Sensex skids over 100 pts, Nifty weak; Vedanta, BHEL down

Moneycontrol Bureau9:50 am Q1 GDP expectations: India's first quarter gross domestic product (GDP) is expected to come in at 7.5 percent versus 6.7 percent in the year-ago period. But economists these days look at the GVA, that is the gross value added, which is expected to fall to 6.7 percent from around 7.4 percent in the first quarter of the previous year. On GVA, taxes are added and subsidies are subtracted to get GDP. Now, while subsidies have fallen marginally, taxes have increased (service tax, excise duty hikes on fuel) during the past year and hence GDP will be higher than last year, but the GVA (the actual amount of value added done by the Indian economy) will come in lower - and the real culprit is agriculture.9:40 am IPO:  Sadbhav Infrastructure Project, the subsidiary of Sadbhav Engineering, has opened its initial public offer for subscription on Monday (August 31). The price band is fixed at Rs 100-103 per share.

The issue, which will close on September 2, consists of fresh issue of equity shares for an amount aggregating up to Rs 425 crore and an offer for sale of up to 32,35,762 shares by Xander Investment Holding XVII Limited and up to 32,35,762 shares by Norwest Venture Partners VII – A – Mauritius. The issue also comprises a reservation of equity shares aggregating up to Rs 25 crore for eligible employees.

Sadbhav Infrastructure has alloted 2,03,87,914 shares at a price of Rs 103 apiece aggregating to Rs 210 crore to anchor investors - HDFC MF, Tata MF, Nomura, Morgan Stanley, Amansa, Tata AIA Life and SBI MF.

9:30 am Market outlook: The Indian economy hasn't yet touched its bottom levels, believes Saurabh Mukherjea, chief executive officer, Institutional Equities, Ambit Capital. Ambit has recently cut India's growth forecast from 7 percent to 6.8 percent. In an interview to CNBC-TV18, Mukherjea says India is currently facing a double whammy in the form of weakness in the home territory and uncertainity on China's yuan devaluation and the US Federal Reserve's hiking of interest rates.  Mukherjea advises not taking any speculative bets in the banking space and has lowered the year-end Sensex target to 28,000 from 33,000. But lower levels of 22,000, he adds, are not inconceivable.Don't miss: 7500 or 8500? 5 things that may keep market jittery in Sept

The market has seen sharp slide in early trade. The Sensex is down 130.74 points or 0.5 percent at 26261.64, and the Nifty slips 36.10 points or 0.4 percent at 7965.85. About 319 shares have advanced, 426 shares declined, and 40 shares are unchanged.

ONGC, Bharti Airtel, Dr Reddy's Labs, Lupin and Wipro while Vedanta, Bajaj Auto, BHEL, TCS and Tata Steel are among laggards in the Sensex.

The Indian rupee has opened lower by 11 paise at 66.25 per dollar against Friday's close of 66.14 a dollar.

Agam Gupta of StandChart Bank said, "We expect the market to keep a close watch on global equities and risk sentiment, especially in light of an increase in the probability of a September rate hike by the US FOMC."

"Dips below 66/dollar will continue to attract demand from importers and any spike to the 66.30-66.40/dollar zone should lead to hedging by exporters. We expect a 65.95-66.35/dollar range for the day," he added.

The dollar traded near one-week highs on rate-hike remarks by a senior Fed official and generally positive US data .

Global cues are mixed with Asian markets kicking off the first trading day of the week lower on expectations of more volatility in Chinese markets.The US market ended narrowly mixed on Friday on the back of a sharp rebound in crude oil and good economic data.

US Federal Reserve Vice Chairman has said in an exclusive interview that the Fed has not yet made up its mind about hiking interest rates in September. Fischer said the Fed will watch the non-farm payroll numbers and also if the volatility in the market is settling down.