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Sustained quarterly growth at 8.9%; H1 FY11 growth at 8.9%
The Q1 GDP numbers have shown a sustained increase in the quarterly domestic product, with the drivers being agriculture and manufacturing. Private consumption growth has shown a modest pickup and Q1FY11 growth has been revised upwards to 8.9%.
Quarter two (Q2) growth for the period Jul. – Sep., as compared to the same period last year:
Sectoral growth driven by agriculture and manufacturing
GDP split up by nature of activity: Agriculture, Industry and Services brings out the pick-up in momentum.
GDP growth for Q2 FY11 over the same period last year stood at 8.9%. The key growth drivers were Agriculture (4.4%) and Manufacturing (9.8%). Services (9.8%) also contributed to this growth rate. Though manufacturing grew by 9.8%, growth in Mining and quarrying saw a drop in growth to 8% from 10.1% last year and Electricity, gas and water supply shrunk to 3.4% from last year’s 7.7%. Of the services sector, ‘Trade, hotels, transport and comm.’ grew by 12.1% from 8.2% in Q2 last year.
From the point of view of sustainability of GDP growth numbers, the only concern would be capital formation growth. Though capital formation stood at 11.6% for Q2FY11, QoQ growth was a meagre 1.6% as opposed to 8.3% for the same period last year.
Private consumption growth sees quarterly pickup
The GDP data reveals a pickup in private consumption growth. Q2FY11 saw growth at 9.3% as opposed to 7.8% in Q1FY11 and 6.7% for Q2FY10. Private consumption as a % of GDP from the last quarter has risen from 60.3% to 60.6%. Better monsoons and increased agricultural output is likely to work in favour of private consumption growth.
n Dealer Comments
The markets started the day’s session on negative note with 120 odd point’s downward gap tracking weak cues from the global markets particularly the overnight European and Asian counterparts. After weak opening markets continued to edge lower in the morning trades on the back of weaker Chinese markets on reports of china may further tighten its policy to rein the soaring inflation. The markets lost almost 200 odd points at one point of time. Today markets were reeled under jitters of possible selling in the frontline heavy weigh stocks like RIL, Infosys, ICICI Bank and HDFC on account of rebalancing in the MSCI index my lead to a deep fall in the indices but the entire selling got absorbed without much impact. Post announcement of better than expected Q2 GDP numbers at 8.9% markets staged a solid recovery and was up almost 200 points and 400 point from the day’s lows. Recently battered realty stocks on the back of loan scam saw extremely good bargain hunting post clarification by DB Realty’s management which soared the index almost 5.5% for the day. Even banking stocks saw good buying action particularly the midcap banking space. However nervousness and absence of major positive trigger in the near future saw the markets paring some of the gains the closing bell. Finally the markets closed the day on a positive note towards the end with Sensex gaining 116 points or 0.60% higher to settle at 19521 levels while Nifty gained 33 points or 0.56% higher to settle at 5863 levels. The overall traded volumes were higher compared to the earlier day by almost 30% and were at Rs 1399 bn. While delivery based volumes were lower compared to the earlier day at 39.9% of the total traded turnover. Among the Fund activities FII’s were net buyers to the tune of Rs 2.68 bn on 29th November 2010. While on 30th November 2010 FII’s were net buyers to the tune of Rs 8.89 bn in the cash segment while in the F&O segment FII’s were net buyers to the tune of Rs 14.45 bn while Domestic Funds were net sellers to the tune of Rs 4.35 bn.
n Technical Comments
Rally continues
The up breeze continued in today’s session also and with that Bulls managed to lead the session with a gain of 30 odd points. Also, Nifty has gone past the falling channel present on the hourly chart and this breakout is coinciding with a higher top higher bottom formation on that same hourly degree, which is a healthy sign. Apart, from this the daily RSI has also given a positive crossover after reversing from the oversold region. Now the next speed breaker in the road of the bulls is at 5920, which is created by an internal trendline.
BSE Realty:
After a minor whipsawing BSE Realty index managed to find support at the lower boundary of the falling channel and hence a bounce upto 3250, which is the 50% retracement of the recent down leg, is an utmost possibility.
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