Benchmark Indices dragged down by GDP forecast, murky global markets - Eastern Financiers

Curtailed GDP forecast by the Central Statistical Organization (CSO) for FY13 at decade low of 5%, assorted set of third quarter earnings by corporates and murky global markets dragged down the benchmark indices marking loss of around one and a half percentage point. Concerns that PSU disinvestment and reduction of promoter stake to meet the Securities & Exchange Board of India mandated minimum public shareholding of 25% for private companies and 10% for state-run firms shall result in supply of equity in the market over the next few months also weighed on the indices along with the PSU Index that tripped down 4.67%.

India's gross domestic product (GDP) is estimated to grow annually at 5% in fiscal year 2012-13, significantly lower than the growth rate of 6.2% in 2011-12 and anticipation of 5.5%. The latest estimate is the worst of all growth projections issued by the government and the RBI. Last month, the RBI had pared the GDP growth estimate for the fiscal year ending in March to 5.5%, the worst since 2002-03.

Following last week's impending set of third quarter earnings, markets this week witnessed mixed set of numbers with Apollo Hospitals and Godrej Industries reporting healthy set of numbers on one hand while Tech Mahindra, Cipla, Cement makers ACC and Ambuja Cement disappointed the streets on the other. ACC Ltd posted a 46%, year-on-year decline in December quarter profit to Rs 251.42 crore on higher finance and raw material cost. If not for the change in depreciation method, the cement company's profit would have been higher by Rs 50 crore. Also, the year-ago number included an exceptional gain for tax write-back of Rs 129 crore. Excluding this, profit would have fallen around 30%. Meanwhile, sales of the company rose around 2 % YoY to Rs 2691.52 crore as demand scenario improved towards the end of the quarter.

Broader indices underperformed the benchmarks shaving off massively to the tune of almost 3-4%. Except for the IT and Telecom sectors that accumulated gains of around 1-2%, rest of the indices parked in the negative terrain clocking loss of around 0-5%. IT stocks rose on recent positive economic data in the US, the biggest outsourcing market for the Indian IT firms and weak INR. While, Consumer Durables was the biggest laggard that slithered down 5.16% followed by PSU Banks, Metal, Power, Oil & Gas, Realty and Capital Goods that flaked off around 2.5-5%.

Source : Equity Bulls

Keywords