BSE Sensex falls on weak GDP data; worst month since Nov

MUMBAI Fri Jun 1, 2012 5:27am IST

Commuters walk past the Bombay Stock Exchange (BSE) building in Mumbai February 28, 2011. REUTERS/Danish Siddiqui/Files

Commuters walk past the Bombay Stock Exchange (BSE) building in Mumbai February 28, 2011.

Credit: Reuters/Danish Siddiqui/Files

Related Topics

Stocks

   

MUMBAI (Reuters) - The BSE Sensex fell on Thursday, ending May with the worst monthly performance since November, after weak economic growth data reinforced concerns about the country's challenges at a time of intense global risk aversion.

India's economy grew at a nine-year low of 5.3 percent in the January-March quarter, with the data coming on a day when the rupee fell to a record low against the dollar, and as protesters took to the streets across India to demand the scrapping of a recent petrol price hike.

The BSE Sensex fell 6.4 percent in May, a month marked by intense worries about the fate of the euro zone, which is exposing India's vulnerabilities as an economy that needs capital inflows to bridge its current account deficit.

Foreign investors sold a net 4.33 billion rupees so far in May, and though they are not yet selling massively, their purchases of Indian assets has clearly slowed.

Investors from overseas bought a net of $619.3 million in debt and equity in May, far below the $7.2 billion in net inflows in February.

"India is primarily known as high growth economy, it deserves valuations premiums, the valuations are always at a premium to many of the other emerging nations. But if doubts emerge on growth itself then definitely it is not a good news," said Kaushik Dani, a fund manager at Peerless Mutual Fund.

The BSE Sensex fell 0.57 percent to close at 16,218.53 points, after earlier falling as much as 1.32 percent after the weak GDP data.

The Nifty index declined 0.54 percent to 4,924.25 points.

Trading was volatile, especially in the afternoon session because of the expiry of derivatives.

The weak economic growth data, however, is raising some hopes for a potential rate cut from the Reserve Bank of India at its mid-June policy meeting, though it was not enough to lift equity markets on Thursday.

Manufacturing remains particularly weak, with the sector shrinking 0.3 percent from a year earlier.

India's top engineering conglomerate Larsen & Toubro (LART.NS) declined 1.3 percent while capital goods maker Crompton Greaves (CROM.NS) fell 2.23 percent.

Tata Motors (TAMO.NS) shares fell 4.1 percent, bringing its falls in the past two sessions to 15.5 percent after disappointing investors with its earnings results on Tuesday.

Maruti Suzuki (MRTI.NS) shares fall 4.41 percent as the drop in the rupee is expected to raise the cost of imports and increase the cost of royalty payments.

Among other decliners, shares in cash-strapped Kingfisher Airlines' (KING.NS) fell 5 percent to a record low, a day after saying net loss more than trebled in the January-March quarter because of higher fuel prices and a weaker rupee.

ICICI Bank (ICBK.NS) dropped 4.16 percent as the stock went ex-dividend on Thursday.

However, shares in Hindalco Industries (HALC.NS) and Reliance Power (RPOL.NS) rose 2 and 3.4 percent, respectively, on media reports that a government panel had given permission to the two companies to start mining at two coal blocks allotted to them.

(Additional reporting by Abhishek Vishnoi; Editing by Rafael Nam)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Earnings Season

Earnings Season

Wipro sees rosier end to year as U.S. clients spend.  Full Article 

DLF Appeals

DLF Appeals

DLF seeks interim relief from capital market ban  Full Article 

Business Climate

Business Climate

Fears for tough penalties grow as India cleans up business  Full Article 

New Email Service

New Email Service

Google launches new email service dubbed "Inbox".  Full Article 

Falling Oil Prices

Falling Oil Prices

Indian consumers respond to softer oil, food prices  Full Article 

Pollution Levels

Pollution Levels

Delhi braces for worst air quality this Diwali week.  Full Article 

Book Keeping

Book Keeping

RBI fires warning shots on companies' lack of FX hedging.  Full Article 

Policy Repo Rate

Policy Repo Rate

Most external members suggested rate cut in RBI's Sept review.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage