Indian stocks erased morning gains to end over 1 percent lower on Friday after the Reserve Bank of India (RBI) reduced FY20 GDP growth target to 6.1 percent from 6.9 percent. In the bi-monthly monetary policy, the RBI cut repo rate by 25 bps for the fifth time this year as expected, in a bid to boost growth the economy.

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The Sensex ended 433 points lower at 37,673, while the broader Nifty50 index lost 139 points to end the day at 11,175. Both indices have fallen 3 percent for the week. In broader markets, the Nifty Midcap fell 0.9 percent and the Nifty Smallcap index shed 1.2 percent.

The RBI maintained its accommodative stance and said it would keep that position as long as it is necessary to revive economic growth while ensuring inflation remains within the target. The six-member monetary policy committee (MPC) cut the repo rate by 25 basis points to 5.15 percent, in line with expectations. The reverse repo rate was reduced to 4.9 percent.

"The big takeaway from the extremely accommodative monetary is that the central bank and the government are in sync on the policy response to revive growth. The MPC’s view that there is further policy space for accommodation to revive growth clearly indicates that more rate cuts are in the offing. Eventually, the repo rate is likely to settle at 4.75 percent in this rate cut cycle. This is good news for the markets even though the markets are concerned about the issues in the NBFC and housing finance space," said VK Vijayakumar, chief investment strategist at Geojit Financial Services.

ONGC, Wipro, TCS, Infosys and Tech Mahindra were the top gainers on the Nifty50 index, while Zee, UltraTech Cement, Grasim, JSW Steel and Titan led the losses.

All sectoral indices, except Nifty IT, ended lower for the day. The banking indices underperformed benchmarks with the Nifty Bank and the Nifty Private Bank down over 2 percent each, while the Nifty PSU Banks lost 1.6 percent and the Nifty Fin Services shed 1.9 percent. The Nifty Media index tumbled 3.6 percent and the Nifty FMCG fell 1.5 percent during the day. The Nifty IT, however, rose 0.4 percent for the day.

Among banks, Federal Bank, ICICI Bank, RBL Bank, HDFC Bank and Kotak Bank fell between 2.7-3.6 percent.

Zee shares fell over 6 percent after global brokerage firm Morgan Stanley cut its target price for the stock by 33 percent to Rs 248 while retaining its "underweight" stance.

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

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.4 percent. Japan's Nikkei stock index rose 0.22 percent, and Australian shares rose 0.54 percent.