WEEKLY CALLS

ECONOMY ON STRONG GROWTH TRAJECTORY.
Strong IIP numbers for the month of Jan 2010 failed to enthuse the market. Industrial growth figure for Jan came in at 16.7% v/s 1% last year. The high Jan growth figure came on the back of strong Dec growth figure of 17.6%. Such month on month strong growth figures are proclaiming that our economy is now firmly on growth track. If we compare the last nine months IIP number i.e. from April 2009 to Jan 2010, then the Industrial growth is well over 9.6% which is three times the growth 3.3% of last year. There is every possibility that the GDP will be revised upwards. One can safely infer that the steps taken by the government to stimulate the economy are now bearing fruits.
ALL EYES ON RBI.
Once again the spotlight has now shifted on the RBI as such high growth in a rising inflation scenario, further adds to the worry of inflation. The role of RBI is shifting from that of managing recovery to managing growth. As can be seen from strong growth figures for the month of Dec and Jan, all eyes are now set on the RBI meet in end April. It won’t be a surprise if the RBI is now forced to act and increase the interest rates or the CRR. Nonetheless, it is an interesting and challenging situation to be in for the RBI.