Benchmarks continue southward journey on Friday on economy growth worries

South-bound journey continued for yet another day on D-street on last trading day of the week with frontline indices hitting its 2013’s low as investors continued to remain concerned over economy growth after Central Statistical Office (CSO) on Feb 7th in the advance estimates shockingly pegged country’s Gross Domestic Product (GDP) growth rate for the current fiscal year to 5 per cent versus 6.2 per cent for 2011-12, lowest in a decade, on account of poor performance of manufacturing, agriculture and services sector. Sensex, after trading near its neutral lines for most part of the day’s trade, lost its ground ending below its crucial 19,500 mark while, Nifty managed to retain its crucial 5,900 mark but ended with a cut of over half a percent as investors resorted to profit booking in late trade on concerns that PSU disinvestment and reduction of promoter stake to meet the Securities & Exchange Board of India (SEBI) mandated minimum public shareholding of 25% for private companies and 10% for state-run firms will result in supply of equity in the market over the next few months.

Also, traders shrugged off supportive global cues as European counters traded with traction in the early trade on Friday ahead of European Central Bank’s policy meeting later in the day and President Mario Draghi’s views on the region's growth prospects. Asian counters too shut shop mostly in the green after Chinese exports grew 25.0 percent in January from a year ago, the strongest showing since April 2011 and well ahead of market expectations for a 17 percent rise, while imports also beat forecasts, surging 28.8 percent on the year.

Back home, market participants adopted cautious approach ahead of Industrial production data for the month of December 2012 and Wholesale Price Index (WPI) for the month of January 2013 to be released in upcoming week. Some pressure also came in from selling in Cement counter after Cement majors such as ACC and Ambuja Cements slipped over 1 per cent in early trade after both the companies reported weaker than expected earnings for the December quarter on February 7, 2013. However, software and technology stocks remained on the buyers’ radar, capping some losses during the trade, after Cognizant earnings, as the result conformed that revenues of Indian software services exporters continue to outperform Cognizant's, making the US-listed IT company still not too much of a competitive threat.

The NSE’s 50-share broadly followed index Nifty declined by thirty five points but managed to end tad above the psychological 5,900 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by about hundred points to finish below the psychological 19,500 mark. Moreover, broader markets too traded in the red throughout the session and ended the session with a cut of about a percent. The market breadth remained in favor of declines as there were 752 shares on the gaining side against 1,357 shares on the losing side while 850 shares remain unchanged.

Finally, the BSE Sensex lost 95.55 points or 0.49% to settle at 19,484.77, while the S&P CNX Nifty declined by 35.30 points or 0.59% to end at 5,903.50.

The BSE Sensex touched a high and a low of 19,648.07 and 19,414.80, respectively. The BSE Mid cap index down by 0.72% and Small cap index was down by 0.95%.

The top gainers on the Sensex were, TCS up by 2.58%, Wipro up by 1.57%, HDFC Bank up by 1.24%, BHEL up by 1.21% and L&T up by 0.89%, while Cipla down by 3.34%, Sterlite Industries down by 3.20%, Hindalco down by 3.18%, Maruti Suzuki down 2.27% and ONGC down by 2.02% were the top losers on the index.

The top gainers on the BSE Sectoral space were, IT up 0.86%, TECk up 0.69%, Capital Goods up 0.48% and Consumer Durables up 0.12%, while Metal down 1.70%, PSU down 1.23%, Realty down 1.19%, Auto down 1.18% and Oil & Gas down 1.14% were top losers on the sectoral space.

Meanwhile, the union cabinet has given its approval for the formation of a special purpose vehicle (SPV) for the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project and also permitted public sector natural gas major GAIL India to join the SPV. The four countries involved in the project signed an Inter-Governmental Agreement (IGA) along with a Gas Pipeline Framework Agreement (GPFA).

The projected 1,080-km long worth $7.6-billion TAPI project will transport gas from Turkeminstan (144 km in Turkmenistan, 735 km in Afghanistan and 800 km in Pakistan) will have a capacity to transport 90 mmscmd of gas in which 38 mmscmd each are for India and Pakistan and the remaining 14 mmscmd for Afghanistan. However, this 14 mmscmd is now available to India and Pakistan as the Afghanistan has said that it does not require the gas at present, but may approach Turkmenistan in future.

As per the union cabinet statement, TAPl is required to have an initial contribution of $ 20 million that is $5 million from an identified entity from each of the four participating countries, while India’s Navratna company, GAIL is empowered to make investment at this project from country side.

In the Inter-Governmental Agreement (IGA) and Gas Pipeline Framework Agreement (GPFA), a suitable provision for security and safety of the pipeline has been made. The SPV would also take up the feasibility study and design work of the pipeline to meet the agreed timelines, as well as search for a consortium lead. Further, need of an active interest in the project by all the partner countries at this stage has been asked which would sustain the credibility of the project and generate interest in the international market and would also pave the way for selection of an appropriate consortium leader in the future.     

The S&P CNX Nifty touched a high and a low of 5,953.70 and 5,883.65 respectively.

The top gainers on the Nifty were TCS up by 2.23%, Wipro up by 1.43%, HDFC Bank up by 1.09%, BHEL up by 1.07% and L&T up by 0.57%.

The top losers of the index were Ambuja Cement down by 5.50%, ACC down by 3.67%, Hindalco down by 3.53%, Cipla down by 3.51% and Reliance Infra down by 3.07%.

The European markets were trading in green, France’s CAC 40 up by 0.46%, United Kingdom’s FTSE 100 up by 0.33% and Germany’s DAX up by 0.11%.

Most Asian stocks markets ended higher on Friday as better than expected economic indicators from China gave some relieve over the health of the mainland economy. Japan’s Nikkei was a notable exception and went home with red mark weighed by poor earnings reports from Sony Corp. and some other front-line companies. Moreover, Japan logged a current account deficit for a second straight month in December for its smallest annual surplus on record - evidence of deteriorating trade balances.

Taiwan Weighted remained shut for the trade today.