“GDP numbers in line with expectations; state assembly election results to be keenly watched”…
Shares gained more
than a per cent on Friday on fresh foreign institutional buying ahead of the
second-quarter gross domestic product (GDP) number announcement. The BSE Sensex
closed at 20,791, up 1.3 per cent, while the NSE Nifty ended the day at 6,176,
up 1.4 per cent on previous day's close. Hopes of the Bharatiya Janata Party
(BJP) performing well in the state elections also bolstered sentiment.
On Friday, foreign investors bought Rs 745 crore while domestic were net
sellers at Rs 101 crore, going by provisional data
The GDP number, 4.8 per cent, was in line
with market expectations and is expected to further boost markets helped by an uptick in agriculture and construction, government
data showed on Friday. Analysts polled by Reuters had forecast growth of 4.6
percent. September's figure percent was the fourth successive quarter of
economic growth below 5 percent. The economy is struggling to rebound from a
long slowdown. Economic growth virtually halved in two years to 5 percent in
the fiscal year -- the lowest level in a decade -- and most economists surveyed
by Reuters last month expect 2013/14 to be worse. Manufacturing rose an annual
1 percent during the quarter and mining fell by 0.4 percent, the data showed,
while farm output rose 4.6 percent.
State election results' announcements
will start from December 8. This year, the
BSE Sensex has outperformed the National Stock Exchange (NSE) Nifty, thanks to
lower exposure to banks and financials. The 30-stock index rose 5.8 per cent
since the beginning of January, against a 3.2 per rise in the Nifty.
This translated into higher gains for those who invested in Sensex-based
exchange-traded funds (ETFs) compared to those who invested in Nifty-based
ETFs. The Kotak Sensex ETF, for instance, rose 5.2 per cent this year, against
a 2.7 per cent increase in the net asset value of the Kotak Nifty ETF during
the same period. The divergence was largely due to a difference in the sectoral
composition of the two indices.
Globally, the Dow and the S&P 500 dipped in thin holiday
trading on Friday, but technology stocks helped lift the Nasdaq to a 13-year
high. The Nasdaq got a boost from the technology sector, with Apple up 1.9
percent at US$ 556.07, Microsoft Corp up 1.4 percent at US$ 38.13 and Amazon
Inc up 1.8 percent at US 393.62. With both the S&P and Dow on an eight-week
winning streak, investors may be cautious in adding new positions. The US stock
market ended its regular session three hours early at 1 pm. The Dow Jones
industrial average fell 10.92 points or 0.07 percent, to end at 16,086.41. The
S&P 500 slipped 1.42 points or 0.08 percent, to finish at 1,805.81. But the
Nasdaq Composite added 15.136 points or 0.37 percent, to close at 4,059.886.
Retail stocks were in focus as the holiday shopping season gets under way. Many
stores opened on Thanksgiving for the first time ever this year, but stores had
to resort to steep discounts and shoppers appeared to be making careful
purchases. A week packed with data awaits investors eager for fresh clues on
when the Federal Reserve will start to trim its stimulus program, as
traditionally bullish December kicks off with the S&P 500 poised to mark
its best year since 1998.
We advise investors to be cautious in taking a short term bet.
Profit booking is advised in case the market rallies on state election results.