Stock Market: Growth at rock bottom; indices accelerate slide down the hill

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By S Jha

New Delhi, February 28: For eighth day on the trot, the Indian equity market dived low, wiping out mammoth valuation of the listed companies and also the investments of the people. Even while India has the consolation of rising more than others, the Indian economy’s 4.4 per cent third quarter gross domestic product (GDP) is alarming the economists.

The Chief Economic Advisor V. Anantha Nageswaran sought to give a spin that low-salary jobs are being created and the economy is on course to achieve the 6.5 per cent GDP growth in the next financial year. The Indian economy is outpacing China, which is not expected to grow more than three per cent. But that comparison is mostly symbolic. The street expected the third quarter GDP to at least touch 4.7 per cent growth rate. The street is not that surprised because the Reserve Bank of India had already predicted that the growth would dip in the third and the fourth quarter.

The fear of El Nino weather pattern has also begun worrying the investors, which may have adverse impact on agriculture. The economic experts have long been concerned of the rural economy being in stress as reflected in stressed demand. The FMCG companies have reported numbers which have been accounted for by the weak rural demand.

With the GDP growth sinking amid the global trade squeeze, the equity market in India is being battered by relentless shorting by the foreign institutional investors (FIIs), who once more dumped over Rs 4500 crore in the cash market. Their domestic counterpart brought in equal strength, but that wasn’t enough to reverse the bearish sentiment in the market. The Dalal Street was also under pressure on account of the collapse of the share prices of Vedanta on account of fear of debt servicing. However, the group later clarified that the company is comfortably placed to manage the debt positions. The metal sectory continued to be laggard on the bourses, falling again on Tuesday.

Adani group had a better day on Tuesday. Adani Enterprises reversed from the low of the day to post a gain of almost 13 per cent. The group companies – Adani Green and Adani Power – were locked in the upper circuit. Adani Port and SEZ also logged in handsome gains. Reliance Industries also tanked by close to two per cent along with IT heavyweights to push the indices lower. The global equity markets are trading with negative biases.

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