The Bombay Stock Exchange benchmark Sensex, which opened 88 points lower than Wednesday’s closing on expectations of weak GDP data, seemed headed for a steep plunge before recovering towards close to end the day just 94 points or 0.57% down.
The index touched an intra-day low of 226 points before closing out at 16,218.53 points on Wednesday. The 50-share Nifty of the NSE also ended down by 0.54% at 4,924 points.Opinion was however divided among traders whether the stock markets had taken the GDP data in its stride, or the partial recovery was due to traders covering up their short positions. Thursday was the last trading session of the month, and traders were obliged to buy back shares taht they had speculated would sink, but contrary to expectations, had risen.
“The markets have factored in the bad news, so in that sense the GDP numbers were not a surprise — there is a resignation to pessimism,” said CJ George, MD, Geojit BNP Paribas Financial Services.
He also ruled out any runaway rally on the markets, on the back of any expected positive policy news from the government. “There will be some positive reaction if the government were to announce any measure of policy reforms, but no irrational exuberance, which is impossible in today’s global environment,” he said.
Caution is advised for retail investors as some analysts feel the actual impact of the GDP data will be seen in the markets on Friday.
“Thursday was the expiry of open short positions taken up by traders and they needed to cover up, so the recovery towards the close of trade was actually a buy-back of shares,” said Jagannadham Thunuguntla, strategist and head of research, SMC Global Securities. “The impact of the GDP numbers may be seen on Friday. Nobody expected a 5.3% (fall).