Weakness continued on the bourses after the latest data showed that the GDP growth hit a decade low of 5% in fiscal year 2012-13. The barometer index, the S&P BSE Sensex, was down 239.48 points or 1.18%, off 215.37 points from the day's high and up 58.35 points from the day's low. The market sentiment was hit as hawkish comments by Reserve Bank of India governor D. Subbarao on Thursday, 30 May 2013, on inflation dashed hopes that the central bank will continue to lower interest rates to boost economic growth. The market breadth, indicating the overall health of the market, was negative.
IT stocks rose after the rupee hit 11-month low against the dollar. Container Corporation of India hit 52-week high. GlaxoSmithKline Pharmaceuticals scaled record high.
Key benchmark indices dropped in early trade as hawkish comments by Reserve Bank of India governor D. Subbarao on Thursday, 31 May 2013, on inflation dashed hopes that the central bank will continue to lower interest rates to boost economic growth. The market extended initial fall in morning trade, with Sensex sliding below the psychological 20,000 mark. Weakness persisted on the bourses in mid-morning trade as latest data showed that India's economic grew at its lowest pace in a decade in fiscal year 2012-13.
At 11:22 IST, the S&P BSE Sensex was down 239.48 points or 1.18% to 19,975.92. The index lost 297.83 points at the day's low of 19,917.57 in morning trade, its lowest level since 27 May 2013. The index slipped 24.11 points at the day's high of 20,191.29 in early trade.
The CNX Nifty was down 75.25 points or 1.23% to 6,048.80. The index hit a low of 6,031.80 in intraday trade, its lowest level since 27 May 2013. The index hit a high of 6,106.25 in intraday trade.
The market breadth, indicating the overall health of the market, was negative. On BSE, 1,144 shares declined and 795 shares rose. A total of 115 shares were unchanged.
The total turnover on BSE amounted to Rs 676 crore by 11:20 IST compared to Rs 431 crore by 10:20 IST.
Among the 30-share Sensex pack, 22 stocks declined and the rest of them gained. M&M (down 2.91%), Hindalco Industries (down 2.82%) and HDFC Bank (down 2.75%) edged lower from the Sensex pack.
IT stocks rose on weak rupee. Tata Consultancy Services (TCS), Wipro, Infosys and HCL Technologies rose 0.03% to 1.07%. The rupee hit 11 month low against the dollar today, 31 May 2013. The domestic currency was at 56.51/52 versus Thursday's close of 56.38/39. The rupee hit 56.60 in intraday trade, its weakest since 29 June 2012. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.
Container Corporation of India gained 5.54% to Rs 1,179.90 after striking a 52-week high of Rs 1,211.30 in intraday trade today, 31 May 2013. The company's net profit declined 0.5% to Rs 225.84 crore on 15% growth in net sales to Rs 1231.39 crore in Q4 March 2013 over Q4 March 2012. The Q4 result was announced on 25 May 2013.
GlaxoSmithKline Pharmaceuticals surged 5.7% to Rs 2,431.20 after striking a record high of Rs 2,550 in intraday trade today, 31 May 2013.
India's GDP grew 4.8% Q4 March 2013, slightly higher than a revised 4.7% growth in Q3 December 2012, data released by the government today, 31 May 2013, showed. GDP grew at a decade low of 5% in fiscal year 2012-13.
In Q4 March 2013, the 'agriculture, forestry and fishing' segment registered a growth of 1.4%, the manufacturing sector reported 2.6% growth, 'electricity, gas and water supply' segment clocked growth of 2.8%, the construction sector grew 4.4%, 'trade, hotels, transport and communication' segment clocked 6.2% growth, 'financing, insurance, real estate and business services' segment clocked 9.1% growth and 'community, social and personal services' segment registered 4% growth. The mining and quarrying segment reported a decline of 3.1%.
The Reserve Bank of India (RBI) governor D. Subbarao on Thursday, 30 May 2013, said that the central bank is concerned about the country's wide current-account deficit (CAD) and still-high retail inflation. Mr. Subbarao, while speaking at an event in Ahmedabad, said the RBI will factor in the current-account gap while formulating its monetary policy. He said the wide deficit is weakening the local currency and may fan inflation that has slowed in recent months. The bank is concerned about the size of the deficit as well as the way India funds it, Mr. Subbarao said. The result of the high current-account deficit has been the depreciation of the rupee, he said. Rupee depreciation is a problem because it pushes up the cost of our imports, it increases debt-servicing cost, it causes inflation and it erodes our external payment situation, he added. Mr. Subbarao said India's retail inflation is still a concern. Sacrificing growth in the short term is "inevitable" as the RBI strives to rein in inflation, he added.
RBI undertakes mid-quarter review of the monetary policy on 17 June 2013. The RBI on 3 May 2013 cut its key policy rate viz. the repo rate by 25 basis points (bps) to 7.25% and kept the cash reserve ratio (CRR) for banks unchanged at 4% after a monetary policy review. RBI said at that time that the balance of risks stemming from its assessment of the growth-inflation dynamic provides little space for further monetary easing. The RBI said it will endeavour to condition the evolution of inflation to a level of 5% by March 2014, using all instruments at its command.
The finance ministry in October 2012 announced a five-year plan to cut fiscal deficit. The government hopes to reduce the fiscal deficit to 3% by March 2017.
Asian markets were trading mostly higher tracking gains in US markets. Key benchmark indices in South Korea, Hong Kong, Taiwan and China were rose by 0.03% to 1.65%. Key benchmark indices in Indonesia and Singapore were down by 0.36% to 0.66%.
Japan's industrial production rose 1.7% during April, the Ministry of Economy, Trade and Industry said today, 31 May 2013.
China will release the government-sponsored manufacturing data for May 2013 tomorrow, 1 June 2013. Investors will be watching to see if the government-sponsored Purchasing Managers' Index matches preliminary results from a privately-compiled version, produced by HSBC and Markit, which showed Chinese manufacturing activity contracting in May.
Trading in US index futures indicated that the Dow could gain 14 points at the opening bell on Friday, 31 May 2013. US stocks edged higher on Thursday, 30 May 2013, as another report cast a positive light on the US housing market and as weaker-than-expected data on first-quarter economic growth and jobless claims raised hopes the Federal Reserve may keep its current level of bond purchases.
Fed Chairman Ben Bernanke said last week that an improvement in data could trigger the central bank to start tapering its asset purchases in coming months, stoking fears that the $85-billion-a-month liquidity injection will soon come to an end.
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