Closing Bell: Sensex tanks 433 pts, Nifty ends below 11,200; Kotak Bank, Zee Ent slip 3-5%

"Major global equity markets sold off during the current week on fears of economic weakness after the US ISM manufacturing purchasing managers’ index declined to 47.8 in September, the lowest since June 2009. There were also fears of trade protectionism as US put fresh tariffs on products from EU."

"The BSE-30 Index declined 3 percent in the current week. Equity markets saw some correction as investors got cautious about declining asset quality in the banking sector, risk of weakening of demand after tepid data prints on auto sales, GST collections and core sector. RBI delivered 25 bps rate cut on Friday which however failed to live upto investor expectations and markets sell-off intensified post the announcement. Yes Bank, IndusInd Bank and State Bank of India were the top losers in the BSE-30 Index, while ITC, Mahindra & Mahindra and Reliance Industries were the top gainers."

"On the economy front, CAD/GDP for 1QFY20 was at 2 percent, from 0.7 percent in 4QFY19. FPIs bought equities worth USD 1.2 billion over the past five trading sessions while DIIs bought USD 288 million worth of equities."

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"Over all the policy was in line with market expectations and it did not have any major impact on rupee. As expected, RBI cut repo rate by 25 bps to 5.15 percent from 5.40 percent and continued the accommodative stance. The only surprise factor was a sharp cut in FY20 GDP to 6.1 percent from 6.9 percent as local economic activity has weakened along with slowdown in global economy and lingering geo-political tensions."

"The central bank has increased its Q2FY20 CPI target to 3.4 percent from 3.1 percent. Going ahead, we expect RBI to continue the rate cut cycle until the GDP doesn’t begin to revive and we are not expecting USD/INR to fall below 70.50. Hence the range for next week will be 70.65- 71.35."

Sensex ended 433.56 points or 1.14 percent in the red at 37673.31 while the Nifty was down 139.20 points or 1.23 percent at 11174.80. About 973 shares have advanced, 1615 shares declined, and 244 shares are unchanged.

TCS, Infosys and ONGC were the top Sensex gainers while Kotak Mahindra Bank, ICICI Bank and Tata Motors were the top losers.

Among the sectors, Nifty media ended over 3 percent lower followed by Bank Nifty, Auto and FMCG.

"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."

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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.

"RBI has cut rate by 25bps and maintains stance to “accommodative” as expected. All committee members voted for a rate cut. Governor said that they will continue with an accommodative stance as long as it is necessary to revive growth. For FY20, RBI has cut GDP growth forecast to 6.1 percent from 6.9 percent, while raises inflation forecast marginally. It has also raised lending limit for MFIs. While reducing rate, Governor added that OMOs will be done to deal with the liquidity situation."

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.

CNBC TV18 reported, 4-5 players have shown initial interest in buying portfolios or acquiring a stake. Cerberus Cap, Apollo Global, Kotak Realty Fund, Edelweiss Special Opportunities Fund and SSG Capital are in talks with lenders for a potential deal. Yes Bank, HDFC Bank, SBI, IFC, BoB are among the key Indian lenders to Altico Capital. Lenders will meet on October 11 to discuss the resolution of Altico Capital.

Emami Cement is expecting an EV of Rs 6,000 crore via sale process, CNBC TV18 reported. The deadline for submission of non-binding bids For Emami Cement has ended. Ambuja Cements, UltraTech, Shree Cement, Nirma Group, Dalmia Cement and HeidelbergCement are in the race for Emami Cement.

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