Post Session- Sensex snaps 5-day rally amid growth concerns Analysis for Feb 07, 2012

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The domestic benchmarks snapped a five-day rally and ended lower after the government slashed the nation's economic growth forecast for 2011-12. The Capital Goods and the Realty space led the decline.

BSE SENSEX closed at 17622.45 down by 84.86 points or by 0.48 % and then NSE Nifty ended at 5335.15 down by 26.5 points or by 0.49 %. The BSE MIDCAP closed at 6073.11 down by 49.46 points or by 0.81 %, while the BSE SMLCAP ended at 6751.98 down by 29.95 points or by 0.44 %.The BSE Sensex touched intraday high of 17832.04 and intraday low of 17582.49 The NSE Nifty touched intraday high of 5413.35 and intraday low of 5322.95.

The weak closing of the US markets on Monday had some impact on domestic sentiment during morning trade. On Monday, the Dow Jones Industrial lost 17.10 points and closed at 12845.13. The S&P 500 lost 0.57 points and closed at 1344.33 and the Nasdaq ended at 2901.99, losing 3.67 points over the previous day's closing. The domestic benchmarks witnessed a flat opening, with a positive bias amid mixed cues from the Asian markets. Asian markets traded mixed on Tuesday as investors eyed the outcome of talks between the Greek government and political parties on the terms of the second bailout package. Chinese stocks fell after the government warned that industrial output in the nation may grow at a slower pace this quarter, in comparison to the previous quarter amid weaker export demand. The benchmarks surged to the day's high but pared gains after the Indian government forecast the nation's economic growth to be 6.9 per cent in 2011-12, the lowest rate of growth since 2008-09, as a worsening global outlook and high inflationary pressures weigh on growth. The benchmarks traded range bound in the positive terrain during afternoon trade amid subdued investor sentiment. Thereafter, the domestic benchmarks slipped in the negative terrain amid weak cues from the European markets. The benchmarks slipped to the day's low before closing on a bearish note. The Sensex and the Nifty shed over 0.45% each. Among the BSE sectoral indices, BSE Capital Goods and BSE Realty lost 2.29% and 2.10% respectively.

Among the Sensex stocks, BHEL, Tata Steel, DLF, Mahindra & Mahindra and GAIL shed 4.22%, 3.30%, 3%, 2.88% and 2.70% respectively. Among the 30 Sensex stocks, there were 8 advances and 22 declines. On BSE out of total shares traded 3046, shares advanced were 1270 while 1661 shares declined and 115 were unchanged.

On the Economic front, the government said that the Indian economy is expected to grow at the slowest rate since 2008-09 at 6.9 per cent in 2011-12 amid global headwinds.

On the Global front, the Reserve Bank of Australia on Tuesday refrained from cutting interest rates despite growing concerns over slowing growth amid the lingering debt turmoil in Europe. The central bank left its key benchmark rate unchanged at 4.25 per cent, citing improvement in financial market sentiment.

On the Asian front, Shanghai Composite ended down 1.68%, Hang Seng ended down 0.05% and Nikkei 225 closed lower by 0.13% on Tuesday.

On the European front, CAC 40 was down 0.32%, DAX was down 0.74% and FTSE100 was trading lower by 0.34% on Tuesday.

On the Corporate front, according to reports, LIC will acquire a 5 per cent stake in Dena Bank by way of preferential allotment. The stock of Dena Bank ended down 1.44% at Rs 78.65 on the BSE on Tuesday.

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