India`s GDP for Q2 stood at 7.9% as against 6.1% for the previous quarter and against 7.7% for the Q2 last year. Finance Minister, Pranab Mukherjee said, ``We are quite satisfied with GDP numbers and expect the economy to grow around 7% in the fiscal year ending March 2010.``

Markets cheered by GDP figures. Currently, the 30-share index Sensex is trading up 382.44 points, or 2.30%, at 17,014.45, after touching a high of 17,026.91 and a low of 16,655.75. Meanwhile the broad based Nifty is trading higher by 120.10 points, or 2.43%, at 5,061.85, after hitting a high of 5,066.35 and a low of 4,942.25. (01.25 p.m.)

Ashok Jainani, Head Research, Khandwala Securities presented his views on GDP figures, ``The Q2 GDP growth at 7.9% comes with good dose of government spending on  community services and fiscal sops pushing manufacturing growth. Calibrated policy tweaking is expected to revive manufacturing and services sectors while it is time to exit from stimulus next year to reduce fiscal deficit.``

``Near term markets are in a range looking for confirmation the growth is not slipping and is able to maintain momentum. Stocks have run little ahead of valuations especially when the growth is moderate, below last five years trendline of over 8.5%. Nifty range for the next three months seems 5,211 – 4,425,`` he added.

``Very high real inflation threatens recovery taking longer to grow roots and therefore monetary and fiscal situation likely to remain in a flux with regulators and policy makers in dilemma on priority to sustain growth or fight inflation,`` he said.

``In the current situation of excess banking liquidity and slowdown in credit off-take, it is difficult to anticipate what RBI would do next. Expect some unconventional measures, perhaps by the government, to stem this liquidity accompanied by cheap interest rates leading to bubble in certain assets.``

``The GDP numbers took the markets completely by surprise. As against the expected GDP around 6.3%, the actual numbers H1FY10 was at 7% v/s 7.8% on a YoY. And for Q2FY10, GDP was at 7.9% v/s 6.1% on a QoQ and 7.7% on a YoY,`` said an independent analyst, Ruma Dubey.

``Undoubtedly, Q2 numbers are spectacular. But let us not yet lose touch with reality. Agriculture sector does seem to a cause for concern. It is the various economic stimuli packages which have helped India clock this growth. In Q2, it was mostly the pre festive and then the festive sales also which helped clock these numbers. Looking ahead now though, inflation is the biggest worry right now. What happens once the Govt gets into the mode of putting a leash on inflation? Once the focus shifts from growth to inflation, surely some of this would chip off the spectacular growth of H1,`` she added. 

``Interest rates cannot be kept where they are for too long now. RBI is sure to step in by January. It would be a gradual rate hike and not one time hike. But what these figures indicate that despite the rate hikes, the economy is no longer as fragile as it was earlier. The economy would be able to sustain a growth level of around 6 -6.5% in Q3 and Q4 despite the hike in rates,`` she opined.