Nifty to close above 5,460 for uptrend to resume

Concerns about the slowdown in the economy, signalled by a fall in GDP numbers for the December quarter and a marginal decline in factory output in February weighed on the investors. Apprehensions about the Union Budget which will be announced by the finance minister on 16^th March also added to the woes. The market settled lower for a second week in a row, after having rallied for seven weeks earlier.

At the end of the week, the Sensex settled 287 points lower (down 2%) at 17,637 and the Nifty fell by 70 points (down 1%) at 5,359. A close below 5,300 may see the Nifty falling to the level of 5,270. However, if it manages to break through 5,460, we may see Nifty rising to 5,575.

Fears of higher inflation making a comeback on the back of rising oil prices led the market down on Monday. However, value buying after the previous day's sharp decline led the benchmarks higher on Tuesday. The market settled flat with a positive bias on Wednesday as the country's GDP for the December quarter came in below expectations.

Worries about the lower economic growth, coupled with a marginal decline in factory output for February, pushed the market lower on Thursday. Late buying in select blue-chips ensured the positive close on Friday, amid a choppy session.

The BSE Healthcare index (up 2%) was the sole sectoral gainer while BSE Realty (down 4%) and BSE IT (down 3%) were the top losers in the week.

The top Sensex gainers were Sterlite Industries (up 5%), Sun Pharma, Maruti Suzuki (up 3% each) Bharti Airtel and State Bank of India (up 2% each). The key losers were DLF (down 10%), Mahindra & Mahindra (down 7%), Hero MotoCorp (down 6%), TCS and Jindal Steel & Power (down 4% each).

The Nifty was led by ACC (up 6%), Reliance Infrastructure, Ambuja Cements, Sterlite Ind (up 5% each) and Maruti Suzuki (up 4%). The laggards on the index were DLF (down 10%), M&M (down 7%), Sesa Goa, Hero MotoCorp (down 6% each) and TCS (down 4%).

India's economic growth rate slipped to 6.1% in the third quarter the current fiscal, the lowest in more than two years. GDP in April-December period also moderated to 6.9% from 8.1% in the first nine months of 2010-11. Expressing concerns over the dip in third quarter GDP figures, India Inc said the country's economic growth rate may even fall below the projected 6.9% in 2011-12.

India's exports grew by 10.1% year-on-year in January to $25.34 billion despite weak demand in the Western markets. However, imports grew at a faster rate of 20.25% to $40.1 billion, leaving a trade deficit of $14.76 billion. From a peak of 82% in July 2011, export growth has slipped to 44.25% in August 2011, 36.36% in September 2011, and 10.8% in October last year.

India's manufacturing sector growth slowed marginally in February, although strong domestic orders were likely to support output expansion in the coming months, an HSBC survey has said. The HSBC India Manufacturing Purchasing Managers' Index (PMI)-a measure of factory production-eased to 56.6 in February as against 57.5 in January owing to a moderation in sequential output growth.

On the international front, European Union leaders have cleared the release of long-awaited second bailout package for debt- ridden Greece by the end of the week. This is to enable Greece avoid a default on paying back 14.5 billion euro debts due on 20^th March. Finance ministers of the euro group, during a two-day meeting in Brussels on Thursday, kicked off the preparations to release the first tranche of the 130 billion euro rescue package.

Meanwhile, Ratings agency Moody's late Friday downgraded Greece to the lowest rating on its bond scale to 'C' from 'Ca', following a deal with private investors that would see them ultimately lose 70% of their holdings in Greek debt. Ratings agency Standard & Poor's took similar action on 27^th February.