the RBI said in a statement.

The RBI had cut the repo rate by 35 basis points in the last policy review in August. In all, it has now cut rates by 135 basis points.

The RBI has revised downwards the real GDP growth for 2019-20 to 6.1 per cent from its August forecast of 6.9 per cent. GDP growth for the first quarter of 2020-21 has also been revised downwards to 7.2 per cent.

RBI set to deliver fifth straight interest rate cut

 

The Reserve Bank of India is set to deliver a fifth straight interest rate cut on Friday, although economists are unsure of the quantum following an unconventional 35 basis-point easing last time.

While all 39 economists surveyed by Bloomberg News expect a reduction, their forecasts range from 15 basis points to 40 basis points. The RBI has lowered borrowing costs to a nine-year low of 5.4% through 110 basis points of easing so far in 2019. Click here to read the report on RBI set to deliver another interest rate cut .

 

Board united on raising as much capital as needed: Ravneet Gill

 

Underlining YES Bank’s strong financials, its Managing Director and CEO Ravneet Gill says the 23 per cent fall in the bank’s share price on Tuesday had no correlation with the private lender’s performance. On Thursday, the YES Bank scrip closed with gains of nearly 33 per cent on the BSE. In an interview to BusinessLine , Gill said the bank is on track to raise capital and could see a significant dilution. He is also optimistic about the bank’s growth prospects and resolution of bad loans. Click here to read the full interview with YES Bank CEO Ravneet Gill .

 

Why IRCTC’s initial public offering was a missed opportunity for the government

 

Pricing an initial public offering (IPO) is considered an art, for no small reason. One need look no further than the Indian Railway Catering and Tourism Corporation (IRCTC) IPO, which closed on Thursday, to understand why. The numbers always tell a story. While the government had targeted a mop-up of ₹645 crore, IRCTC’s IPO saw bids amounting to a whopping ₹72,000 crore! For a government that is desperately trying to shore up its revenues at a time when it has announced a reduction in the corporate tax rate and coping with falling Goods and Sevices Tax (GST) collections, this definitely is an opportunity missed. Click here to read in full an analysis on why  the IRCTC IPO was a missed opportunity for the government .

 

Rupee rises 9 paise to 70.78 versus USD in early trade ahead of RBI policy decision

 

The Indian rupee appreciated by 9 paise to 70.78 against the US dollar in early trade on Friday ahead of the Reserve Bank of India’s (RBI) monetary policy decision.

Forex traders said, the domestic unit was trading higher as investors believe the RBI will go for yet another rate cut to boost slowing economic growth.

The RBI’s Monetary Policy Committee (MPC) is slated to announce its fourth bi-monthly policy decision for this fiscal later in the day. Click here to read in full the rupee report .

Sensex, Nifty hold firm

The Sensex and Nifty traded firm in early session on Friday. The Sensex was at 38,363, up 256 points or 0.67 per cent higher, while the NSE was at 11,368, up 54 points or 0.48 per cent firmer.

The markets have risen along with expectations for another rate cut by the RBI at its policy meeting today.

The top gainers in the Sensex pack were ONGC, NTPC, IndusInd Bank, SBI and HDFC, while the laggards were ITC, Kotak Mahindra, Tata Motors, HCL Tech and Bharti Airtel.

Among the BSE sectoral indices, the top gainers were the power and IT indices, which rose 1.12 per cent and 1 per cent each, followed by Utilities (0.90 per cent), auto (0.77 per cent) and technology (0.74 per cent).

Eye on RBI policy as hopes of rate cut soar

Amidst poor high frequency numbers related to consumer spending and the industrial sector and GDP slipping in Q1 FY-2020 to as low as 5 per cent, marketmen expect the RBI to continue its downward revision of repo rates on Friday by its unconventional 35 basis points like the last one close to the 5 per cent mark. The lowest RBI kept the repo rate since the aftermath of 2008 global credit crisis was 4.75 per cent. Shares of banks, NBFCs, HFCs, FMCGs and automobile companies will be in focus.

Corporate India raises ₹6,000 crore through IPOs in Q3

 

Corporate India raised USD 0.86 billion (around ₹6,000 crore) through 10 initial public offerings in the July-September quarter of this year and going forward, the IPO activity is expected to gain momentum in the first half of 2020, an EY report said on Thursday. Click here to read in full the report on funds raised by corporates through IPOs in Q3 .

 

With an oversubscription of 112 times, IRCTC’s stock offer is a showstopper

 

Everyone seems keen on hitching a ride with the Indian Railway Catering and Tourism Corporation (IRCTC), the response to its IPO shows. On Thursday, the final day of bidding, the issue was subscribed over 111.93 times, the biggest response that a PSU has ever received for its public float. The IPO is priced in the range of ₹315-320 a share.

With all categories of investors — FPIs, HNIs, institutions and retail — pouring in money, the issue received bids for ₹72,000 crore against the target of ₹645 crore. Click here to read in full the report on oversubscription of IRCTC IPO .

Bharat 22 ETF doesn’t deserve a look

Bharat 22 ETF, the Centre’s ETF route for disinvestment, has come up with its fourth tranche. It opened for subscription on October 3, 2019 for the anchor investors. Other institutional and retail investors can buy it on October 4. Click here to read in full the report on Bharat 22 ETF .

Opening bell

The benchmark indices, the BSE Sensex and the NSE Nifty, opened in the green on Friday.

The Sensex was at 38,356, up 249 points or 0.65 per cent higher, than its overnight close.

The Nifty was at 11,388, up 74 points or 0.66 per cent firmer.

On Thursday, the Sensex closed at 38,106, down 198 points or 0.52 per cent lower. The Nifty ended at 11,313, down 46 points or 0.41 per cent softer.

 

Day Trading Guide for Friday, October 4, 2019

Given below are supports and resistances for Nifty 50 futures and seven key stocks that can help in your intra-day trading:

₹1223 • HDFC Bank

 

₹785 • Infosys

 

₹261 • ITC

 

₹128 • ONGC

 

₹1311 • Reliance Ind.

 

₹254 • SBI

 

₹2060 • TCS

 

11361 • Nifty 50 Futures

 

S1, S2 : Support 1 & 2; R1, R2: Resistance 1 & 2.

Today's Pick: Godrej Industries (₹381.95): Sell

 

The shares of Godrej Industries marked a fresh 52-week low on Thursday and closed at ₹381.9, below the crucial support level of ₹400.

The stock has been weak since the beginning of the year.In September, it attempted to recover from ₹400 levels, where it rallied during the first half of the month and appreciated to ₹440, piercing above 21-day moving average offering temporary hope for the bulls. It even tested the 50-DMA. But the price witnessed selling pressure from that level and started declining from the latter half of September. On Thursday, reaffirming the bearish trend, the stock moved below the 21-DMA. Click here to read Today's Pick on Godrej Industries .