Weak But Robust Growth in India

123jump.com Staff
07 Feb, 2008
New York City

The Central Statistics Office reported weaker but strong fiscal outlook for the rest of the year, indicating that the current global financial market turmoil will have minimal impact on the economy of India. CSO lowered its annual economic growth estimate to 8.7% from 9.6% on lower service and manufacturing performance. Manufacturing is estimated to grow at 9.4% slower than 12% from a year ago, service to grow at 10.7% from 11.1%, and agriculture to growth at 2.6% from 3.8%.

[R]10:00AM New York, 7:30PM Mumbai – Global financial turmoil overshadowed the strong fiscal outlook in Mumbai trading.[/R]

Market Sentiment

India markets closed weak despite a strong GDP growth forecast for the current fiscal year and a surge in domestic liquidity. The benchmark index declined 3.4% or 612.56 at 17,526.93. In the broader markets slid 3.6% or 189.3 at 5,133.25.

Of the BSE shares, 799 shares advanced, 2,004 shares declined while 34 stocks remained unchanged. Among the Sensex index 30 stocks only one stock advanced while the rest fell.

Selling was visible in oil & gas, metals and mining, real estate, information technology and banking shares.

Hindalco, Reliance Communications, NTPC, Reliance Industries and Satyam led the decliners in the BSE Sensex index declining over 4.4% each. Bharti Airtel, ICICI Bank, L&T, ITC and Maruti also ended the day lower.

Of the NSE CNX Nifty index of 50 shares, HCL, Unitech, VSNL, PNB and Cairn India declined more than 4.9% each.

Selling was also evident in metals. Top losers of the day were Bhushan Steel, Hindalco, SAIL, Jindal Steel & Power, Hindustan Zinc, Tata Steel, Maharashtra Seamless, NALCO, and Sterlite.

Daily turnover on the BSE stood at 6,541 crore rupees and on the NSE was at 13,982 crore rupees.

Reliance Natural Resources with a turnover of 5699 crore rupees was the most active stock on the BSE followed by Reliance Energy, Reliance Petroleum, Reliance Industries and Future Capital Holdings.


Economic News

India''s economy is expected to expand at annual rate of 8.7% in the current fiscal year ending in March 2008, slower than 9.6% growth rate in fiscal 2006-07, the strongest pace in 18 years, according to the Central Statistics Office.

The CSO said manufacturing output would rise at slower pace by 9.4% in this fiscal year compared to 12% growth in the previous year. Agricultural output growth is estimated to grow at 2.6% compared to 3.8% growth in the previous year. Services sector growth is estimated to slow at 10.7% from the 11.1% growth in the previous year.


Gainers and Losers

Cairn India was down 4.9% to 199.05 rupees, ONGC shed 3.7% to 988.5 rupees and Gail lost 2.6% to 425.1 rupees.

Metal stocks declined on the expected global slowdown. Sterlite Industries lost 3.8% to 758.5 rupees, National Aluminum Company was down 3.3% to 377.1 rupees, Hindalco Industries shed 5.6% to 163.3 rupees, Steel Authority of India slid 4.9% to 210.3 rupees and Tata Steel lost 3.5% to 771.4 rupees.

Software services exporters declined for a third day in a row due to a gloomy economic outlook in the United States, which provides more than 50% of revenue to these companies.

Satyam Computer Services fell 4.4% to 390.85 rupees, Wipro lost 3.6% to 409.85 rupees, Tata Consultancy Services shed 2% to 882.95 rupees and Infosys was down 2% to 1,480.9 rupees.

ICICI Bank was down 4.1% to 1,105.25 rupees. Larsen & Toubro fell 4% to 3,630.45 rupees. ACC was the lone gainer in the Sensex Index and managed to rise 1% to 772.7 rupees.


Reliance Update

Reliance Industries declined 5% at 2,425 rupees while Reliance Communications declined 5.5% to 644.05 rupees.

International Markets

In Tokyo Nikkei 225 Index closed higher 107.91 or 0.82% to 13,207.15, in Australia ASX 200 index lower 12.70 or 0.23% to close 5,596.70. Markets in Hong Kong were closed today.

Thailand SET index closed lower 1.46 or 0.18% to 793.17. Sensex index in India decreased 612.60 or 3.36% to 17,526.93. Market of South Korea and Indonesia were closed today.

In London FTSE 100 Index closed lower 151.30 or 2.58% to 5,724.10, in Paris CAC 40 Index decreased 92.63 or 1.92% to close at 4,723.80 and in Frankfurt DAX index lower 113.79 or 1.66% to close at 6,733.72. In Zurich trading SMI decreased 145.44 or 1.92% to close at 7,420.01.