26th Feb: GDP at 6.1%

Indian Q4 GDP growth slowed more than expected to the slowest in more than two years. The discontinuity of revised data means interpreting the outcomes remains difficult. However, annual GDP growth is now running below the trend pace as per the RBI's estimates. High frequency indicators suggest activity has probably turned at the start of the year, but GDP growth looks on course to hover around 6% for another quarter in Q1

2012 on base effects. The pressure thus remains on the RBI to ease policy to get growth back on trend. The recent spike in inter-bank liquidity deficit points to another CRR cut likely in the near term. However, the timing of this year’s Union Budget, coming just a day after the March policy review, suggests the first reduction in the repo rate may be delayed until April.

Rising crude oil hurting Indian economy in 3ways. Firstly, a 5% increase in domestic oil prices increased inflation directly by app 75 bps. Secondly, Oil accounts for 30% of total imports. A $10/bbl increase in oil prices will increase current account deficit by $8bn (0.4% of GDP), Third, Every $15/bbl increase in oil prices can lead to an increase in fiscal deficit by roughly 0.3% of GDP assuming a 10% increase in domestic oil prices.

Nifty is been in the downtrend since it closed below the 5400 levels. In the past also we have seen that the Nifty always faced severe selling pressure above the 5400 level. Nifty closed down at 5359 and Sensex at 17637 levels. As mentioned in the past the MACD is in the mood to give negative signal. RSI have been in the down trend. Nifty have taken support at its 14 DMA. Close below the same may take the nifty past 5300 levels. And it may further fall to 5250 levels.

FII started Month on the negative side. First of the month saw a small selling in the Equity market. FII sold stocks worth Rs127Cr. but the weekly close is still positive till the close of Thursday. DII remained sellers.

ONGC Online FPO saw a major jolt. The FPO saw a lackluster response. Bids for Rs.8000Cr were only done, in expectation of Rs.12000Cr which was projected. Finally local insurance had to come for the rescue. And the FPO was finally fully subscribed. The cut off time for the data was 3.30 pm but the data was not, hinting that the local insurance was asked to fill the FPO.

Commodities have done good this week. Gold got its shine back. Silver also closed above Rs.60000 per kg. Rupee is trading at 49.50 per dollar.

Dlf is in the negative trend. Independent Research house ‘Veritas Corp’ have come out with a report of a price target of Rs.100. Stock closed down at 203 levels. Close below the 200 levels can take the stock to 185 levels.