Negative sentiments were triggered in the Indian markets after the announcement of poor GDP growth numbers.
The GDP growth numbers in the fourth quarter of FY12 was 5.3 per cent, much below market expectations of growth at 6.1 per cent. Although the stock markets opened sharply lower, they recovered later to close down 0.5 per cent lower. The Sensex closed at 16,218, down 93 points while the Nifty closed at 4,924, down 26 points
Likely to knock off
“The impact of the GDP numbers was terminated by the F&O expiry which was today. In my opinion, the market recovered because of the short-covering. In the coming days, poor GDP numbers will knock off the markets,” said Mr Jagannadham Thunuguntla, Strategist & Head of Research, SMC Global Securities.
“These bad numbers shows that we are becoming a subdued growth economy,” he said. The GDP growth in FY12 is expected to be the worst in nine years.
Market experts also feel that the later recovery was because there was expectation that the RBI may cut rates. “The markets instantly reacted to the poor GDP numbers. However, the positivity came on expectation of a rate cut,” said Mr Abhinav Angirish, Founder and CEO, Invest Online.
“It is hard to describe India's March quarter GDP release as anything other than shocking. The big question of course is how the RBI chooses to respond. We continue to expect another 125 bps of repo rate cuts by the end of the current fiscal year in March 2013,” said a note from Credit Suisse.
The recovery in the Indian markets was aided by the stabilisation in the European stocks. The European markets were trading marginally higher, after the two per cent fall on Wednesday.