An Evening Walk Down D-Street: Rate cut fails to cheer market; investors poorer by Rs 5.28 lakh cr in last 5 sessions

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Indian stocks suffered strong losses on October 4, extending the losing spree into the fifth consecutive session, even as the Reserve Bank of India slashed key lending rates by 25 basis points.

In the last five sessions, the market has retreated by over 3 percent and investors have lost Rs 5.28 lakh crore as the overall market capitalisation of BSE-listed firms dropped to Rs 1,43,18,262.13 crore from Rs 1,48,45,854.70 crore on September 26. On October 4 alone, investors lost about 1.42 lakh crore.

While the rate cut of 25 basis points was already factored in, the market was expecting clear measures to address the concerns over the slowdown in the economy. Experts said the market was expecting a bigger cut in rates along with concrete measures to boost growth.

“Today’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, which is reflective of further widening of the negative output gap,” said Shubhada Rao, Chief Economist, YES Bank.

“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,” said Shishir Baijal, Chairman & Managing Director of Knight Frank India.

S Ranganathan, Head of Research at LKP Securities, said the cut in GDP forecast by RBI, coupled with selling in financials pulled indices down despite the rate cut.

Sensex shut shop at 37,673.31, with a loss of 434 points or 1.14 percent, while Nifty ended 139 points, or 1.23 percent, down at 11,174.75.

Tata Consultancy Services, Infosys and Tech Mahindra settled as the top gainers in the Sensex index, while Kotak Mahindra Bank, ICICI Bank and HDFC Bank emerged as the top losers in that order.

Overall, 20 stocks closed in the red in Sensex index and 10 stocks in the green.

Midcaps and smallcaps also experienced the selling pressure as their sectoral indices on BSE fell up to 0.94 percent.

Barring BSE IT (up 0.74 percent) and Teck (up 0.32 percent), all sectoral indices finished with losses, with Bankex and Consumer Durables falling over 2 percent each.

As many as 256 stocks, including Indiabulls Real Estate, Grasim Industries, L&T Finance Holdings, Oriental Bank of Commerce and BHEL, hit 52-week lows on BSE.

Top news of the day:

The Supreme Court on October 4 issued a notice to CBI, asking it to respond on former finance minister P Chidambaram’s plea seeking bail in the INX Media corruption case.

RBI has directed large pre-paid instrument (PPI) issuers to set up an internal ombudsman mechanism to address customers’ grievances.

Samsung Electronics announced it had ended the production of smartphones in its last factory in China.

Pakistan’s parliament has blocked a bill seeking an amendment in the Constitution to allow non-Muslims to become Prime Minister and President of the country.

Stocks in news:

Shares of Yes Bank lost steam, ending almost a percent lower at Rs 42.15 on BSE on October 4 even as the company reiterated it is on track to complete fundraising plan.

Extending the losses into the fifth consecutive session, shares of Lakshmi Vilas Bank settled at Rs 29.85, down 4.94 percent after the RBI initiated prompt corrective action (PCA) plan against the lender.

Shares of National Fertilizers climbed 2.29 percent to Rs 24.60 after the state-owned company reported record sales during Kharif 2019.

Shares of Info Edge jumped 6.34 percent to Rs 2,255 after a media report talked about a fundraising plan from Zomato.

Shares of Zee Entertainment Enterprises fell 5.81 percent to Rs 236.80 after global brokerage Morgan Stanley slashed its target price by 33 percent amid debt concerns.

Global update:

European stocks hovered in positive territory on Friday, propped up by hopes of easing measures from the US Federal Reserve, but gains were slim as markets threatened to log their worst weekly performance in a year, reported Reuters.

Among Asian peers, Kospi closed 0.55 percent lower and Nikkei ended higher by 0.32 percent. Get access to India’s fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code “GETPRO”. Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.