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Sensex Falls 161 Pts; Q1 GDP Growth Dims Rate Cut Hopes
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The Sensex on 31 August' 2012 dropped nearly 161 points to close at a fresh four-week low on selling across sectors even as GDP growth at 5.5 per cent beat estimates but it dashed hopes of a cut in interest rates.
After a slow start, the BSE benchmark index fell to 17,337.61 soon after the Gross Domestic Product (GDP) data was announced. The Sensex attempted to stage a comeback and went up to 17557.62, but it lost the momentum to close at 17,380.75, down 160.89 points or 0.92 per cent over yesterday.
Likewise, the 50-share National Stock Exchange index Nifty lost 56.55 points, or 1.06 per cent to close at 5,258.50.
Out of 13 BSE sectoral indices, 12 ended lower with power, metal, oil&gas, realty and auto indices losing over 1 per cent each. Sustained selling in RIL, ITC, TCS and ICICI Bank weighed on the 30-share index where Hindalco, CIL and Bhel were among the worst performers losing over 2 per cent each.
Poor showing by the manufacturing sector pulled down the GDP growth to 5.5 per cent in the April-June quarter, the decade's worst Q1 performance, but was a higher than the 5.3 per cent estimate put out by most economists.
"GDP growth in Q1 of FY2013 witnessed a marginal improvement... Given any credible steps towards fiscal consolidation so far and RBI's prevalent hawkish stance, we do not expect it to cut rates in the September meeting," said Esp?rito Santo Securities Chief India Economist Deepali Bhargava.
The trading mood was also soured as the eighth consecutive day of Parliament was lost today to the uproar created by BJP over coal block allocations, raising the prospect of washout of remaining part of Monsoon Session that ends on September 7.
Meanwhile, weakness in most of the Asian stocks following marked fall on Wall Street yesterday also weighed on the local bourses, despite rise in European markets in afternoon deals.
Asian shares, excepting Singapore and Taiwan which ended in positive terrain, closed lower between 0.07 per cent and 1.60 per cent as investors appeared worried ahead of US Federal Reserve Chairman Ben Bernanke's speech later in day at a global meeting at Jackson Hole.
"If there is no clear signal on the much anticipated QE3, then markets would be disappointed. On the Eurozone front, fresh concerns on Spain has dampened investor sentiment," said Sanjeev Zarbade, Vice President (Private Client Group Research), Kotak Securities.
However, European markets were trading higher in their afternoon deals. The CAC was up by 1.35 per cent, the DAX by 1.30 per cent and the FTSE by 0.57 per cent.
Kishor P Ostwal, CMD, CNI Research Ltd. said,"Though the GDP growth is better than expected but all other factors are negative and hence the impact could be as such negative on merits. I don't expect any thing from US FED today."
Out of the 30-share Sensex pack, 25 stocks finished with losses while the remaining five ended with gains.
The biggest loser from the Sensex pack was Hindalco Ind (2.21 pc), followed by Coal India (2.15 pc), BHEL (2.10 pc), Hero MotoCorp (2.02 pc), Sterlite Ind (1.99 pc), NTPC (1.90 pc), HUL (1.57 pc), Tata Motors (1.35 pc), TCS (1.30 pc), RIL (1.28 pc), Dr Reddy's (1.15 pc) and Tata Steel (1.15 pc).
Among the sectoral indices the BSE-Metal fell by 1.39 per cent, followed by the BSE-Power (1.33 pc), the BSE-Oil&Gas (1.31 pc), the BSE-Realty (1.27 pc), the BSE-Auto (1.23 pc), the BSE-IT (1.10 pc) and the BSE-FMCG (0.95 pc).
The total market breadth turned negative as 1,419 stocks ended negative and 1,380 stocks finished with gains.
The total turnover dropped to Rs 1,843.80 crore from the yesterday's closing level of Rs 2,597.55 crore.
Foreign Institutional Investors (FIIs) infused Rs 2,501.1 crore yesterday as per Sebi data.