Markets Shed Heavily Over Economic Slowdown

The Indian markets extended their losses in the late afternoon trade and closed in the deep red zone. Overall, the day remained quite bad for the markets. Weak global cues, the falling rupee and slower economic growth have slammed the market very badly, marking a rough start to the June series. Both the indices are down significantly. Nifty is down by 1.80% to levels of 4835, while the Sensex was dragged below the 16000 mark.

The markets remained under pressure for most of the session on the back of weak global cues and poor GDP data for the Mar 2012 quarter. The GDP grew by 5.3%, the eighth successive quarterly decline and the slowest pace in 9 years. The rupee depreciated further to 56.42 levels against the dollar. The latest HSBC manufacturing PMI data also showed a marginal slowdown to 54.8 in May from 54.9 as in Apr.

All the major European markets have turned negative and extended their losses over weak data emerging from the region. The Euro zone manufacturing sector contracted at its steepest pace in nearly 3 years in May, while Italy's Apr jobless rate reached a new record high of 10.2%. The country debt problems are spreading to other economies as well. The recent concerns on Spain’s struggling banking sector and the rising borrowing costs have also put the region's ability to solve the crisis in question.

The Asian markets also closed on a negative note over concerns on the global markets and lower industrial production numbers in China.

All the BSE sectoral indices, except for FMCG, bucked under selling pressure. CG, Power, Auto and Oil & Gas were among the major losers, down by 3%, 2.49%, 2.17% and 2.11% respectively. All the others were down in the range of 0.74%-2.11%.

In individual stocks, Indraprastha Gas closed with spectacular gains of 28% at Rs 249.80 ahead of the Delhi High Court's decision on the company's case against the Petroleum and Natural Gas Regulatory Board.

Automobile and hotel stocks looked weak across the board after the government announced a series of austerity measures aimed at controlling unproductive expenditure.

All the 30 Sensex shares closed trades in the red zone. Among the major losers, BHEL, HDFC Bank, Infosys, Jindal Steel, Maruti Suzuki, RIL, Sterlite Industries, Tata Motors and Tata Power all closed down by nearly 2.5% each.

We expect the markets to remain volatile with a negative bias for the next week, as the slowdown in the economy will undermine the sentiment.