NIFTY surges 6.2% wow on improved global cues & better-than-expected macro data  Goldman Sachs,

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NIFTY surges 6.2% wow on improved global cues & better-than-expected macro data
 Banks outperformed (CNXBANK +6.8% wow) the broader indices, all sectors gained significantly wow.
 August saw most foreign outflows in a month (US$2.2bn) since Oct 2008; ytd outflows of US$ 87mn.
 1QFY12 GDP came in slightly better than expected but showed a gradual slowdown across all sectors.
 Weekly inflation data showed food articles’ WPI surging to 10.05% yoy and primary articles’ WPI came in at 12.93% yoy.
Overview
Indian equities recovered well and even
outperformed Asian peers this week. The SENSEX
rose 828 points in the first two days of the week
following an upturn in global sentiment, and
better-than-expected GDP growth in 1QFY12. The
Apr-June real GDP growth came in at a 6-quarter
low of 7.7% yoy (vs consensus of 7.6% yoy).
Exports climbed 81.8%yoy in July and imports
increased 51.5%yoy. Weekly inflation data on
Thursday showed food inflation at 10.05% yoy.
NIFTY price performance
NIFTY gained 6.2% wow, down 17.8% ytd
Source: NSE, DataStream, GS Global ECS Research.
Foreign and domestic flows
Foreign investors sold US$240mn wtd, while DIIs
bought US$98 mn wtd (as of Aug 29, 2011).
Earnings sentiment
Info. Tech. had the weakest EPS sentiment (-11%)
wow. MSCI India is now trading at 12.8X forward
earnings vs MXAPJ at 10.5X.
Commodities
Commodities rose 3.5% wow, led by Metals
(+4.3%) and Energy (+3.8%).
Economic events
August Markit Services PMI (Sep 5)