Benchmarks dive deeper into red; murky advance estimates figures for economy’s growth rate weigh

After falling in a knee jerk reaction to the murky advance estimates figures for country’s economic growth rate, benchmark equity indices have dived deeper in red terrain, to trade near intra-day’s low level. Sustained selling pressure in Consumer Durable, Metal and Capital Goods counters amidst mostly pessimistic global-set up, has kept the trend downbeat at D-street. Further, pressure seems to be also coming from upstream oil marketing companies, such as ONGC and which have reported to higher subsidy burden. The subsidy burden of ONGC, India’s biggest oil explorer, is set to cross Rs 50,000 crore this fiscal - the highest ever. Going by company officials, as of end-December, ONGC has already parted with more than Rs 37,000 crore from its reserves and cash flows towards this.

Thus, trading near intra-day’s low, benchmark 30 share and 50 share index, Sensex and Nifty, are oscillating around 19650 and 5950 psychological levels respectively. Additionally, broader indices too incurring additional losses are now trading lower with loss of close to half a percent. On the global front, Asian shares were trading downbeat, as investors awaited the European Central Bank's policy meeting later in the day and President Mario Draghi's view on euro zone growth prospects.

Closer home, Information Technology and Auto counter were the pockets showcasing fervor in the otherwise drudgery session of trade. On the flip side, decline of gold firms, namely Manappuram Finance and Muthoot Finance, also weighed on the sentiment. Shares of two gold loan firms capitulated to selling pressure after the central bank proposed to limit import of gold into India, which is putting pressure on India's current account and threatening the country's sovereign credit ratings. The overall market breadth on BSE is in the favour of declines which thumped advances in the ratio of 1459:1011, while 132 shares remained unchanged.

The BSE Sensex is currently trading at 19609.55, down by 30.17 points or 0.15% after trading in a range of 19702.56 and 19574.73. There were 8 stocks advancing against 22 declines on the index.

The broader indices added to the pressure; the BSE Mid cap and Small cap index was trading lower by 0.49% and 0.48% respectively.

The top gaining sectoral indices on the BSE were, IT up by 0.45%, Auto up by 0.10%, while Consumer Durables down by 1.66%, Metal down by 0.90%, Capital Goods down by 0.82%, Power down 0.74% and PSU down by 0.74% were the top losers on the index.

The top gainers on the Sensex were HDFC up by 1.10%, Tata Motors up by 0.66%, Infosys up by 0.55%, TCS up by 0.44% and Hindustan Unilever up by 0.40%.

On the flip side, Sterlite Industries down by 3.29%, NTPC down by 2.86%, Cipla down by 2.36%, Bharti Airtel down by 2.13%, and Hero MotoCorp down by 1.49% were the top losers on the Sensex.

Meanwhile, in a big shocker, the Central Statistical Office (CSO) in the advance estimates has pegged country's Gross Domestic Product (GDP) growth rate for the current fiscal year to 5%, way lower than the government’s downward revision to economic growth for fiscal 2011-12, in the previous month to 6.2% from the earlier estimate of 6.5%.

Surprisingly, the latest estimate is the worst of all growth projections issued by the government and Reserve Bank of India. Last month, the RBI in recent monetary policy review, lowered Country’s GDP growth estimate for the fiscal year ending in March to 5.5%, the worst since 2002/03.

The Gross Domestic Product (GDP) at factor cost at constant (2004-05) prices in the year 2012-13 is likely to attain a level of Rs 55,03,476 crore, as against the First Revised Estimate of GDP for the year 2011-12 of Rs 52,43,582 crore, released on January 31, 2013.

The dimmer forecast is due to continued weakness in manufacturing and farm output growth. Meanwhile, the government expects manufacturing output to grow 1.9% this year compared with a 2.7% increase last year. According to the latest estimates available on the Index of Industrial Production (IIP), the index of manufacturing and electricity registered growth rates of 1.0 per cent and 4.4 per cent, respectively during April-November, 2012-13, as compared to the growth rates of 4.2 per cent and 9.5 per cent in these sectors during April-November, 2011-12.

The farm output is expected to rise 1.8%, compared with a 3.6% increase last year. On the other hand, the sectors which registered growth rate of over 5 percent were Construction, trade, hotels, transport and communication, financing, insurance, real estate and business services, and community, social and personal services. 

More depressingly, per capita income in real terms is likely to be just 2.9%, compared to 4.7% for 2011-12. National income, or average income per person, at current market prices, is likely to be about Rs 68,747 or about Rs 5,729 per month per person, showing a rise of 11.7%. Overall national income, at factor cost, is expected to grow by 4.2% as against the previous year’s growth rate of 6.1%.

Fiscal and current account deficits along with uncomfortably high inflation have hurt investments and deteriorated industrial activity. While, the current account deficit has widened to 4.2 percent of GDP in 2011-12, causing the rupee to depreciate sharply before its recent stabilization.

The S&P CNX Nifty is currently trading at 5,948.05, down by 11.15 points or 0.19% after trading in a range of 5,978.50 and 5,936.45. There were 15 stocks advancing against 35 declines on the index.

The top gainers of the Nifty were Power Grid up by 1.97%, JP Associate up by 1.30%, HDFC up by 1.06%, Grasim Industries up by 0.81% and Tata Motors up by 0.68%.

On the flip side, Reliance Infra down by 3.04%, Sesa Goa down by 2.87%, Bank of Baroda down by 2.62%, NTPC and Cipla were down by 2.54% were the major losers on the index.

Most of the Asian equity indices were trading in the red; Shanghai Composite declined 0.66%, Hang Seng dropped 0.38%, Nikkei 225 tumbled 0.39%, Straits Times contracted 0.47%, KOSPI Composite was down by 0.23%.On the flip side, KLSE Composite rose 0.04% and Jakarta Composite rose by 0.19%, while, Taiwan Weighted was shut for trade today.