MODEST CUT

It turned out to be a lackadaisical performance from the benchmark indices on Wednesday as they failed to snap the session in the green territory and settled marginally below the neutral line. The frontline gauges took a breather, a session after showcasing a scintillating performance as investors chose to remain on the sidelines ahead of the US Federal Reserve's monetary policy meeting outcome. Meanwhile, the IMF scaled down India's economic growth for the calendar year 2011 and 2012. It expects India to grow by 7.8% in 2011 against the earlier estimates of 8.2%, and 7.5% in 2012 besides the earlier estimate of 7.8%. Local sentiments were also hurt by PMEAC chairman C Rangarajan's expectations that inflation may stay at current elevated level for coming three months and the RBI's stance on inflation depends on the inflation scenario in the coming three weeks. The session was largely characterized by volatility as investors indulged mostly in stock specific activities and hunted for fundamentally strong shares especially from the broader markets rather than from heavyweight counters. Shares like Everonn Education, Tree House Education, Educomp, Zee Learn etc from the education sector kept buzzing through the session after reports that Dubai based GEMS Education bought 12% stake in Everonn which was locked at 5% upper circuit. Furthermore, shares from the sugar and cement pockets of the broader market too garnered a lot of traction in the session. Sentiments in the local bourses were largely influenced by the global cues through the session. Optimistic leads from the Asian markets during the start of trade took the key indices to session's highs within minutes of the opening bell but the optimism proved short lived. Thereafter domestic investors' morale was undermined by the sluggish European market opening on fresh concerns over banks' exposure to indebted Greece. However, the downside risks for the local frontline indices were capped as marketmen expected that the Federal Reserve may announce fresh measures later in the day to stimulate US economy post Federal Open Market Committee meeting on US interest rates conclusion.
Earlier on Dalal Street, the benchmark got off to a positive opening, in tandem with the cautiously optimistic sentiments prevailing in Asian markets. The frontline indices soon gathered momentum and touched intraday highs in early hours but the optimism fizzled out sooner and the indices sea-sawed around the neutral line though the morning session. But fresh bouts of selling pressure surfaced after weak European opening post which the indices found it hard to claw back into the green terrain and eventually settled in the negative zone. Finally the NSE's 50-share broadly followed index Nifty, registered single digit losses to settle below the crucial 5,150 support level while Bombay Stock Exchange's Sensitive Index, Sensex slipped by less than fifty points and closed above the psychological 17,050 mark. Moreover, the broader markets showed some resilience and settled on a positive note, outperforming their larger peers by quite a margin. On the BSE sectoral space, the Oil & Gas counter did the maximum damage as it slumped by over a percent after heavyweight Reliance Industries plummeted by over one and half a percent on reports that the CBI is set to file a case against the Mukesh Ambani-led RIL over inflation of costs. To add to this the company is also likely to take a tax hit of about Rs200 crore, as the union finance ministry has ruled that it is not exempt from paying state-level taxes on its gas sales. Profit booking was also evident in Automobile, Metal, IT and FMCG counters. On the flipside, the rate sensitive counters like Banking and Real Estate tried hard to prevent the benchmarks from drifting deeper into the red terrain by amassing about a percent of gain each while sectors like PSU and Power too witnessed some buying interests in the session. The markets consolidated on weaker volumes of around Rs 1.24 lakh crore while the turnover for NSE F&O segment too remained lower as compared to Tuesday at over 1.11 lakh crore. The market breadth remained optimistic as there were 1610 shares on the gaining side against 1228 shares on the losing side while 126 shares remained unchanged.
Finally, the BSE Sensex lost 34.13 points or 0.20% to settle at 17,065.15, while the S&P CNX Nifty declined by 6.95 points or 0.14% to close at 5,133.25.
The BSE Sensex touched a high and a low of 17,191.12 and 17,000.61 respectively. The BSE Mid cap and Small cap index was up by 0.73% and 0.71% respectively.
