Nifty tumbles below 6,000 mark on lower GDP figure; Sensex slumps 450 points

Stock markets in India kick started the new F&O series on a daunting note with the benchmark equity indices getting pummeled by over two percent on Friday. The domestic benchmarks traded in a narrow range for most part of morning trades but a sharp wave of selling pressure, which emerged in noon deals, dragged the key gauges below their crucial 6,000 (Nifty) and 19,800 (Sensex) levels. Markets southbound journey only came to a halt with the close of trade as sentiments remained uninspiring right from the beginning of trade. The downfall was largely transpired due to brutal selling in rate sensitive counters like, realty and banking after economic growth data came in line with expectations, dashing hopes that the RBI would cut interest rates next month. GDP for fourth quarter grew at 4.8 per cent against revised 4.7 per cent in previous quarter. India’s GDP for FY13 grew at 5 per cent, lowest in a decade, versus 6.2 per cent, year-on-year (y-o-y).

Further, Reserve Bank of India governor’s comment that inflation still remains high and it will take into account the current account deficit for policy decisions also weighed on market sentiment. Meanwhile, investors shrugged off better than expected FY13 fiscal deficit data which came in lower at 4.89 per cent against budget estimate of 5.2 per cent, on account of higher non-tax revenue, which were up by Rs 8,000-10,000 crore. Meanwhile, FY13 revenue deficit came at 3.6 per cent against budget estimate of 3.9 per cent.

Selling got intensified after European markets made weak opening as investors continued to contemplate as to the timeline of the US Federal Reserve’s potential pruning of its massive global asset buys, a key stimulator of markets worldwide. Asian markets too ended the session mostly in red terrain with investor remaining on sidelines ahead of Chinese economic data over the weekend.

Back home, depreciation in Indian rupee too remained the major reason for downfall in markets. The rupee was seen continuously weakening against the US dollar due to increased dollar demand in the local market. Stocks from Metal space also edged lower as the International Monetary Fund (IMF) recently cut its growth forecast for China this year citing a weak world economy and exports, adding to concerns that the world’s second-largest economy is losing momentum.

The NSE’s 50-share broadly followed index Nifty declined by over one hundred and forty points to end below the psychological 6,000 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex tumbled by over four hundred and fifty points to end below its crucial 19,800 mark. Meanwhile, broader markets too butchered badly and snapped the session with a cut of 1-2 percent.

The overall volumes stood above Rs 1.44 lakh crore, which remained on the lower side as compared to that on Thursday. The market breadth remained in favor of declines as there were 791 shares on the gaining side against 1,591 shares on the losing side while 117 shares remain unchanged.

Finally, the BSE Sensex shaved off 455.10 points or 2.25% to settle at 19,760.30, while the CNX Nifty plunged by 138.10 points or 2.26% to end at 5,985.95.

The BSE Sensex touched a high and a low of 20,191.29 and 19,730.55, respectively. The BSE Mid cap index down by 1.33% and Small cap index was down by 1.56%.

The top gainers on the Sensex were, Infosys up by 2.79%, Sterlite Industries up by 2.58% and TCS up by 0.07%, while Bharti Airtel down by 4.86%, Gail India down 4.26%, Jindal Steel down 4.07%, ITC down 4.06% and Hindalco down by 3.95% were the top losers on the index. 

The only gainer on the BSE Sectoral space was IT up 0.87%, while Realty down 3.38%, Oil & Gas down 2.71%, Bankex down 2.46%, FMCG down 2.21% and PSU down 2.15% were the top losers on the sectoral space.

Meanwhile, in a big sigh of relief to the country’s policymakers, India’s fiscal deficit for FY13 came at 4.89% of GDP, which is lower than the budget estimate of 5.2%. The deficit has been contained due to higher non-tax revenue and savings of non-planned expenditure.

The fiscal deficit occurs when a government's total expenditures exceed the revenue that it generates. The government had budgeted revenue realization for FY13 fiscal at Rs 10.38 lakh crore. However, there was some slippage on the direct tax front, while the indirect tax mop up has exceeded the revised estimates. The direct tax collection was estimated at over Rs 5.65 lakh crore and Rs 4.69 lakh crore from indirect taxes. Meanwhile, government’s total expenditure was pegged at Rs 14.30 lakh crore.

The government is committed to check the fiscal deficit and in budget has proposed to lower fiscal deficit to 4.8% of GDP in FY14 and reduce it gradually to 3% by FY17. Earlier, the finance minister had said that fiscal deficit target is a red line that would never be breached  and had also exuded confidence that the revenue target for 2013-14 financial year would be achieved as the GDP growth is likely to be over 6%. 

The CNX Nifty touched a high and a low of 6,106.25 and 5,975.55 respectively. 

The top gainers on the Nifty were Infosys up by 2.67%, Sesa Goa up 2.44%, Ambuja Cement up 0.85%, HCL Tech up 0.65% and TCS up by 0.11%.

On the flip side, the top losers of the index were, Ultra Tech Cement down 5.18%, Reliance Infra down 4.92%, PNB down 4.64%, GAIL down 4.57% and IDFC down by 4.47%.

The European markets were trading in red, France’s CAC 40 down by 0.26%, Germany’s DAX down by 0.56% and the United Kingdom’s FTSE 100 down by 0.63%.

Asian equity markets ended mostly lower as investors remained nervous over whether the US Federal Reserve might soon taper off the stimulus programme that has helped send Wall Street soaring. However, Japan's Nikkei outshined its Asian peers and closed with strong gains, after earlier session’s massive fall as exporters took a hit from the dollar's fall against the yen. Hong Kong markets went home with red mark as investors took profit on outperformers. China’s stocks ended lower, paring the benchmark index’s biggest monthly gain this year, ahead of economic data over the weekend.