Lower Than Expected GDP Numbers Disappoint Markets

The Indian markets opened on a negative note today and continue to trade on a weak note following lower GDP growth numbers for the Mar 2012 quarter. Further, the weak global markets continue to dent investor sentiment. During the Jan-Mar 2012 quarter, the Indian economy grew by 5.3%. This marked the eighth successive quarterly decline, and the slowest pace in 9 years. For the full year FY12, the economy grew 6.5%. A major fall was seen in the Electricity sector, which fell from 9% in Q3 to 4.9% in Q4FY12. Mining remains the only sector that has shown growth in the quarter, up by 4.3% vs the figure of of -2.8% in Q3. Nifty is trading down by 0.96% at this hour, while Sensex is down by 1.03%.

The other Asian markets have continued to trade on a negative note over concerns from weak global markets and lower industrial production numbers in Japan.

European markets have bounced back today. They have opened on a marginal positive note, recovering after steep losses in the previous session. However, we believe that the gains could be limited by the worries over Spain's ability to rescue its ailing banking sector. These concerns on the country's struggling banking sector and the rising borrowing cost will continue to persist over the next one month unless the ECB has any major plan to come to the rescue.

Of the BSE sectoral indices, Realty and Power are up by 0.37% and 0.10% respectively. All the others are trading in the negative zone in the range of 0.05% to 1.19%. There has been some selling pressure in the Auto, CG and Oil & Gas spaces, which are down by 1.88%, 1.33% and 1.20% respectively.

In individual stocks, Educomp Solution has fallen by 3% to Rs 139 as the company posted weak numbers for the Mar 2012 quarter. Its net sales increased by 5.10% to Rs 513 crore and the net profit declined by 57.75% to Rs 61.54 crore.

United Spirits is down by 5.75% to Rs 577 as the company post weak results for the quarter. The stock has lost almost 10% in the last two trading sessions. The net sales of the company grew by 24.5% to Rs 9186 crore, but the net profit declined by 67% to Rs 187 crore.

Among the Sensex shares, ICICI Bank, Maruti Suzuki and Tata Motors are significantly down by 4% each, while Cipla, Hindalco and NTPC are up by 1.03%, 1.40% and 1.34% respectively.

The market breadth, which indicates the overall health of the market, is very weak as of now. On BSE, 1981 shares have fallen, 944 shares have risen and 127 shares remain unchanged.

We believe that the markets will remain in the negative territory, and one can also expect a further downfall. Therefore, we advise investors to remain cautious.