Indian economy posted yet another lower than expected GDP this quarter, making 2012 the worst year in the past decade in terms of economic growth. It is strange to consider a 5.3% GDP “weak”, but India requires an estimated 6% growth to match their increasing population size.
The Government has set a double digit growth target, and current figures hardly passed the halfway mark.
Despite this, market appears to ignore the disappointment, with SENSEX keeping most of the gains today, and USD/INR now trading back at pre GDP announcement levels.
5 Min Chart
Market could be more forgiving to India missing their mark when the rest of the world are struggling to avoid publishing red figures. Also noteworthy is the fact that risk sentiment globally is still riding high, with DOW breaking 13,000 and HSI 22,000, encompassing the “Risk On” sentiment the rest of the world is feeling on “Cliff Deal” optimism. It is the same sentiment that is weakening USD and strengthening INR despite the lower than expected GDP.
Daily Chart shows a significant change of direction as USD/INR drop below 54.7 support/resistance, looking to test previous swing low in Jul – 54.15.
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