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Sensex ends flat, GDP data disappoints

February 27, 2009

The benchmark index shed 0.7 pct on Friday as disappointing growth data for the third quarter dampened investor sentiments.

Data released today showed the economy grew 5.3 percent in the December quarter from a year earlier, its slowest annual pace in almost six years, as the global economic crisis cut demand and exports. MARKETS-SOUTHASIA-STOCKS

It was below forecast of 6.2 percent and the previous quarter’s 7.6 percent.

Banks largely fell on worries about lower treasury gains from bonds trading that have supported their earnings in recent quarters.

Index heavyweight Reliance Industries sheds 1.9 percent, while Bharti Airtel was down 2.3 percent.

Tata Steel posted a consolidated net profit for the December quarter, beating forecasts for a loss. The stock closed up 5.6 percent at 172.35 rupees after being down about 4 percent before the results were announced.

The BSE Realty Index felt the heat throughout the session, ending with losses of 2.9 pct. DLF, HDIL, Puravankara Projects, Akruti City were down in the range of 2-5.08 pct.

The rupee plunged to a record low of 51 per dollar on Friday, hit by month-end dollar demand from importers and the widening current account deficit.

Contraction in the economy was seen in the manufacturing sector, which fell 0.2 percent in the October-December quarter from a year earlier, while the farm sector contracted an annual 2.2 percent.

In view of today’s GDP figures, the government’s forecast of 7.1 percent growth in the 2008/09 fiscal appears too optimistic. Do you think a 100 basis points cut in the repo and reverse repo rates will help restore confidence in the economy and boost the market?

Trivia: Biggest Sensex fall was for 1408 points on Jan 21, 2008 followed by March 3, 2008.


The worst for Indian economy may not be over yet though GDP growth for 4Q 2009 shall certainly be better as it would be backed by rabi crop,and seasonal demand pull owing to the marriage festivies.At best,we could overall touch 6.9%(Fy 2009).
Mr Kshitij Anand’s observations regarding a skid in realty stocks is now a routine event.Realty companies performance is quite dysfunctional of market movement.Infact,real estate companies have become a ‘weapon of mass destruction’ for themselves,shareholders,prop.investors,P E investors,creditors,suppliers,auditors,e mployees etc.The government must now set up a committee to recommend ways for survival aptly called ‘Saving Realty.’
A reduction in repo/reverse repo rates is overdue.A 1% reduction may yet be a small measure-may be more bolder steps are required.Surely let us make a beginning.

Posted by A.Kapoor | Report as abusive

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