Indian shares fell sharply on Friday after government data showed the country's GDP growth languished around its lowest level in three years in the first quarter ended June.
GDP grew at a higher-than-expected 5.5 percent versus forecasts for a 5.3 percent expansion, dashing rate cut hopes left over, if any, at the upcoming monetary policy meeting to be held in September.
The construction sector registered 10.9 percent growth from a year ago, and financing insurance, real estate and business services expanded 10.8 percent, while the farm sector grew 2.9 percent annually. The mining and manufacturing sector logged in weak growth, with output edging up 0.1 percent and 0.2 percent, respectively.
The benchmark 30-share Sensex ended the session down 161 points or 0.92 percent at 17,381, with 25 of its components retreating. Among those that bucked the downtrend, drug producer Cipla rose 1.3 percent on the back of heavy trading volumes, housing finance major HDFC saw some fresh buying to end 1.3 percent higher, telecom major Bharti Airtel rose 1.2 percent on bargain hunting after recent steep losses, state-run ONGC added a percent and HDFC Bank edged up 0.1 percent.
The broader Nifty index fell by 57 points or 1.06 percent to 5,258. Among the prominent decliners, Hero MotoCorp, BPCL, Kotak Mahindra Bank, IDFC, BHEL, Coal India, Hindustan Unilever, Reliance Industries, Axis Bank and NTPC fell 2-4 percent.
State-run lenders such as Union Bank of India and Oriental Bank of Commerce rose 2-3 percent as higher than expected farm output and the recent improvement in rainfall lessened the threat of higher NPAs on their exposure to rural India.
There is improvement in rainfall and it will be better in September than forecast earlier," media reports quoted Laxman Singh Rathore, director general, Indian Meteorological Department, as saying.
Tech Mahindra reversed early losses to end 0.6 percent higher following yesterday's steep loss after global telecom giant British Telecom on Thursday sold 14.1 percent stake in the company to institutional investors for about Rs 1,395 crore. Shares of group firm Mahindra Satyam ended down 0.9 percent.
HPCL shares fell 3.1 percent following reports it plans to set up a nine million tons per annum Greenfield refinery in Ratnagiri district of Maharashtra. Jaypee Infra slid 0.4 percent amid reports it lost a Rs.1,100 crore road project in Uttar Pradesh.
Rashtriya Chemicals & Fertilizers rose 2.3 percent after it unveiled plans to expand the capacity of urea at Thal by setting up one single stream ammonia plant of capacity 2,200 MTPD and one single stream urea plant of capacity 3,850 MTPD at the existing site.
Lanco Infratec advanced 0.9 percent on reports the company is in talks with private equity firms Bain Capital and Kohlberg Kravis Roberts to sell stake in its power business.
On the global front, Asian stocks fell broadly, as investors prepared themselves for Bernanke's speech tonight, which may offer some hints to future Fed policy.
With recent economic data sending mixed signals, many expect Bernanke to refrain from doing anything additional to support the economic recovery, although he may reiterate the Fed's stance on accommodative policy.
European stocks snapped a three-day losing streak, the euro gained ground and commodities advanced as investors braced for Bernanke's speech in Jackson Hole, Wyoming, tonight.
by RTT Staff Writer
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