Sensex ends 285 points lower as government cuts GDP forecast; Nifty50 below 7,800

MUMBAI: Key stock indices snapped a four-day winning streak on Friday after the government lowered its GDP growth estimate for this financial year and on weak cues from the Asian and European markets as crude oil prices fell.

The BSE Sensex declined 284.56 points, or 1.1%, to settle at 25,519.22. The Nifty on the National Stock Exchange fell 82.4 points, or 1.05%, to end at 7,761.95. Technology, metals and oil & gas stocks led the decline. Traders who had taken market positions when the Nifty had dropped into an oversold zone of about 7,600 at the start of the week booked profits at higher levels.

The government, in its mid-year economic review, lowered the gross domestic product (GDP) growth target to 7-7.5% for the year ending March 2016 from 8.1-8.5% estimated in February. It said retail inflation was expected at 6% for this financial year.
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“It’s definitely a matter of concern for markets that the government has lowered its GDP growth target,” said Sudip Bandyopadhyay, promoter of Inditrade Capital. “However, investors should not be overly worried about the growth numbers.” Technically, the short-term trend of the markets indicates a rise. If the Nifty holds above the support level of 7,700, the index may test 7,950 levels in the near future. However, if 7,700 level is breached, the index may drop further to about 7,500 levels, some analysts said.



“We expect the Nifty to advance towards 8,000, where it might find some resistance,” said Amit Gupta, head of derivatives at ICICI Direct. “However, on the downside, the index may find support around 7,700.” Among the European indices, UK’s FTSE 100 traded 0.75% lower and Germany’s DAX and France’s CAC 40 declined about 1.5% during the first half of trade. In Asia, China’s Shanghai Composite index closed little changed and the Hang Seng dropped 0.5%.

Analysts said the stock markets are likely to remain volatile in the near term due to domestic cues, including the prevailing uncertainty over passage of a bill to introduce a goods and services tax. Foreign institutional investors were net sellers of Indian stocks worth aboutRs 7 crore on Friday, while domestic institutional investors also sold shares worth Rs 404 crore.