The Reserve Bank of India (RBI) expects India's economy to expand 8% in the year ending March 2011 (FY 2011) with an upward bias, assuming a normal monsoon this year and sustenance of good performance of the industrial and services sectors on the back of rising domestic and external demand. The RBI at its annual policy review on 20 April 2010 said it will continue to monitor macroeconomic conditions, particularly the price situation closely and take further action as warranted.
In its half-yearly World Economic Outlook, the International Monetary Fund (IMF) has pegged India's GDP growth at 8.75% in calendar 2010 and 8.5% in calendar 2011. According to the IMF, domestic demand in India will strengthen as the labour market improves, and investment is expected to be boosted by strong corporate profitability, rising business confidence and favourable financing conditions.
Rally in index heavyweight L&T aided an intraday rebound on the domestic bourses on Monday, 17 May 2010, triggered by recovery in European stocks and US index futures. Intraday volatility was high. The BSE 30-share Sensex ended the day with a loss of 159.04 points or 0.94% to 16,835.56 on Monday.
As per provisional figures on NSE, foreign funds sold shares worth Rs 1224.29 crore and domestic funds bought shares worth Rs 381.89 crore on Monday
The market may extend last two days' losses if trading in S&P CNX Nifty index futures on the Singapore stock exchange is of any indication. It indicated that the Nifty could fall 17 points at the opening bell. High volatility cannot be ruled out amid choppy Asian markets. Major Asian markets were higher Tuesday in volatile trade after US markets managed a late-session rebound when the dollar pulled back from a four-year high against the euro. The key benchmark indices in Hong Kong, Indonesia, Japan, Singapore and Taiwan rose by between 0.07% to 0.45%. But, the key benchmark indices in China and South Korea fell by between 0.25% to 0.34%.The market may extend Friday (14 May 2010)'s losses on weak global stocks. Trading in S&P CNX Nifty index futures on the Singapore stock exchange indicate that the Nifty could fall 59.50 points at the opening bell. Asian stocks fell on Monday as concerns over the long-term health of the euro zone and weak US earnings dampened investor appetite for risk. The key benchmark indices in China, Hong Kong, Japan, Indonesia, South Korea, Singapore and Taiwan fell by between 1.18% to 2.67%.
US stocks fell on Friday 14 May 2010 on a combination of weak earnings from retailers, Senate backing for limits on credit card fees and concerns over the sustainability of European public debt. The Dow Jones Industrial Average dropped 162.79 points or 1.51% to end at 10,620.16. The Standard & Poor's 500 Index fell 21.76 points, or 1.88% to 1,135.68. The Nasdaq Composite Index lost 47.51 points, or 1.98% to close at 2,346.
On the macro front, while the headline inflation declined to 9.59% in April 2010 from 9.9% rise in March 2010, the data for February 2010 was revised upwards to 10.06% from provisional figure of 9.89%, the latest government data showed.
The data showed that annual food inflation rose to 16.87% in April 2010 from 16.65% in the prior month. Fuel inflation eased to 12.55% the same month from 12.7% in March 2010. Manufacturing inflation cooled to 6.7% from 7.13% in March 2010. The RBI has forecast the headline inflation to ease to 5.5% at end-March 2011 on expectations of a normal monsoon.
The latest economic data showed industrial output rose lower than expected 13.5% in March 2010. The growth was also slower than February's 15.1% expansion. Manufacturing sector output rose 14.3% in March 2010. Industrial output rose 10.4% in the 2009/10 fiscal year, faster than the 2.6% growth clocked in the previous fiscal year.