The markets ended lower for the third straight day as slower IIP growth coupled with weak global cues weighed on the investor sentiment. The Nifty opened in red and remained subdued until the industrial output data for the month of April came in at 6.3%, putting pressure on stocks from capital intensive sectors.The S&P CNX Nifty touched a low of 5,457 in the afternoon session and recovered partially to closed at 5,486, down 35 points. The BSE benchmark Sensex ended at 18,269, down 116 points, recovering from a low of 18,183.
The industrial out data signaled a definite slowdown in economic activity due to rising cost of credit and high inflation. Production at factories, mines and utilities grew 6.3% annually, lower than an 8.83% reported in March last year.
Manufacturing activity which contributes 80% to the index also showed fatigue. It grew at 8.4% in April, lower than 10.4% in May. This data was the first of a new series with a different base year of 2004-05 comprising of new components and weightage. Under the old series, annual industrial output growth in April was at 4.4%.
Analysts expect the Reserve Bank of India to slow down its rate hike activity due to cooling economic growth. Markets will take cues from the RBI rate hike next week. Technical analyst, Devanghsu Datta said, “Nifty would fall further only if 5450 is broken and the index would face resistance at 5525.”
Among the sectoral pack, BSE Capital Goods index was the top loser, down 1.1% as investors’ dumped stocks due to concerns over capital investments being deferred for an extended period. Larsen & Tourbo slipped 1.6%, Praj Industries was off 1.6% and Suzlon Energy fell 1.5%.
BSE Consumer Durables index witnessed buying interest on back of normal monsoon boosting demand for consumer goods. Whirlpool advanced 3.7%, Titan climbed 1.8% and Bajaj Electrical rallied 1.6%.
Retail shares rallied on reports that the proposal of foreign direct investment (FDI) in multi-brand retail stores is expected to come up for cabinet approval in a few weeks. Pantaloon Retail was up 6.9%, Trent advanced 5%and Shoppers Stop gained 9%.
From the broader markets, midcap and the smallcap indices closed down 0.3% and 0.4% each.
Top losers on the Sensex were DLF, down 1.8%, ITC slipped 1.7% and Larsen & Tourbo declined 1.6%. Prominent gainers were Maruti Suzuki up 1% after reports that Haryana government banned the strike at the Manesar plant, Hindalco declined 0.7% and ONGC was off 0.6%.
The market breadth has turned negative. Out of 2860 stocks traded on the BSE, 1102 stocks have advanced while 1635 have declined.
