Benchmarks lose momentum as sanguinity wanes post GDP numbers

The optimism in Indian equity markets got tempered in afternoon trades on Tuesday and the frontline indices came off to some extent from the intraday highs as marketmen dissected the first quarter GDP numbers. Indian economy grew at 7.7% in the April-June period, the slowest pace since 2010, confirming fears of a slowdown mainly due to the poor performance of the manufacturing sector. RBI's the longest stretch of monetary tightening in a decade have made borrowing more expensive and slowed investment and consumer demand in Asia's third-largest economy. Though the GDP numbers were largely in line with expectations yet optimism waned in domestic stock markets as investors speculated tough times ahead amid the aggressive monetary tightening from Indian central bank and the persistence of debt crisis in developed economies. Meanwhile the European stock markets too got off to an optimistic opening on expectation that the US economic reports due this week would soothe nerves over the gloomy economic prospects. The benchmarks have managed to hold on to the psychological 4,950 and 16,500 levels thanks to the hefty position build up in high beta - real estate and Metal counters. The beaten down information technology and rate sensitives also are seeing some buying. However, the Capital Goods pocket bore the brunt of selling pressure as it got dragged to the bottom of the sectoral table on BSE after bellwether L&T plunged post weak manufacturing growth numbers in the GDP data. Index heavyweight ONGC too got butchered in the session as it lost around four and half a percent, being the top loser in the space.

Moreover, the broader markets too lost a lot of ground from the high point of the day but held their head above the water with moderate gains. The bourses climbed on good volumes given that these are the initial days of a new F&O series while the market breadth on BSE was in favor of advances in the ratio of 1535:1032 while 119 scrips remained unchanged.

The BSE Sensex is currently trading at 16,535.32 up by 118.99 points or 0.72% after trading as high as 16,678.72 and as low as 16,443.35. There were 20 stocks advancing against 10 declines on the index.

The broader indices were trading on a positive note; the BSE Mid cap index gained 0.61% and Small cap rose 0.39% respectively.

On the BSE sectoral space, Realty up 2.53%, Metal up 1.76%, TECk up 1.22%, Bankex up 1.01% and IT up 0.90% were the major gainers while Capital Goods down 0.87%, PSU down 0.46% and FMCG down 0.36% were the only losers on the index.

Tata Steel up 4.67%, DLF up 4.53%, Sun Pharma up 2.73%, RIL up 2.71% and JP Associates up 2.30% were the major gainers on the Sensex, while ONGC down by 4.40%, L&T down 2.09%, ITC down 0.74%, Bajaj Auto down 0.71% and Tata Power down 0.51% were the major losers on the index.

Meanwhile, to enhance trade over the land routes, India and Bangladesh have taken the first major step by relaxing the present practice of unloading trucks at the zero border point. Trucks from both sides would now be allowed to enter 200 metres inside each other's territories.  To reinforce trade at the Petropole-Benapole border in Bengal's North 24 Parganas district, Union Home Minister P Chidambaram laid the foundation stone for a new road there to ensure flawless traffic flow on the route, with state-of-the-art warehouses and modern parking facilities for heavy vehicles. The Petropole border is the largest land customs station in Asia.

The total cost of the project is around Rs 125 crore and State-run RITES is the advisor. This new stretch would be a bypass road on the present congested one, connecting Benapole to NH35, bypassing Bongaon, the last town in the India-Bangladesh border that is 97 km from Kolkata. This move by the government would ease overcrowding and allow trucks to move in a smoother fashion to the Bangladesh side and also to receive the traffic coming from there. It is also reported that both the sides were also discussing a Comprehensive Motor Vehicular Agreement, to encourage seamless cross-movement of cargo.

Development of the land trading route with the installation of proper security measures was on the main agenda discussed during the visit of Bangladeshi Prime Minister, Hasina, in January 2010. Both sides had agreed to comprehensively address all land boundary issues and announced creation of a Joint Boundary Working Group. The need of sufficient infrastructure in the trading routes across borders has resulted in major delays and cost overruns. Traffic congestions, delay in handling shipments and increasing storage-dwell times have been major non-tariff barriers for trade.

Earlier last month, Commerce, Industry and Textile Minister Anand Sharma and his Bangladeshi counterpart, Muhammad Faruk Khan, inaugurated 'Border Haats' at Kalaichar in the West Garo Hill district in Meghalaya. It is estimated that bilateral trade worth $20 million will take place annually from these Haats, which would re-establish the traditional system of marketing local produce.

The bilateral trade between India and Bangladesh has increased from $2.7 billion in 2009-10 to $3.9 billion in 2010-11, an increase of 45 percent. The growth of exports from Bangladesh to India has also increased from $0.25 billion in 2009-10 to $0.39 billion in 2010-11. In 2010, India offered a $1 billion line of credit to Bangladesh, the largest ever one-time bilateral financial assistance extended to any country by India.

The S&P CNX Nifty is currently trading at 4,957.70, higher by 38.10 points or 0.77% after trading as high as 4,998.05 and as low as 4,927.55. There were 29 stocks advancing against 21 declines on the index.

The top gainers of the Nifty were DLF up 4.72%, Tata Steel up by 4.65%, R Com up 4.23%, SESA Goa up 4.07%, and IDFC up 3.20%.

ONGC down 4.42%, L&T down 2.11%, SAIL down 1.59%, BPCL down 1.59% and BajaJ Auto down 0.89% were the major losers on the index.

Asian markets traded on a positive note, Hang Seng surges 1.06%, Nikkei 225 soared 1.16%, Seoul Composite climbed 0.78% and Taiwan Weighted amassed 0.90%.

On the other hand, Shanghai Composite eased 0.02%.

Meanwhile, Malaysian and Singaporean bourses are closed on account of Hari Raya Puasa today while the stock markets in Indonesia too remained shut for Idul Fitri holiday. Indonesian stock exchanges will remain closed till September 2.

The European markets traded on optimistic note as France's CAC 40 surged 0.86%, Germany's DAX climbed 0.79% and Britain's FTSE 100 soared 1.95%. 

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