After making a rebound of nearly 25% since the end of 2011, the BSE SENSEX has consolidated during the month of February 2012 due to growth forecasts lower than expected. Indeed, the Indian index corrected violently of 10% in a few sessions sign of investor nervosity. The attractiveness of Indian equities is still hampered by a weak currency and high inflation. Therefore, any warning on global growth and especially on Chinese growth leads financial operators to take quickly profits.

Facing the return of the European crisis and the current slowdown in Chinese growth darkening global outlook, the Reserve Bank of India (RBI) has cut its rate by 50 basis points to 8%. Thus, after a double lowering in two months of the reserve requirement ratio of commercial banks, the RBI has decided to boost domestic demand to support India's growth. These various measures to reduce such borrowing costs will be limited through inflation which, although it slowed to 6.7 % last month, remains high.

Moreover, the central bank also said that India's gross domestic product could increase by 7.5 % during the year 2012/2013 against 7 % originally planned. This determination of the RBI could encourage investors to purchase again the Indian index in the coming weeks.

Technically, the dynamics of the Indian index remains bullish in weekly data above 17000 points, threshold coinciding with the moving average at 20 weeks. We find also this key level in daily data tested three times since the rapid correction occurred during the month of February. We decide to pay this level to take advantage of a continued upward trend in direction of 18 500 and 20 000 points. A protective stop will be carefully placed under the 16 700 points.