Sensex tanks 161 points as Q1 GDP dashes rate cut hopes
Mumbai: The Sensex on Friday plunged nearly 161 points dragged down by power, metal and oil&gas stocks as better-than-expected 5.5 percent growth in first quarter dashed hopes of interest rate cut, amid a weak global trend.
After a slow start, the BSE benchmark index dropped to 17,337.61 soon after the Gross Domestic Product number was announced. It attempted to stage a comeback and went up to 17557.62 but lost the momentum to close at 17,380.75, down 160.89 points or 0.92 percent over yesterday closing value.
Poor showing by the manufacturing sector pulled down the GDP growth to 5.5 percent 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.
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 percent each.
Brokers said the better-than-expected growth might hamper government efforts to revive the economy and force the RBI to ease lending rates.
"GDP growth in Q1 FY13 witnessed a marginal improvement... Given any credible steps towards fiscal consolidation so far and RBI's prevalent hawkish stance, we do not expect RBI to cut rates in the September meeting," said Esprito Santo Securities Cheif India Economist Deepali Bhargava.
Out of the 13 BSE sectoral indices, 12 ended lower with power, metal, oil&gas, realty and auto losing over one percent each.
The 50-share National Stock Exchange index Nifty lost 56.55 points, or 1.06 percent to close at 5,258.50.