Indian Economy and Capital Markets Review- 04Dec2011’s GDP for Q2 FY12 grew at 6.9% (Bloomberg estimate: 6.8%). Core sector growth for the month of October dropped to a six year low of 0.1%. The core sector has expanded 7.2% last year (October 2010).

India’s food inflation for the week ended November 19 declined to 8%on a week-on-week basis from 9.01% for the week ended November 12 while fuel price index increased to 15.53% (15.49% last week).

Indian Prime Minister Manmohan Singh failed to break an impasse with opposition parties and his own allies demanding a rollback on FDI hike in retail sector. And as of today, this new policy has been put on hold to get agreement from opposing political parties.

World’s leading central banks announced a big coordinated intervention to lower swap rates. Indian equity indices (Nifty, Sensex) gained about 7% last week, to return from 2 year lows to make two-week highs as 6 major central banks of the world agreed to increase liquidity for European banks by providing cheaper US dollars funding.

The Nifty started the week with a gap up action and gained from strength to strength as the week progressed and closed the week moving above the psychological 5000 mark. Renewed buying by foreign funds in last three days supported the positive movement.

The Sensex was up by 1151.40 points or 7.30% for the week to settle at 16,846.83 whereas the Nifty closed at 5050.15, up by 340.10 points or 7.20%. All the Nifty 50 stocks closed in green during last week, with banking, metals, cement, oil & gas, auto and IT stocks propelled the rally.

Nymex crude climbed to $100/ barrel on weekly basis (up 3.6% on Thursday).

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