Banking, capital goods stocks dip post Q1 GDP data

PNB, YES Bank, Canara Bank, HDFC Bank and Axis Bank from banking, L&T, Bharat Electronics were among the top losers from these two sectors

Shares of companies in the banking and capital goods sectors are trading lower at the bourses after data showed that India’s gross domestic product (GDP) slowed in the quarter ended June (Q1) this year.

Punjab National Bank, Yes Bank, Canara Bank, HDFC Bank, Axis Bank, Kotak Mahindra Bank and Indusind Bank from banking, Larsen & Toubro, Bharat Electronics and Alstom T&D from the capital goods sector are down 2% - 3% on the BSE.

At 10:38 AM, S&P BSE Bankex and the S&P BSE Capital Goods index were down 1.6% and 1.5% respectively compared to 0.78% decline in the benchmark S&P BSE Sensex.

GDP growth at 7.0% y-o-y in Q1 FY16 was lower than Q4 FY15 and came in below consensus expectations. GDP growth in the FY15 June quarter was 6.7%.

According to CARE Ratings, the ‘financial, insurance, real estate & professional services’ sector 9% growth, 0.4% lower than the previous year. There has been a sharp decline, of 6.9%, in growth of the ‘electricity, gas, water supply & utility services’ in Q1 FY16 compared to that in the previous year.

Although the economy has been moving in the upward direction the climb has been slow and there are no perceptible signs that there is going to be a quick and sizeable increase, the rating agency said in a report.

Meanwhile, CRISIL Research expects GDP growth to rise to 7.4% with consumption growth at 6.6% in FY16.

"This, we believe, will improve capacity utilisation rates and lead to revival of private investments over the next 12-18 months. Also, as the expected pick-up in consumption is fragile and investment revival not in sight this year, the case for further monetary easing becomes stronger. With inflation under control, we expect RBI to reduce rates by 25 bps in the current fiscal," added the CRISIL said.