The Indian stock markets started the day on a weak note, and were trading below the dotted line for a good part of the morning session. However mid-session they started picking up stream despite the fact that GDP growth for the quarter was at a 2 year low. Some volatility was seen close towards the end of the session however they once again picked up steam towards the end of today's trading session.
Gains on the BSE-Sensex came in the region of 115 points (up 0.7%) while NSE-Nifty witnessed gains in the region of 27 points (up 0.6%). The smaller indices however did not see similar movement. The BSE Mid Cap and BSE Small Cap indices were closed in the red; they were both trading 0.7% lower. Oil and gas and FMCG stocks saw a strong finish. Consumer durables and realty on the other hand saw some selling pressure.
Asian indices were trading mixed. Europe is mainly trading in the negative currently. The rupee was trading at Rs 52.37 to the dollar at the time of writing.
Fears about India's growth slowing down have come to the fore. India's economy grew at its weakest pace in over 9 quarters in the three month period ended September 2011. GDP growth fell to 6.9% in the second quarter of the 2011-12, slipping below 8% for the third straight quarter. The euro zone crisis, slowdown in western economies, stubborn inflation and the 13 rate hikes by the RBI continued to take a toll on Asia's third largest economy.
The manufacturing sector, contributing nearly 16% of the country's GDP, grew at 2.7% in the second quarter. This compares unfavorably with the 7.8% growth seen a year ago. Farm output rose an annual 3.2% for the same period and mining activity fell by 2.9% on account of the illegal mining ban in a few states. Taking into account the trajectory over the past two quarters, the Finance Minister Pranab Mukherjee expects GDP growth to be 7.3% in the current financial year. This is an over 1% contraction from the 8.5% growth seen in 2010-11.
Lack of coal availability is one of the major issues dogging power companies and now Mother Nature is playing its part. Excessive rains and strike by Coal India's workers union has led to shortfall in coal production by 17.95 million tonne (MT) in the last two months. Against a target of 87.68 MT, the actual coal production amounted to just 69.73 MT in the months of September and October. During the two month period, dispatches of coal and products by Coal India to thermal power plants declined by 9% from 48 MT during the corresponding period last year to 43.60 MT. However Coal Minister, Sriprakash Jaiswal said that efforts were being made to make up this shortfall in other months of the year.