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GDP downward revision makes market see red

Key benchmark indices slid in the red zone reacting sharply to revised growth estimates by Prime Minister’s economic panel while broader markets continue to be firm. At 11:25am, the BSE Sensex was down by 31 points trading at 19,750 levels while NSE Nifty gained by 6 points at 5,844 levels. Broader markets remain firm; BSE Mid cap and small cap are up in the range of 0.3-0.5%. Prime Minister’s Economic Advisory Council (PMAEC) has pegged India’s Gross Domestic Product (GDP) growth at 5.3% for the current financial year. This is way down from their earlier estimates of 6.4% but higher than sub-5% growth projected by various brokerage firms and independent economists. C Rangarajan, Chairman of PMEAC said in a press conference that controlling CAD remains a major concern for the government and pegged FY14 CAD at $70 bn or 3.8% of GDP. BSE IT and FMCG indices have declined by nearly 1% each. However, BSE Capital Goods, PSU, Power and Realty indices have gained by 1% each. The main losers on the Sensex at this hour include Wipro, HDFC Bank, HDFC, Bharti Airtel, ITC, Maruti Suzuki and Infosys, all declining between 1-3%. Capital goods shares remain positive on announcement of better-than-expected July factory output data. Index of industrial production (IIP) rose by 2.6% in July on a y-o-y basis after falling for 2 consecutive months.

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