Benchmark share indices ended 1.7% down on Friday, amid weak global cues, on concerns over economic growth slowdown and subdued growth outlook for fiscal 2013. The 30-share Sensex ended down 253 points or 1.6% at 15,965 and the 50-share Nifty ended down 82 points or 1.7% at 4,842.
The broader markets were no exception. The Midc-ap and the Small-cap indices closed the day lower by over 1% each, almost in line with the Sensex.
As a reaction to the weak Q4 GDP numbers, a new round of economic downgrades from investment banks and other agencies cutting India's forecasts took place. Morgan Stanley analysts cut its 2012 economic growth estimates to 5.7% from 6.3%. Standard Chartered Bank cut its fiscal 2013 GDP forecast to 6.2 % from 7.1%.Meanwhile, CLSA said it "will probably" lower its already below consensus GDP forecast of 6.3 % to around 6 %. In a report titled "gasping elephant," HSBC warned of the challenges ahead, though it did not cut India's forecasts.
The investor sentiment was marred after China's economy betrayed signs of a broadening slowdown as surveys of its vast factory sector showed momentum eased in May, signaling a deeper-than-forecast deterioration in demand at home and abroad and the likelihood of more policy easing. The HSBC China manufacturing PMI retreated to 48.4 from 49.3 in April - its seventh straight month.
Meanwhile, India's manufacturing sector kept up its steady expansion in May, with fast-rising output evened out by slowing growth of domestic order books. The HSBC manufacturing Purchasing Managers' Index, slipped marginally to 54.8 in May from 54.9 in April.
In the international markets, weak Chinese data and worries about Spain's banking sector drove the euro to two-year lows against the dollar and safe-haven German Bund futures towards record highs on Friday. All the European markets were trading in the red with DAX down over 2% followed by CAC and FTSE down nearly 1% each.
In Asia, Japan's Nikkei average slid to mark its ninth straight week of losses, the longest such run in 20 years, after disappointing Chinese and US data deepened fears of a global slowdown in the throes of Europe's debt crisis. The index lost 1.2%. The other major losers were Taiwan Weighted, Straits, Hang Seng down 0.5-3%. Shanghai Composite which was flat with a positive bias was the only exception.
Back home, among the sectoral indices, Capital Goods, Power, Auto, Oil & Gas and IT indices shed 2% each in today's trades.
Capital goods shares were down on concerns of order inflows coupled with economic growth slowdown after government data Thursday showed a sharp drop in fourth quarter GDP growth, which slumped to a 9 year low. L&T, BHEL, Havells India, Siemens down 2-5% were the top draggers
In the auto space, India's top car makers posted lacklustre sales in May as an excise tax hike and rising fuel prices hit demand, casting more gloom over the country's economic outlook. The government raised petrol prices by around 11% last month, hurting car makers already reeling from an excise hike announced in the budget in March and a weakening of the rupee that is jacking up import costs. Tata Motors, Maruti Suzuki, Mahindra & Mahindra, Bajaj Auto and Hero MotoCorp which lost 1-4% were the significant losers.
Shares of software exporters were down on concerns of slowdown of the US economy and as jobless claims increased for the seventh week in eight and ahead of the monthly payroll data due later today. India's software exporters earn most of their revenues from software exports to the US.HCL Tech, Infosys, Wipro and TCS shed 2-3%.
Oil & gas shares were down as the depreciating rupee would result in higher payments for crude oil imports. Index heavyweight, Reliance Industries dropped 4% along with ONGC which dropped 3%.
The other notable losers among the Sensex stocks were Sterlite, HDFC Bank, Jindal Steel, Tata Power and Hindustan Unilever which lost 2-3%
Meanwhile, ITC and Gail India added 1.5% and 2.6% respectively.
Among individual stocks, Indraprastha Gas (IGL) rallied more than 12% after the Delhi High Court has ruled in favour of IGL in the company's dispute with government regulator Petroleum and Natural Gas Regulatory Board. The stock rallied 29% to Rs 250 on the BSE.
The market breadth was negative on the BSE. 1830 stocks declined and 850 stocks advanced.