Mkts continue bull run, expect weak GDP data to trigger rate cut

The Indian equity markets extended their bull run for a fourth consecutive day today on expectations that a weak GDP growth of 5.3 percent in the second quarter will put pressure on the RBI to cut interest rates.

On the other hand, India's fiscal deficit during the April-October period rose to Rs3.68 trillion, or 71.6% of the budgeted full fiscal year 2012/13 target. During the same period in the previous fiscal year, the deficit was 74% of the budget target.

Battling with weak consumer demand in overseas and domestic markets, the economy's growth figures although has come more or less in line with estimates, but are still stuck near three year low. The slowing economy has already battered government revenues, leaving the government scrambling for ways to balance the budget and avert a credit rating downgrade threatened by ratings agencies Standard & Poor's and Fitch.

Reuters

"The growth is below the Reserve Bank of India's trend growth expectation, and I think the central bank will cut rates further from here. I expect a repo rate cut in January and there could possibly be another cash reserve ratio cut in December, " Robert Prior Wandesforde, Director, Credit Suisse told Reuters earlier today.

The Sensex closed 0.88 percent higher at 19339.90 and the Nifty ended at 5876.20 up 51.20 points or 0.88%.

TCS, Wipro, Tata Power, BHEL, ONGC, ICICI Bank, L&T, Hindalco, Bharti Airtel, Tata Steel, Gail India, Sun Pharma, are among gainers in Sensex and Nifty.

RIL, Infosys, Ranbaxy, Bajaj Auto, Coal India, ACC, Bajaj Auto, Maruti are among losers in Sensex and Nifty.

After Goldman Sachs upgraded Indian equities to overweight, investment bank Citigroup today raised the Sensex target to 20,800 for end 2013 based on premise of 9.6/12 percent earnings growth for FY13/FY14 and a valuation multiple of 14.5 times -a slight discount to its 15-16 times longer-term average.

Even BlackRock is aiming to go overweight on India. Andrew Swan, who manages about $3 billion as the head of Asian equities for the world's biggest money manager, told the Reuters Global Investment 2013 Outlook Summit on Friday that Indian politicians will push reforms and economic growth will tick up.