GDP report to show direction

The great thing in the world is not so much where we stand, as in what direction we are moving. - Oliver Wendell Holmes.

Earnings season has come and gone. The less said the better. Market players will now focus on economic data and its impact on the RBI’s policy stance. In that context, the Q4 and FY11 GDP report due out today will be an important event. Consensus expectation is for 8.2% expansion in Q4 GDP. The Government has estimated a GDP growth of 8.6% for FY11.



The numbers will be analysed to ascertain the underlying trends in the economy and the road ahead. Already the FY12 GDP forecasts have been scaled down amid rising borrowing costs and sticky inflation. All eyes are on what steps the Government will take to tame inflation and stem the slowdown.

The start will be positive as most Asian markets are on a firm wicket despite lack of cues from the western markets. Watch out for action in stocks like RCOM, ONGC, IOC, M&M and Hindalco, which announced their results on Monday.

FII flows have improved in the past couple of days. One has to see if the trend persists in the coming days as well. Monsoon’s progress would also be tracked closely. Offshore events will continue to have a bearing.

But, don’t expect great things in the near term. The market remains in a limbo due to lack of big triggers. Some bold policy moves from the Centre may just perk up the markets. But, UPA II seems in no mood right now.

We expect the ongoing lackluster trend to continue in the short-term and the Nifty to trade in a range of 5450-5550. A broader trading range is pegged at 5300 and 5600.

The broader market suddenly sprung to life on Monday. It could see some more action in the near term due to lack of interest in the Large Cap shares. However, one must be very careful and vigilant while trading in these less liquid counters. Avoid companies with dodgy background and stick to those with reasonable earnings visibility.

FIIs were net buyers of Rs 2.53bn in the cash segment on Monday, according to the provisional NSE data. The domestic institutional institutions (DIIs) were net sellers at Rs 503.9mn on the same day. In the F&O segment, the foreign funds were net sellers of Rs 4.55bn.

The foreign funds were net buyers of Rs 2.54bn in the cash segment on Friday, as per SEBI web site. Mutual funds were net buyers of Rs 2.86bn on the same day.

Results Today: BEML and Sterling Biotech.