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Sensex falls 161 points, GDP growth dims rate cut hopes

PTI 31 Aug 2012, 19:37:22 IST
Mumbai, Aug 31:  The Sensex today dropped nearly 161 points to close at a fresh four-week low on selling across sectors even as GDP growth at 5.5 per cent beat estimates but it dashed hopes of a cut in interest rates.

After a slow start, the BSE benchmark index fell to 17,337.61 soon after the Gross Domestic Product (GDP) data was announced. The Sensex attempted to stage a comeback and went up to 17557.62, but it lost the momentum to close at 17,380.75, down 160.89 points or 0.92 per cent over yesterday.

Likewise, the 50-share National Stock Exchange index Nifty lost 56.55 points, or 1.06 per cent to close at 5,258.50.  Out of 13 BSE sectoral indices, 12 ended lower with power, metal, oil&gas, realty and auto indices losing over 1 per cent each. Sustained selling in RIL, ITC, TCS and ICICI Bank weighed on the 30-share index where Hindalco, CIL and Bhel were among the worst performers losing over 2 per cent each.

Poor showing by the manufacturing sector pulled down the GDP growth to 5.5 per cent in the April-June quarter, the decade's worst Q1 performance, but was a higher than the 5.3 per cent estimate put out by most economists.

“GDP growth in Q1 of FY2013 witnessed a marginal improvement... Given any credible steps towards fiscal consolidation so far and RBI's prevalent hawkish stance, we do not expect it to cut rates in the September meeting,” said Espírito Santo Securities Chief India Economist Deepali Bhargava.

The trading mood was also soured as the eighth consecutive day of Parliament was lost today to the uproar created by BJP over coal block allocations, raising the prospect of washout of remaining part of Monsoon Session that ends on September 7.

Meanwhile, weakness in most of the Asian stocks following marked fall on Wall Street yesterday also weighed on the local bourses, despite rise in European markets in afternoon deals.