GDP Surges at 8.8%, Record Inflation

123jump.com Staff
30 May, 2008
New York City

Fourth quarter GDP in India surged at 8.8% beating the expectations of 8.2% set by the government. For the fiscal year ending in March, economy grew at 9%. Service sector growth led the rise in the economy in the quarter and for the year. Lack of agriculture growth continues to drag the overall economy and record inflation at 8.1% is sapping disposable income for consumers.

[R]10:00AM New York, 7:30PM Mumbai – GDP in the fourth quarter rose at 8.8% and for the fiscal year surged 9% despite record inflation.[/R]

Fourth quarter GDP surges

Economy grew at a rate of 8.8% in the fourth quarter ending in March 2008 and for the fiscal year 2008 it rose at a rate of 9% beating the government estimate of 8.2%. The sharp rise in economic growth was on the back of 11.2% surge in services, 7.6% in industries and 2.9% growth in agricultural output.

The sharp rise in the economic growth in the last two quarters has been associated with a surge in inflation. The latest read on the whole sales price index suggested inflation at 8.1%, a record level in the last four years.

Market Sentiment

In Mumbai trading, the 30-share BSE Sensex rose 0.6% or 99.31 to 16,415.57. On the National Stock Exchange S&P CNX Nifty gained 0.7% or 34.8 at 4870.10 levels.

Of the BSE traded shares, 1,008 shares gained 1,701 shares declined and 58 shares remained unchanged.

Shares in India rose supported by falling global crude prices and strong rise in gross domestic product. Crude oil was trading around $125 a barrel, nearly $5 lower than record price of $135 last week.

Surprisingly strong economic growth and a jump in inflation above 8% put an interest rate rise back on the agenda on Friday, although many analysts thought the central bank would remain focused on cash management.


Trading Highlights

Daily turnover on the BSE stood at 5,478 crore rupees and on the NSE was at 14,953 crore rupees.

Reliance Power was the most active on the BSE with the turnover of 354.21 crore rupees followed by Reliance Industries, Larsen & Toubro, Piramal Life and IFCI.

IFCI recorded a highest volume of 2.62 crore shares on BSE followed by Reliance Power, Spice Communication, Ispat Industries and Reliance Natural Resources.

Market news

The Securities & Exchange Board of India on Thursday allowed sovereign wealth funds, university funds, endowments and charitable trusts to register as foreign institutional investors.

Gainers and losers

Housing Development Finance Corporation led the gainers in the Sensex index with a gain of 5.6% at 2,569.15 rupees, in Ranbaxy Laboratories of 4.8% at 528.65 rupees, in Bharat Heavy Electricals of 3.9% to 1,662.15 rupees and in HDFC Bank of 2.5% 1,357.85 rupees.

Jaiprakash Associates led the losers in the Sensex index with a loss of 5.4% to 213.20 rupees followed by losses in Ambuja Cements of 2.7% to 95.20 rupees, in Mahindra & Mahindra of 2.3% to 592.50 rupees and in State Bank of India of 1.4% to 1,443.35 rupees.

Infosys Technologies gained 3.6% to 1,957.55 rupees, TCS advanced 3.4% to 1,029.25 rupees, and HCL Technologies added 0.9% to 312.90 rupees. However, Wipro closed down 0.9% at 508 rupees and Satyam Computer lost 0.5% to 523.75 rupees.

ICICI Bank fell 1.1% to 788.30 rupees.

Reliance companies update

Reliance Petroleum fell 1% to 174.55 rupees, Reliance Infrastructure fell 1.3% to 1,230.75 rupees and Reliance Industries declined 2.6% at 2,401.65 rupees.


Asian Markets Review

In Tokyo Nikkei 225 Index closed higher 214.07 or 1.52% to 14,338.54, in Hong Kong Hang Seng index increased 149.13 or 0.61% closed to 24,533.12. In Australia ASX 200 index lower 54.70 or 0.96% to close 5,654.70. In Malaysia KL Composite index increased 14.28 or 1.13% closed to 1,276.10.

In South Korea Kospi Index increased 10.80 or 0.59% to close at 1,852.02, in Thailand SET index closed higher 3.04 or 0.37% to 833.65 and Indonesia JSE Index edged decreased 2.61 or 0.11% to 2,444.35. Sensex index in India increased 99.31 or 0.61% to 16,415.57.