Better than expected FY13 fiscal deficit data limits downtrend of bourses at D-street

Although the downtrend continues to prevail, selling pressure currently seems to be arrested at D-street with benchmark equity indices even recouping marginal losses on account of release of better than expected FY13 fiscal deficit figures. In a sign of cheer for the economy, the country's fiscal deficit for FY13 came at 4.89%, lower than the budget estimate of 5.2%, mainly on account of higher non-tax revenue. Nevertheless, the decade low growth of Asia’s third largest economy, India at 5% for FY13 continues to be a matter of concern for some investors, which amidst mostly negative global cues, are preferring to reduce their exposure in risky asset class such as equities. After mixed Asian pacific shares, European markets have got off to a negative start ahead of data on euro zone inflation and unemployment. Meanwhile, Asian pacific shares mostly stayed in pressure while Japanese equities outperformed on Friday, and investors remained nervous over whether the US Federal Reserve might soon taper off the stimulus program that has helped send Wall Street soaring higher.

Closer home, benchmark 30-share index, Sensex, off its psychological 20,000 mark is trading with loss of over a percent, however, Nifty, trading with similar magnitude loss is managing to hold above its crucial 6,050 level. Additionally, broader indices have also pared some losses.  Stocks from Fast Moving Consumer Goods, Oil & Gas and Banking counters are keeping the markets under pressure. Banking stocks are trading downbeat after Reserve Bank of India on Thursday tightened asset restructuring rules for banks after the weakest economic growth in a decade prompted a surge in bad loans. On the flip side, Information Technology, Health Care and Consumer Durable counters, bucking the negative trend, are aiding benchmarks in cutting short losses. Fresh 11-month low depreciation of Indian currency is mainly auguring well for IT firms, which derive lion share of revenue in foreign currency. The overall market breadth on BSE is in favour of declines, which have outnumbered advances in the ratio of 1252:805; while 117 shares remain unchanged.

The BSE Sensex is currently trading at 19,997.54, down by 217.86 points or 1.08% after trading in a range of 20,191.29 and 19,917.57. There were 8 stocks advancing against 22 declines on the index.

The broader indices too cut short some losses; the BSE Mid cap and Small cap index were down by 0.38% and 0.40% respectively.

The only gaining sectoral index on the BSE was, IT up by 0.84%, TECK up by 0.25%, Health Care up by 0.04% and Consumer Durables up by 0.01%, while, FMCG down by 1.61%, Oil & Gas down by 1.35% and Bankex down by 1.27%, Realty down by 0.86% and Capital Goods down by 0.84%were the top losers on the BSE.

The top gainers on the Sensex were Sterlite Industries up by 2.19%, Infosys up by 1.40%, Dr Reddys Lab up by 0.85%, Wipro up by 0.77% and Gail India up by 0.62%.On the flip side, Hindalco Inds down by 3.01%, ITC was down by 2.95%, Mahindra & Mahindra was down by 2.23%, HDFC Bank down by 2.22% and RIL was down by 2.21% were the top losers on the Sensex.

Meanwhile, much in-line with expectation, India’s economy grew 4.8% in the fourth quarter of 2012-13, better than the 4.5% growth in the previous three months, the lowest figure in fifteen quarters which was later revised to 4.7%. For the full year, the growth was 5%, the lowest in 10-years, but in-line with an official preliminary estimate given in February that pointed to decade low growth of 5%.

Mining sector continued to be a major concern with a contraction of 3.1% in the fourth quarter of the current fiscal year against 0.1% in the same period last year. Agriculture growth also declined to 1.4% in the last quarter compared to 2.0% y-o-y. While, construction and social, personal services also slowed down to 4.4% and 4% in this period against 5.1% and 6.8%, respectively.

However, the manufacturing sector, which has been a cause of concern lately, however, had a silver lining as it grew 2.6% during this quarter against 0.1% in fourth quarter of 2011-12. Additionally, trade, hotels, transport and communication’ grew to 6.2 percent in the fourth quarter while financing, insurance, real estate and business services grew 9.1%.

Showing an increase of 5%, GDP at factor cost at current prices in the year, is estimated at Rs 55,05, 437 crore, as against Rs 52, 43,582 crore in the last fiscal.  Meanwhile, GDP at factor cost at constant (2004-05) prices in Q4 of 2012-13 was estimated at Rs 14,707.82 billion, as against Rs 14,037.27 billion in Q4 of 2011-12. Private Final Consumption Expenditure (PFCE) at current prices is estimated at Rs 56,94,362 crore in 2012-13 as against Rs 50,56,219 crore in 2011-12. Government Final Consumption Expenditure (GFCE) at current prices is estimated at Rs 11,86,761 crore in 2012-13 as against Rs 10,42,677 crore in 2011-12.

Gross Fixed Capital Formation (GFCF) at current prices is estimated at Rs 29,64,677 crore in 2012-13 as against Rs 27,49,072 crore in the previous fiscal. In terms of GDP at market prices, the rates of GFCF at current and constant (2004-05) prices during 2012-13 are estimated at 29.6% and 33.2%, respectively, as against the corresponding rates of 30.6% and 33.7%, respectively in 2011-12.

Q4 GDP number is not a surprise and suggests only a cyclical and not a structural upturn and hence does not reflect any improvement in growth. A moderate recovery in Indian factories, exports and investments were perhaps the reason for an increase in overall growth in the quarter through March. Data showed year-over-year factory output grew in March, for the third month in a row, after contracting for the majority of last year, while capital goods output - a key barometer of investment - rose for a second straight month, albeit off a low base.

The CNX Nifty is currently trading at 6,059.35, down by 64.70 points or 1.06% after trading in a range of 6,106.25 and 6,031.80. There were 13 stocks advancing against 37 declines on the index.

The top gainers of the Nifty were Sesa Goa up by 2.70%, Infosys up by 1.21%, JP Associates up by 1.20%, HCL Technologies up by 1.03% and NMDC up by 0.88%. On the flip side, Hindalco down by 3.04%, ITC down by 2.86%, Bank of Baroda down by 2.63%, Reliance Industries down by 2.35% and HDFC Bank down by 2.30% were the major losers on the index.

Most of the Asian equity indices were trading in red; KLSE Composite declined by 0.03%, Shanghai Composite slid by 0.43%, Jakarta Composite down by 0.51%, Straits Times was down by 0.61% and Hang Seng too edged lower.

On the flip side, Nikkei 225 surged 1.37%, KOSPI Composite added 0.05% and Taiwan Weighted was up by 0.14%.

European markets got off to a negative start; with CAC 40 declining by 1.31%, DAX sliding by 0.73% and FTSE 100 dropping 0.74%.