The top gainers on the Sensex were ICICI Bank up 2.15%, Jaiprakash Associate up 2.14%, Coal India up 1.57%, Wipro up 1.30%, and SBI up 0.89%.
On the flip side, Hero Motocorp down 3.06%, Hindalco Industries up by 2.80%, Maruti Suzuki up by 2.65%, Reliance up by 1.57% and Bajaj Auto down 1.49% were the top losers on the index.
The top gainers on the BSE sectoral space were Consumer Durables (CD) up 2.04%, Bankex up 0.96%, Realty up 0.83%, PSU up 0.50% and Power up 0.43%. While, Oil & Gas down 1.16%, Auto down 0.91%, Metal down 0.26%, IT down 0.26%, FMCG down by 0.14% were top losers on the BSE sectoral space.
Meanwhile, on the back of weak recovery in the global economy, the International Monetary Fund (IMF) expects Indian economy to grow by 7.5% to 7.75% in 2011-12. The projection made by IMF is on the line of Reserve Bank of India (RBI) and Prime Minister's economic advisory council, which expects India to grow close to 8% in 2011-12.   The IMF has scaled down India's economic growth for the calendar year 2011 and 2012. It expects India to grow by 7.8% in 2011 against the earlier estimates of 8.2%, and 7.5% in 2012 besides the earlier estimate of 7.8%. This downturn revision in growth forecast was done because of the weak expansion in global economy and recent corporate governance issue. The IMF has also scaled down the growth projections for world economy from 4.3% to 4% for 2011 and it expects economy to grow by 4.5% in 2012.
'In India, growth is forecasted to average 7.5-7.75% during 2011-12. Activity is expected to be led by private consumption. Investment is expected to remain sluggish, reflecting, in part, recent corporate sector governance issues and a drag from the renewed global uncertainty and less favorable external financing environment,' IMF said. By adding further IMF said that a key challenge for policymakers is to bring down inflation, which is running close to double digits and has become generalized. Despite policy tightening, real interest rates are much lower than pre-crisis averages, and credit growth is still strong.
In its latest World Economic Outlook report, the IMF said India along with Argentina and Russia requires higher monetary tightening than any other countries which are in a position to postpone such a move. However, IMF expects decline in India's consumer price index from elevated level of 12% in 2010 to 10.6% in 2011 and 8.6% in 2012. However, India's consumer prices are higher than the other developing nations like China and South Korea.
The IMF's projection of consumer prices for developing Asia (India and China) for the current calendar year is around 7% and for 2012 it expects it to moderate to 5.1%. In order to tame inflation, the RBI has increased its short term lending and borrowing rates by 12 times in last 18 months, which has adversely affected the overall investment scenario hence affecting the growth. India's economy in the first quarter of 2011-12 grew by its slowest pace in last six quarter. It grew by 7.7% in April-June 2011 from 8.8% in April-June 2010. For the current financial year, all the major agencies including RBI have done downward revision in India's economic growth for current financial year.  The S&P CNX Nifty touched high and low of 5,168.40 and 5,109.85, respectively.
The top gainers of the Nifty were Siemens up 2.03%, ICICI Bank up 1.99%, Grasim up 1.80%, Ambuja Cement up 1.74% and JP Associate up 1.66%.
On the flip side, ONGC down 2.76%, Hero Motocorp down 3.43%, Hindalco Industries down 3.27%, Maruti Suzuki down 3.19%, Cairn down 2.55% and Reliance down 1.97% were the top losers on the index.

The European markets were trading in the red. France's CAC 40 climbed by 1.19%, Britain's FTSE lost by 0.43%, and Germany's DAX declined by 1.01%.

Most of the Asian counterparts ended the day's trade in the positive terrain on Wednesday as investors remained optimistic that the Federal Reserve will announce new monetary easing steps to boost the world's largest economy. Meanwhile, the IMF warned of severe consequences to the global economy unless euro-zone nations strengthen their banking system and the US gets its fiscal affairs in order. It warned that the US and European economies face recession and a 'lost decade' of growth unless governments around the world take concerted actions to revamp economic policies. Moreover, Chinese - Shanghai Composite gained over two and a half percent on the back of bargain hunting in banking stocks and increased demand from fund managers.