RECOVERY

The Indian markets despite a volatile session were able to post good gain at the end after a day of decline. Though, the start of the trade was on a somber note, tracking the mixed global cues and apprehension about the local economic growth. There was mood of cautiousness in the beginning ahead of the announcement of September quarter GDP numbers, though the street was expecting a weaker number but apprehension were rife as after the 13 successive hikes by the Reserve Bank of India the industrial growth had slowed considerably. In the global markets the Asian counterparts made a sluggish start after the Standard & Poor's cut credit ratings on US lenders from Bank of America Corp. to Goldman Sachs Group Inc. Though in Europe Italy was able to sell its bonds but paid record yields of nearly 8% to sell three-year paper and a 10-year bond at a euro lifetime high of 7.65%. However, European inflation remained at a three-year high and unemployment increased to the highest in more than 13 years. On the local front the marketmen took encouragement with inline GDP numbers, which though came at a more than two year low on quarterly basis but was more or less as expected. The street seemed to have discounted the fact in last session. India's Gross domestic product (GDP) growth has came at 6.9% in the second quarter ended September, compared with 8.9% a year ago in the same quarter and its lowest in last nine quarters.
Earlier the trade at Dalal Street started on a somber note and it looked like the consolidation mood will continue with intermittent profit booking. The benchmarks lost their crucial levels in opening trade and drifted lower. All the sectoral gauges made a weak start and the banking sector stocks were seen under pressure in early trade. The retail stocks too were in dull mood as the logjam in parliament continued over government's approval for 51% FDI, however they got a spurt after Prime Minister Manmohan Singh said that the government would not roll back the decision. The markets started moving higher in the noon trade after the storm of weak GDP numbers stabilized and later the European markets too recovered after a soft start. On the sectoral front Oil & Gas emerged as the top gainer closely followed by FMCG and technology sector, while Consumer Durables and the realty remained the laggards since beginning and could not recover till last. The broader markets too underperformed and the BSE Midcap and Smallcap indices both lost over half a percent. In individual stock movements, market heavy weight Reliance Industries made a good bounce back in the latter part of the day to close with a gain of around 2 percent, otherwise it made a weak start on reports that it has shut down four oil wells in KG-D6 field. On the same time pharma major Ranbaxy remained under pressure since morning amidst uncertainties as to when it will be able to launch a generic version of the blockbuster drug Lipitor.
Finally, the BSE Sensex gained 115.12 points or 0.72% to settle at 16,123.46, while the S&P CNX Nifty added 26.95 points or 0.56% to close 4,832.05.
The BSE Sensex touched a high and a low of 16,179.56 and 15,849.57 respectively. The BSE Mid cap and Small cap index were down by 0.66% and 0.73% respectively.
The top gainers on the Sensex were Bharti Airtel up 3.17%, ONGC up 3.06%, Sun Pharma up 2.84%, NTPC up 2.40% and Hindustan Unilever up 2.26%. While, ICICI Bank down 3.01%, Sterlite Industries down 2.98%, Hero MotoCorp down 2.76%, Tata Motors down 2.76% and Jaiprakash Associate down 1.66% were the major losers on the index.
The top gainers on the BSE sectoral space were Oil & Gas up 1.63%, FMCG up 1.20%, TECk up 0.95% IT up 0.64% and Power up 0.61%, while Consumer Durables (CD) down 2.04%, Realty down 0.91%, Auto down 0.69%, Bankex down 0.61% and Capital Goods (CG) down 0.18% were top losers on the BSE sectoral space.
Meanwhile, substantiating fears of a slowdown, India's economy grew by just 6.9% in the second quarter of 2011-12 financial year, the weakest expansion since the second quarter of 2009 against 8.8% in the year-ago period. The general expectation was that the economy will grow at the rate of 7% much lower than the 7.7% growth in the April-June quarter. The numbers were mainly dragged down by manufacturing sector which grew at 2.7% against 7.8% in the same quarter last year and mining which witnessed a de-growth of 2.9% compared to 8% growth Y-o-Y. Sectorally, Agriculture and Industry grew by 3.2%, Services by 9.3% and Construction growth stood at 4.3%.
As per the Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation, the Quarterly Gross Domestic Product (GDP) at factor cost at constant (2004-05) prices for Q2 of 2011-12 is estimated at Rs 12,27,254  crore  as against  Rs 11,48,472 crore in Q2 of 2010-11, showing a growth rate of 6.9% over the corresponding quarter of previous year. GDP at factor cost at current prices in Q2 of 2011-12, is estimated at Rs 19,55,880 crore, as against Rs 16,85,793 crore in Q2, 2010-11, showing an increase of 16.0%.
The economic activities, which registered significant growth in Q2 of 2011-12 over Q2 of 2010-11 are, 'electricity, gas and water supply' at 9.8%, 'trade, hotels, transport and communication' at 9.9% and 'financing, insurance, real estate and business services' at 10.5%. The estimated growth rates in other economic activities in this quarter are 3.2% in 'agriculture, forestry & fishing', 2.7% in 'manufacturing' and 4.3% in 'construction' and 6.6% in 'community, social and personal services'. The growth of 'mining and quarrying' sector declined to (-) 2.9% during this period.
Though, the decrease in the growth of GDP in second quarter can largely be attributed to the negative growth in 'mining and quarrying' and steep fall in the growth of manufacturing sector but the dampening business sentiment, sluggish industrial growth and expected decline in merchandise exports are further likely to impede the growth. Even the RBI had revised downwards the baseline projection of GDP growth for 2011-12 to 7.6% from 8% earlier.
The S&P CNX Nifty touched a high and low of 4,851.55 and 4,754.80 respectively.
The top gainers on the Nifty were Powergrid up 3.83%, ONGC up 3.63%, DLF up 3.26%, NTPC up 3.03% and Jindal Steel up 2.71%. On the flip side, SAIL down 3.94%, Sterlite Industries down 3.03%, Ranbaxy down 2.96%, Axis Bank down 2.73% and Hero MotoCorp down 2.43% were the top losers on the index.
The European markets were trading in red. France's CAC 40 lost 0.70%, Britain's FTSE 100 down by 0.33% and Germany's DAX down by 0.47%.

After a two day rally, most of the Asian markets snapped the day's trade in the negative terrain as eurozone finance chiefs struggled to boost the financial firepower of a bailout fund for the debt-ridden region. Moreover, investors remained cautious ahead of US and Chinese manufacturing data on Thursday and US employment data on Friday this week. The sentiments in the region were also dampened after credit rating agency Standard & Poor's cut credit ratings on US lenders from Bank of America Corp. to Goldman Sachs Group Inc., Citigroup Inc., and Morgan Stanley had their long-term credit grades cut to A- from A at S&P. JPMorgan Chase & Co. was reduced to A from A+.

In China, the Shangai Composite Index has plunged over three percent, following a report by a Chinese central banker, who has played down the possibility of monetary policy easing next year moreover, Hang Seng dropped by about one and a half percent as Property shares suffered after Credit Suisse forecasted office rents in the city would drop by 25% next year and then stay flat in 2013. New World Development Co. ended down 3.6%, while Henderson Land Development Co. fell 2.4%.