Robust GDP data fails to lift Sensex

Major headlines

Q1FY11 gross domestic product comes in at 8.8%

Honda may sell its entire stake in Hero Honda Motors; the stock closes 0.01% lower

Tata Communications, Axiata Group sign IP transit deal; the stock ends 0.14% higher



Global signals

European shares fell sharply in early trades on Tuesday (August 31, 2010) as growing concerns about the pace of global economic recovery forced investors to stay on the sidelines.

All the major Asian indices closed in the negative terrain on Tuesday. Japan's Nikkei tumbled over 3.5% to close at 16-month low.

The US stock index futures signal lower opening on the Wall Street. Investors will keep an eye on Consumer Confidence data for August and Home Price Index for June.

Indian indices

It was another volatile session for the Indian indices with modest losses at the closing. The indices fell to a seven-week low owing to weak global clues and faltering US economy after slowing personal incomes added to concern that the economic rebound may slow further. The indices ignored positive news back home that April-June quarter gross domestic product (GDP) stood at 8.8%, fastest economic growth in 2 1/2 years. On concerns that robust economic growth may increase pressure on the Reserve Bank of India to extend the most aggressive round of monetary-policy tightening in Asia did not let the indices to rise. However, the indices clawed back some losses in the last hour of trading as strong buying emerged in fast moving consumer goods (FMCG) and auto stocks.

Index heavyweight Reliance Industries tumbled over 3% on announcing that it has acquired 14% stake in hotel chain EIH.

The key benchmark index - Sensex started the session 16 points lower at 18016 (day’s high) taking lead from the weak Asian markets. The index went on extending its losses in the morning trades as Asian markets slid further shrugging off the strong GDP data back home. In the afternoon session, the index widened its losses hitting the day’s low of 17820 as the European stocks opened lower. However, in the last hour of trades, the Sensex trimmed its losses owing to buying in FMCG and auto scrips.

At the finishing line, the Sensex shut below 18000 levels at 17971, 61 points lower. The Nifty managed to closed above 5400 levels at 5402, down by 13 points.

Bond Market Update: India's 10-year bond yield had changed little at 7.97% after the GDP numbers were out. While the rupee was trading at 47 per dollar with almost no change.

Market Outlook: Tonight, there will be release of the minutes of the last Federal Reserve monetary policy meeting. Will there be any further QE2 clues from Ben Bernanke that need to be watched. With weak Housing numbers for the last week in focus as S&P Case-Shiller Home Price Index for June estimated at 146.43 & Chicago PMI numbers to be released later today and expected at 57 for August.

Market sentiment

The market breadth was very weak as declining stocks outpaced the advancing ones twice. Of the 3,027 scrips traded on the BSE, 1,993 scrips slid while 922 scrips rose. Hundred and twelve shares remained unchanged.

Sectoral & stock screening

Of the 13 sector indices on the BSE, only four managed to close the day in the green while the remaining closed in the red. BSE FMCG was the best performer, rose by 1.58%. BSE Auto, BSE Information Technology (IT) and BSE TECk were the other gainers, up by 0.83%, 0.03% and 0.01% respectively. On the other hand, BSE Consumer Durables (CD) fell the most by 2.32%, followed by BSE Oil & Gas that declined by 1.95% and BSE Realty that was down by 1.71%.

Among 'A' group stocks, Adani Enterprises topped the gainers’ chart, rose by 3.95%, followed by Marico that surged by 3.62% and Colgate Palmolive that gained by 3.46%. On the other hand, EIH slid by 7.13%, followed by Jet Airways that fell by 5.25% and REI Agro that shed by 4.05%.

Viewing volumes

Pharma company - Piramal Healthcare was traded the most with over 0.92 crore shares changing hands on the BSE, followed by leading hotel chain - EIH (0.91 crore shares), industrial finance company - IFCI (0.35 crore shares), leading integrated steel makers - Ispat Industries (0.33 crore shares) and India’s second largest developer - Unitech (0.30 crore shares).