Markets slump amid weak FY13 GDP forecast

Benchmark indices have closed the trading session on a lower note as Government disappointed the street by sharply lowering the GDP forecast.

India’s economic growth rate this fiscal is estimated to be sharply lower at 5%, lowest in a decade, on account of poor performance of manufacturing, agriculture and services sector.

The 30-share Sensex ended at 19,580 down 59 points or 0.30% and the 50-share Nifty ended at 5,939 down by 20 points or 0.34%. The Sensex and the Nifty reached an intra-day low of 19,540 levels and 5,928 mark, respectively.

India's economic growth likely eased further to around 4.8% in the quarter ending in December, mainly as a result of deep cuts in government spending, a senior official at the statistics ministry said.

"It is disappointing. My own estimate is when the full year data becomes available, it can be revised upward," said C Rangarajan, the chairman of the Prime Minister's Economic Advisory Council. Despite the revision, the economy could still grow at 5.5% or more for the current fiscal year ending March, he said.

On the global front, Japanese shares came off a more than four-year high on Thursday as investors booked profits, with Nikon Corp sinking 19% after it lowered its annual earnings forecast.

The Nikkei closed at 11,357.07, retreating from a high of 11,498.42 struck on Wednesday. Trading volume stood at 4.04 billion shares, marking the highest level since March 15, 2011.

The euro, German bonds and shares steadied on Thursday, as investors awaited the European Central Bank's policy meeting later in the day and President Mario Draghi's views on the region's growth prospects.

Back home, On the sectoral front, BSE Consumer Durable index slumped by over 3% followed by counters like Realty, Power, Metal, Capital Goods, PSU, Healthcare, Oil & Gas and Banks, all declining by 1% each. However, BSE IT index was up by 1%.

Capital goods shares like L&T and BHEL were down by over 1% each. Manufacturing growth is expected to drop to 1.9% in this fiscal, from 2.7% last year.

From the Consumer Durable segment, Bajaj Electricals, Rajesh Exports, Titan Inds and Videocon declined between 2-3%.

Metal shares like Sterlite was the top Sensex loser, down nearly 3%. Tata Steel, JSPL and Hindalco slipped between 1-2%.

NTPC slumped by almost 3%, extending its previous day’s 2.1% fall, after the government proposes to offload its 9.5% stake in the company through the offer for sale (OFS) route. Tata Power is down by almost 1%.

Cipla slipped by 3% after reporting a lower-than-expected 25.5% year-on-year (yoy) growth in net profit at Rs 339 crore for the third quarter ended December 31, 2012 (Q3). Analysts on an average had expected profit of Rs 374 crore from the drug maker.

Other notable losers include Bharti Airtel, GAIL, Tata Power, Hero Moto, Bajaj Auto, ICICI Bank and SBI.

On the gaining side, HDFC, TCS, M&M and Tata Motors gained by 1% each.

The broader markets underperformed the benchmark indices in trades today. The BSE mid-cap index slipped 0.88% and the small-cap index was down 1.34%.

SMART MOVERS

Godrej Industries gained after posting better-than-expected numbers for the quarter ending December 2012.

Shares of Strides Arcolab dropped 13% to Rs 917 amid uncertainty over the sale of its injectables-medicine unit Agila Specialities.

Jubilant Foodworks surged 3.41% after foreign fund house Morgan Stanley Asia (Singapore) bought additional shares of the company for over Rs 37 crore on Wednesday.

Honeywell Automation of India ended higher by 3.46% to Rs 2,603 after reporting 14.5% year-on-year (yoy) growth in operating profit at Rs 52 crore for the fourth quarter ended December 31, 2012 (Q4) mainly on account of lower raw material cost.

Manappuram Finance tanked 8% after the Kerla-based gold loan company has reported 48% year-on-year (yoy) drop in its net profit for the quarter ended December 31, 2012 (Q3).