Sensex blues: Ends < 17K despite jump in industrial growth

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India’s benchmark stock market index Sensex and Nifty fell for the eighth time in nine days on Friday, August 12 despite higher-than-expected growth in factory output.

The 30-share benchmark index Bombay Stock Exchange (BSE) Sensex had climbed 1.1 per cent in opening trade before dropping by 215.80, or 1.26 per cent, to 16,843.60 at 1230 hours, led by stocks of software exporting companies. The Sensex closed at 16839.63 or or 1.26 per cent lower.

The broad-based National Stock Exchange Nifty index lost 53.70 points, or 1.05 per cent, to 5,084.60, after initially trading higher at 5,194.45. Nifty finally closed at 5071.40.

Industrial output growth accelerated in June to 8.8 percent from a year ago following a revised 5.9 percent gain in May. Bloomberg reported that the jump in industrial growth intensified concerns of a further increase in borrowing costs as Asian equities declined.

In this third straight week the Sensex ended in red. The Sensec lost 2.8 percent this week while the S&P CNX Nifty Index slid 1.4 percent to 5,065.40. The BSE 200 Index dropped 1.1 percent to 2,101.12.

The Sensex has lost 18 percent so far this year, the worst performer after Brazil’s Bovespa Index among major indexes in the 10 biggest markets.

Companies on the gauge are valued at 13.9 times estimated earnings, compared with a multiple of 9.8 for the MSCI Emerging Markets Index.

About $6.77 trillion has been erased off from the global equities since July 26 after S&P cut US’s debt for the first time and Europe’s debt crisis deepened. Data today showed French economic growth stalled last quarter, ahead of reports that may show euro-region factory output was unchanged in June and U.S. consumer confidence weakened.

Tata Motors was the biggest loser ending 5.8 percent lower to 800 rupees after disappointing quarterly numbers. Amid concerns of double dip recession, IT sector whose 60 per cent of the software export revenues come from the US and European markets registered steep fall. Wipro tumbled 3.6 percent to 340.30 rupees, while its larger rival Tata Consultancy Services Ltd. (TCS) lost 3.3 percent to 946.60 rupees. Infosys lost 2.64 % to end Rs 64.50 lower at 2,374.45 rupees.

The market received another blow after Citigroup reduced its forecast for the Sensex to 19,700 from 21,500, citing a “weak market environment” and “heightened uncertainty“.

Bloomberg reported that foreign investors bought a net 2.49 billion rupees ($55 million) worth of local equities on Aug. 10, increasing their investments in stocks this year to 47.8 billion rupees, data on the website of the market regulator.



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