Markets extend early losses on weak GDP data

Indian equity markets extended early losses on the back of disappointing GDP data for the March quarter. The BSE Sensex and NSE Nifty fell over 1%. India's economy grew at an annual rate of 5.3% in the quarter ended March 2012, much lower than expected. GDP growth for the full year was 6.5% against 8.4% last year, reporting the slowest pace in three years. Meanwhile commenting on this data Prime Minister's Economic Advisory Council chief C Rangarajan said that it will be tough for the Reserve Bank of India to cut rates if inflation remains sticky. He said that growth is important but inflation cannot be ignored. In currency markets, rupee hit a record low against American currency on the back of heavy demand for dollar from importers and continued worries over euro zone. On sectoral front, all were trading in red except realty sector. On the global front, Asian shares were under pressure amid signals that China did not plan a large stimulus package. Back home, the market breadth favoring negative trend; there were 748 shares on the gaining side against 1,385 shares on the losing side while 107 shares remained unchanged.

The BSE Sensex is currently trading at 16,125.19, down by 186.96 points or 1.15%. The index has touched a high 16,224.86 and low 16,086.06 of respectively. There were 8 stocks advancing against just 22 declines on the index.

The broader indices were trading on a negative note; the BSE Mid cap and Small cap indices down by 0.58% and 0.78% respectively.

The only gaining sectoral indices on the BSE were Realty up by 0.13%. While, Oil & Gas down by 1.75%, Auto down by 1.63%, Capital Goods (CG) down by 1.45%, Bankex down by 1.40% and CD down by 1.06% were major losers on the index.

The top gainers on the Sensex were Hindalco Industries up by 3.24%, NTPC up by 1.03%, Cipla up by 0.88%, Coal India up by 0.44%, and Tata Power up by 0.16%.

On the flip side, ICICI Bank down by 3.86%, Maruti Suzuki down by 3.38%, Tata Motors down by 3.02%, Reliance down by 2.88% and Sterlite Industries down by 1.99%, were the major losers on the index.

Meanwhile, a substantial fall in the non-oil imports of India will lead to a decline in current account deficit, stated a report by financial services firm - Nomura. This is expected due to the depreciation of the rupee which will make imports costlier, slumping commodity prices and subdued investment inflows.

India’s current account deficit stood at an uncomfortable 4% of GDP. This was mainly due to the high prices of global crude oil whose imports totaled to $150 billion and diminishing exports. Also the non oil imports like gold, capital goods, coal, fertilisers and other metals contributed to the CAD significantly. Infact imports of gold stood at $55 billion. The government in an attempt to discourage its imports of gold increased the import duty on it. As a result gold import is set to fall further with rising prices and taxes.

In FY12 the non oil imports grew by 24% and by 31% in FY11. However now as per Nomura, it is expected that this number will come down to a single digit. Infact the report cited that the non-oil commodity price growth will remain flat in FY13. Further the rising rupee will make imports costlier leading to greater focus on domestic production. A subdued investment demand is further expected to reduce the imports of non oil commodities.

The S&P CNX Nifty is currently trading at 4,895.45, lower by 55.30 points or 1.12%. The index has touched a high and low of 4,908.65 and 4,883.55 respectively. There were 15 stocks advancing against 35 declines on the index.

The top gainers of the Nifty were Hindalco up by 3.41%, SAIL up by 1.90%, PNB up by 1.63% Bank Baroda up by 1.06% and Cipla up by 1.04%. 

On the flip side, ICICI Bank down by 3.94%, Maruti down by 3.50%, Reliance down by 3.07%, Tata Motors down by 2.59% and Axis Bank down by 2.24% were the major losers on the index.

All the Asian equity indices continued to reel under pressure; Jakarta Composite down 2.64%, Shanghai Composite down 0.29%, Hang Seng Index down 0.83%, Straits Times Index  down 0.41%, KOSPI Composite Index down 0.08%, Taiwan Weighted up 0.55%, Nikkei 225 was down 1.05% and KLSE Composite down by 0.07%.