Markets recovers despite disappointing Q2 GDP numbers

The Indian equity markets recovered some lost ground but still remained in negative territory even as Q2 GDP numbers came in slightly lower than expectation. Meanwhile according to the data released by the government, Gross Domestic Product (GDP) grew at 6.9% in the July - September quarter, the slowest pace in nine quarters. In the April-June quarter, the economy grew at 7.7%. Manufacturing sector saw a growth of 2.7%, as compared to 7.2% in the previous quarter. Services sector grew at 9.3%. Construction sector recorded a growth of 4.3% as compared to 6.7% in the corresponding quarter last year, while mining sector growth declined by 2.9%. On sectoral front, all were trading in red. Consumer durables, realty, capital goods, auto and metal stocks were mostly trading weak. Power, healthcare and FMCG stocks were also seen trading lower. On the global front, most of the Asian markets extended their losses. Back home, the market breadth favoring the negative trend; there were 926 shares on the gaining side against 1,368 shares on the losing side while 113 shares remained unchanged.

The BSE Sensex is currently trading at 15,963.50, down by 44.84 points or 0.28%. The index has touched a high and low of 16,019.39 and 15,849.57 respectively. There were just 12 stocks advancing against 18 declining ones on the index.

The broader indices too were trading lower; the BSE Mid cap index was down by 0.84% while, Small cap index was down by 0.65%.

There is no gainer on the BSE sectoral space, while CD down by 2.00%, CG down by 1.27%, Realty down by 1.24%, Metal down by 0.79% and Auto down by 0.77%.

The top gainers on the Sensex were HDFC Bank up by 1.29%, HUL up by 1.11%, Sun Pharma up by 0.99%, Bajaj Auto up by 0.76% and ONGC up by 0.74%.

On the flip side, Sterlite Industries down by 2.25%, M&M down by 2.08%, BHEL down by 2.07%, Tata Motors down by 1.49% and JP Associates down by 1.35% were the top losers on the index.

Meanwhile, substantiating fears of a slowdown, India’s economy grew by just 6.9% in the second quarter of 2011-12 financial year, the weakest expansion since the second quarter of 2009 against 8.8% in the year-ago period. The general expectation was that the economy will grow at the rate of 7% much lower than the 7.7% growth in the April-June quarter. The numbers were mainly dragged down by manufacturing sector which grew at 2.7% against 7.8% in the same quarter last year and mining which witnessed a de-growth of 2.9% compared to 8% growth Y-o-Y. Sectorally, Agriculture and Industry grew by 3.2%, Services by 9.3% and Construction growth stood at 4.3%.

As per the Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation, the Quarterly Gross Domestic Product (GDP) at factor cost at constant (2004-05) prices for Q2 of 2011-12 is estimated at Rs 12,27,254  crore  as against  Rs 11,48,472 crore in Q2 of 2010-11, showing a growth rate of 6.9% over the corresponding quarter of previous year. GDP at factor cost at current prices in Q2 of 2011-12, is estimated at Rs 19,55,880 crore, as against Rs 16,85,793 crore in Q2, 2010-11, showing an increase of 16.0%.

The economic activities, which registered significant growth in Q2 of 2011-12 over Q2 of 2010-11 are, ‘electricity, gas and water supply’ at 9.8%, ‘trade, hotels, transport and communication’ at 9.9% and ‘financing, insurance, real estate and business services’ at 10.5%. The estimated growth rates in other economic activities in this quarter are 3.2% in ‘agriculture, forestry & fishing’, 2.7% in ‘manufacturing’ and 4.3% in ‘construction’ and 6.6% in ‘community, social and personal services’. The growth of ‘mining and quarrying’ sector declined to (-) 2.9% during this period.

Though, the decrease in the growth of GDP in second quarter can largely be attributed to the negative growth in ‘mining and quarrying’ and steep fall in the growth of manufacturing sector but the dampening business sentiment, sluggish industrial growth and expected decline in merchandise exports are further likely to impede the growth. Even the RBI had revised downwards the baseline projection of GDP growth for 2011-12 to 7.6% from 8% earlier.

The S&P CNX Nifty is currently trading at 4,789.45, down by 15.65 points or 0.33%. The index has touched a high and low of 4,804.85 and 4,754.80 respectively. There were 18 stocks advancing against 32 declining ones on the index.

The top gainers of the Nifty were Kotak Bank up by 1.70%, PowerGrid up by 1.31%, HDFC Bank up by 1.19%, Sunpharma up by1.06% and HUL up by 0.98%.

On the other hand, SAIL down by 3.28%, Siemens down by 3.19%, Ranbaxy down by 2.74%, Sterlite Industries down by 2.29% and M&M down by 2.07% were the major losers on the index.

Asian indices continue to trade mixed; Shanghai Composite lost 3.27%, Hang Seng down 1.82%, Nikkei 225 plunged 0.56%, Straits Times was down by 0.03%, Seoul Composite down 0.41% and Taiwan Weighted down 1.21%.

On the other hand, Jakarta Composite advanced 0.17% and KLSE Composite gained 0.81%.