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European stock markets opened mostly lower on Wednesday, tracking losses seen in Asia markets, as investors questioned whether the rally in global equities has been overdone. In Asia as well, markets ended lower with the Nikkei slipping 0.6% at 12,239. Shanghai stocks traded sharply lower for a second day, as investors assessed whether the economic outlook supported further gains.
Back in India, Prime Minister Manmohan Singh today said in the Lok Sabha that the economy will return back to high growth trajectory within the next 2-3 years. He also said that the GDP has slowed down in the last couple of years owing to several domestic as well as international factors.
Despite the high Consumer Price Index (CPI) inflation, it is expected that the Reserve Bank of India (RBI) would cut the repo rate by 25 basis points in its mid-quarter review of monetary policy on March 19, to give a push to the country's sagging economic growth.
Meanwhile, Morgan Stanley and HSBC each cut their India's economic growth forecasts for 2013/14 to 6% from 6.2% to reflect lower-than-expected growth in the October-December quarter.
HSBC says it expects 50 basis points of additional rate cuts in the calendar year 2013, and "a slightly more protracted recovery" in India.
Financial shares were down after higher-than-expected industrial growth in January and retail inflation remaining in double digits for the third straight month diminished hopes of a rate cut by the central bank. BSE bankex slumped 2% at 13,515 after Indian bank’s credit to industry grew at sluggish space in January compared with year ago. ICICI Bank was down 3.2% at Rs 1,086. HDFC Bank was down 1.3% while SBI slipped 1% in trades.
Consumer Durables Index was among the top loser among the sectoral indices on the BSE for the second straight session, down 1.5% at 6910, after high inflation for the past few months has led to lower spends on consumer durables.
Auto shares fell with the BSE auto index dropping 1.5% at 10,669. According to reports, passenger car sales in the Indian market hit a 12-year low in February, declining 25.7 per cent to 158,513 units, as high interest rates and rising fuel costs continued to keep off consumers from showrooms.
Shares of software exporters were down on account of appreciating rupee against the US dollar as most of these companies earn a major portion of their revenue from exports to the US. BSE IT index dropped 1%.
In the auto segment, Tata Motors was down 1% at Rs 301 on reports that its key Jaguar Land Rover (JLR) unit posted lower-than-expected around 3% year-on-year (yoy) growth in retail volumes in February mainly due to a sharp decline in volumes in China.
Bharti Airtel was up 0.7% at Rs 318 on news that the company's plans to raise low-cost debt and sell a part of its direct-to-home (DTH) business are considered positives by analysts.
According to media reports, Reliance Industries and six other firms were shortlisted by Iraq on Tuesday for development of its Nasiriya oilfield and construction of an associated 300,000 barrels per day refinery. RIL was flat at Rs 844.
FMCG names were in the green. HUL added 0.5%. ITC was up 1% at Rs 3025 on news that cigarette prices has increased up to 20%.
The eight new stocks which are to debut on the FTSE Emerging Market Index have slipped in trades. These are YES Bank, NMDC, GlaxoSmithKline Consumer , Godrej Consumer, Wockhardt, United Breweries, Shree Cement and IndusInd Bank dropped 1-5% each in trades.
BSE market breadth was negative. Out of 3,013 stocks traded, 1,893 shares declined while 992 shares advanced.
