The benchmark indices continue to reel under pressure and are trading in negative terrain in the early noon session, with the broader market too displaying weakness. Though the benchmark indices have rallied 9.1% in March, notching their biggest gain in six months but are lacking strength since past few sessions, BSE Mid-cap and Small-cap indices were down by 0.49% and 0.38%, respectively. Some BSE sectoral indices like FMCG, Capital Goods and Health Care are trading in green while Auto, Realty, PSU, Oil & Gas, Consumer Durables, Power and IT are in red. The market breadth on the BSE was in favour of declines in the ratio of 1097:1657 while 90 scrips remained unchanged. On the global front the Asian markets continue to trade mixed, KLSE Composite and Taiwan Weighted were reeling in red.
Loan disbursement by banks in India continues to grow at a strong pace and above the central banks' target for FY11 of 20%. According to the data compiled by the Reserve Bank of India (RBI), outstanding credit from banks increased by 21.5% to Rs 40.57 lakh crore as on March 25 compared with Rs 33.37 lakh crore a year ago. During the fortnight ended March 25, all scheduled banks together disbursed Rs 84,236 crore of credit, nearly double compared with Rs 48,871 crore worth credit disbursed in the corresponding fortnight of previous fiscal. However, part of the credit disbursement in the last fortnight of the year might also reflect 'window dressing', a term generally used to describe the tendency on part of banks to push loan disbursement towards end of the fiscal to meet targets.
The BSE Sensex lost 52.34 points or 0.27% at 19,538.84. The index touched a high and a low of 19,697.21 and 19,463.56 respectively.
The BSE Mid-cap and Small-cap indices lost 0.49% and 0.38%, respectively.
The sectoral indices trading in the green on the BSE are Capital Goods up 0.77%, FMCG up 0.61% and Health Care up 0.14%.
On the flip side, Auto down 1.31%, Realty down 1.27%, PSU down 1.02%, Oil & Gas down 0.78%, Consumer Durables down 0.77%, were the major losers.
The top gainers on the Sensex were Bharti Airtel up 2.20%, Sterlite Industries up 1.60%, L&T up 1.26%, HUL up 0.71% and BHEL up 0.60%.
On the flip side, Hindalco down 2.62%, JP Associates down 2.44%, Tata Motors down 1.82%, Wipro down 1.59% and Reliance Infra down 1.55% were the major losers on the index.
Meanwhile, Research houses continue to downgrade India's growth estimate for the current financial year, though most still expect the overall growth performance to remain close to the 8% level. Latest in this regard is Standard Chartered which has now pegged India's FY12 growth projection at 8.2% as compared with 8.5% growth it expects in 2010-11.
It has mentioned a number of factors including inflation and rising interest rates that can impact growth. 'Local headwinds - inflation, higher rates and governance risk - are likely to slow growth to 8.1% in FY12 from 8.5% in FY11, with a more pronounced effect in first half of FY12,' the banking major said in a research policy report. The Indian government had earlier pegged growth in FY12 at 9% although most economists now do not expect that number to come true.
Standard Chartered believe that while consumption expenditure in the country continues to increase at a strong pace, the investment cycle has not fully recovered due to high inflation and rising rate scenario. India is a largely a domestic demand driven economy but share of foreign trade in its gross domestic product (GDP) has been increasing over last several years. There are also some risks in the governance space with a lot of controversies surrounding the present union government.
Another downside risk to India's growth stems from the rising commodity prices. Brent Crude continues to hover around the $120 a barrel mark and if it remains here for a good part of the year, India's subsidy bill will surge significantly and would easily derail the fiscal deficit number of 4.6% budgeted by the finance ministry. Lower remittances from West Asia due to geopolitical tensions in the region can also impact India's growth according to Standard Chartered.
A number of other research houses too had downgraded India's growth estimate earlier. Nomura for instance said in a research note a week ago that the tight monetary policy of the central bank and declining growth in capital goods output is expected to moderate India's growth rate to 8% in 2011 from 8.6% in the previous year. Bank of America-Merrill Lynch too had recently cut the GDP growth forecast for India for financial year 2012 to 8.2% from 8.5% given earlier.
Morgan Stanley had given perhaps the most pessimistic estimate so far when it said growth in current fiscal in the country is likely to come down to 7.7% from 8.2% earlier. This was the second time this year that Morgan Stanley had slashed the growth forecast for India. Even the Asian Development bank has lowered growth projection for the country to 8.2% from 8.5% the multilateral lender had given earlier. Overall though most economists continue to expect that growth will be close to 8%, which means India will continue to be the second fastest growing large economy.
The S&P CNX Nifty was down by 19.45 points or 0.33% at 5866.25. The index touched high and low of 5926.95 and 5841.10, respectively.
The top gainers on the Nifty were Bharti Airtel up 2.18%, Ranbaxy up 2.11%, Sterlite Industries up 1.46%, L&T up 1.20% and HUL up 0.92%.
On the other hand, Hindalco down 2.89%, IDFC down 2.57%, JP Associates down 2.45%, RPower down 2.25% and BPCL down 1.96% were the major losers on the index.
Asian markets were trading mixed, KLSE Composite was down by 0.05% and Taiwan Weighted was down by 0.08%. The gainers were Hang Seng up 0.55%, Shanghai Composite up 0.74%, Jakarta Composite up 0.06%, Nikkei advanced 1.85% and Strait Times up 0.10%.
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