Share Market Update: Domestic benchmark indices BSE Sensex and NSE Nifty on Friday extended heavy losses, dragged by a stiff decline in banking stocks hours after the Reserve Bank of India (RBI) sharply reduced country's economic growth projection for 2019-20 fiscal from 6.9 per cent to 6.1 per cent. In its fourth bi-monthly monetary policy meet, the RBI's monetary policy committee (MPC) also cut the repo rate by 0.25 per cent to revive growth that has hit a six-year low.

After opening nearly 300 points higher, the 30-share index gave up all the gains to turn negative after the policy announcement by the RBI. After gyrating 770 points during the day, the 30-share Sensex ended 433.56 points, or 1.14 per cent, lower at 37,673.31. It hit an intra-day low of 37,633.36 and a high of 38,403.54. Even the broader NSE Nifty plunged 139.25 points, or 1.23 per cent, to close at 11,174.75.

On a weekly basis, Sensex shed nearly 3 pe cent while Nifty50 lost 2.93 per cent. Top losers in the Sensex pack included Kotak Bank, ICICI Bank, HDFC Bank, Tata Motors, L&T, SBI, Tata Steel and Axis Bank, falling up to 3.46 per cent. On the other hand, TCS, Infosys, ONGC, Tech Mahindra, IndusInd Bank and NTPC rose up to 1.03 per cent.

Banking stocks faced the heat, with the BSE bankex, finance, auto and realty indices tanking up to 2.45 per cent. Central Bank’s estimates come in the back drop of a sliding gross domestic product (GDP) growth to a six year low of 5 per cent in the June quarter, resulting in a massive slowdown in sales growth and private sector investments.

Speaking to news agency PTI, Gaurav Dua, Sr VP, Head Capital Market Strategy & Investments, Sharekhan by BNP Paribas, despite the rate cut and the dovish commentary, the equity market has reacted negatively, especially banks.

"That is because of the RBI’s focus on the quick transmission of lower interest rates would put pressure on margins of banks," Dua pointed out. Also, the economic growth outlook remains concerning despite the 135 bps policy rate cuts in 2019 and there is limited elbow room with RBI now to further take monetary actions to support the economy, he said.

Meanwhile, the Indian rupee depreciated 9 paise to 70.97 against the US dollar intra-day. Brent crude futures, the global oil benchmark, advanced 0.78 per cent to USD 58.16 per barrel. Elsewhere in Asia, Hang Seng and Kospi settled on a negative note, while Nikkei closed in the green. Chinese markets are closed for a holiday.