Indian equities remained jittery on Monday as the government lowered its 2012-13 GDP forecast, a day ahead of the RBI’s policy review. The benchmark indices gave away early gains and traded in the red for most part of the session before closing down 0.4%. The Sensex ended down 72.83 points at 19,244.42, while the broader Nifty lost 21.7 points to close at 58,57.90.
In its mid-year review, the finance ministry said the economy may grow 5.7-5.9% in the current fiscal against an earlier estimate of 7.85%.
Traders say the growth revision was in line with the RBI's outlook on the economic expansion this fiscal and, hence, may not prompt it to cut interest rate as yet. However, tightened liquidity due to advance tax outgo and muted deposit growth is expected to force the RBI into considering another round of CRR cut.
Based on these expectations, interest-rate sensitive stocks from the banking and realty spaces rallied. SBI, PNB and ICICI Bank were the gainers among the big banks, rising 0.7-1%. Canara Bank and Yes Bank rallied more than 1%, while Union Bank rose 3.3% to R274. Maruti Suzuki and Tata Power were the blue chip gainers from the Nifty, rising 1.5% each. DB Realty rose as much 7.7%. The mid- and small-cap indices also mirrored market momentum by advancing 0.6% and 0.5%, respectively.
Metal stocks gained strength after China, at the end of an annual economic conference, said it will increase urbanisation to boost domestic consumption.
Sesa Goa and JSPL led the rally of blue chips, rising 2.5-3%. Hindalco was the biggest gainer among the Nifty constituents, rising 3.5% to R124.2.
Bharti Airtel and TCS that fell 4% and 3% to R300.5 and R1205, in that order, were the biggest losers among the large caps. While TCS was hit by worries over its outlook ahead of a meeting with analysts, Bharti fell after its subsidiary, Bharti Infratel, priced its IPO at R220, the lower end of an indicative price range.
Meanwhile, FIIs continued their purchases of Indian stocks. They bought $162 million worth of equities, taking their YTD buying to $ 22.5 billion, the second highest since 2010 when they acquired stocks valued $29.3 billion.