While the market may try to bounce back, the medium-term trend is firmly down

The market closed lower this week, down for the second straight week, as the government lowered the GDP growth rate estimate for the current fiscal to 5%, compared to 6.2% growth in 2011-12. Macro-economic indicators like industrial output for December and monthly inflation data will drive the market in the week ahead.

The BSE Sensex closed the week with a loss of 296 points (1.50%) at 19,485 and the Nifty ended at 5,904, down 95 points (1.59%). While the market may try to bounce back, the medium-term trend is firmly down.

Weak global cues and selling in PSU, healthcare and power stocks caused the market to end lower on the first day of the week. The market settled in the red on Tuesday on selling pressure in heavyweights. The benchmarks ended flat on Wednesday as the market gave up its gains in the second half of the trading day.

The lower GDP estimate for the current fiscal pulled the market down on Thursday. Subdued quarterly earnings from corporates and selling in stocks from rate-sensitive sectors led the market lower on Friday. While the Sensex closed lower on all trading days of the week, the Nifty barely managed a green close on Wednesday (up two points).

BSE IT (up 2%) and BSE TECk (up 1%) were the sectoral gainers in the week while BSE Consumer Durables and BSE PSU (down 5% each) were the top losers.

TCS (up 6%), HDFC (up 4%), Sun Pharmaceutical Industries (up 3%), HDFC Bank and Wipro (up 1% each) were the top Sensex gainers. The key losers on the benchmark were Sterlite Industries (down 10%), Cipla (down 8%), BHEL (down 7%), ONGC and NTPC (down 6% each).

The Nifty was led by TCS (up 6%), HDFC, Sun Pharma (up 4% each), UltraTech Cement Company (up 3%) and HDFC Bank (up 2%). The major losers in the week were Jaiprakash Associates (down 12%), Bank of Baroda (down 11%), Cipla, Sesa Goa (down 8% each) and BHEL (down 7%).

The Central Statistics Organisation (CSO) on Thursday projected a fall in the country’s GDP growth to a decade low of 5% in 2012-13, a sharp decline from the 6.2% expansion witnessed in the previous fiscal. The CSO's economic growth projection is a lower than the 5.5% forecast made by the Reserve Bank of India in its quarterly monetary policy review last week.

Meanwhile, the finance ministry has said the CSO has underestimated GDP growth rate for current financial year and exuded the confidence that economic expansion will exceed 5.5%.

Among corporates, weak results and outlook impacted companies including Mahindra & Mahindra, BHEL, Hindalco Industries and Cipla.

In international news, the focus shifted to Europe as the European Central Bank (ECB) kept interest rates at a record low 0.75% at its policy meeting earlier this week. ECB president Mario Draghi said the central bank will monitor the economic impact of a strengthening euro, feeding expectations the currency's climb which could lead to an interest rate cut.

Also, Chinese exports grew 25% in January from a year ago, the strongest showing since April 2011, while imports surged 28.8% on the year.