The World This Week 4th Nov - 9th Nov


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The World This Week 4th Nov - 9th Nov

  1. 1. ADVICE for the WISE Newsletter –NOVEMBER 2013 1
  2. 2. Contents Index Page No. Economic Update 4 Equity Outlook 8 Debt Outlook 14 Forex 16 Commodities 17 Real Estate 18 2
  3. 3. From the Desk of CIO Dear Investors, October marked the equity markets reaching new highs. Rupee At present, we are probably experiencing the prices catching up with remained stable and at relatively higher levels while debt markets fundamentals. Owing largely to price inflation, the nominal incomes largely maintained long term yields at the earlier levels. The and even profits of many listed companies were going up even if sentiment is clearly positive amongst the majority, even if cautiously volumes did not keep pace in most cases. This earnings growth was so. As in earlier rallies, within equity markets domestic retail not fully factored into the prices. Part of the current catch-up reflects investors have largely continued selling even as FIIs have been large that. Also the postponement of tapering in the US also meant net buyers for several days. There is a lot of speculation on whether continuation of loose liquidity conditions around the globe – this is a beginning of a new rally or a short term over-optimism propping up risk assets including emerging market equities. Part of amongst investors. that liquidity also made its way into India. One of the commonest concerns being raised is – where is the There is also the additional element of speculation. The elections change in fundamentals? This question misses an important point. next year will have very important implications for the long term Capital markets do not necessarily price assets without lead or lag. growth dynamics of Indian economy. Some market participants have The change in prices is often way ahead of or way behind the change probably started building in an expectation of a given coalition in fundamentals. That can happen for various reasons. The most coming to power vs another. common one is liquidity. A sharp increase or decrease in liquidity can change prices of assets without an immediate change in This build-up of positive sentiments while most probably not over- fundamentals. Conversely, liquidity movements can also keep the optimistic or too-soon, is nevertheless prone to accidents. An asset prices from catching up with fundamentals in some cases. announcement of further monetary tightening within India or any Other reasons for the lead or lag between fundamentals and prices trouble on US debt ceiling or a speculation regarding QE tapering can include sentiments and specific events (such as elections). Lastly easily make investors jittery. By their very definition accidents are there is the matter of diverse beliefs about the future – starting from unpredictable. However, being aware of their possibility helps one the same data. prepare mentally for some volatility. “Advisory services are provided through Karvy Capital having SEBI Registration No: INP000001512. Investments are subject to market risks. Please read the disclaimer on slide 20” 3
  4. 4. Economic Update - Snapshot of Key Markets 195 31st As on Oct 2013 Change over last month Change over last year Sensex Nifty S&P 500 Nikkei 225 175 155 135 115 BSE Sensex 21165 S&P Nifty 14.4% 6299 9.8% 12.1% S&P 500 1757 4.5% 24.4% Nikkei 225 Equity Markets 9.2% 14328 (0.9%) 60.5% 95 75 9.3000 8.8000 10 yr Gsec 8.3000 7.8000 7.3000 10-yr G-Sec Yield Debt Markets 8.59% (10 bps) 47 bps Call Markets 8.67% (97 bps) NA Fixed Deposit* 9.00% 25 bps 50 bps 6.8000 34000 32000 Gold 30000 28000 26000 RICI Index Commodity Markets 3518 (1.8%) (4%) Gold (`/10gm) 30683 1.6% (0.8%) Crude Oil ($/bbl) (As on 28th October) 24000 70 `/$ 65 108.29 (0.4%) (1.5%) 60 55 50 Forex Markets Rupee/Dollar 61.41 1.54% (12.43%) Yen/Dollar 98.24 1.2% (19.3%) 45 40 4 • Indicates SBI one-year FD •New 10 Year benchmark paper(8.15%, 2022 Maturity) was listed in the month of June , the 1 year yield is compared to the earlier benchmark(2021 Maturity)
  5. 5. Economy Update - Global • U.S. factory output contracted in October for the first time since late 2009 and the overall pace of growth was the slowest in a year. US • Moody's, would maintain its AAA rating while Fitch warned that it may cut its assessment. • The United States has been picking up, with the economy having grown 2.5 % in the Q2. Manufacturing, appears to be gaining momentum after having contracted as recently as May. Europe • The economy grew 1.1% in the Q2, and the economy minister predicted rising exports would compensate for a leveling off in domestic consumption, sustaining a recovery in Euro zone. • Markit's PMI fell to 51.5 from September's two-year high of 52.2 • Consumer spending in Japan jumped in September as shoppers frontloaded purchases before a sales tax increase next year, a boost to government efforts to spark demand and end 15 years of deflation. Japan • Japanese household spending rose 3.7 % in September from a year earlier, a sign that consumer spending may have recovered from a slight dip. • Japan’s adjusted unemployment rate fell to 4.0 % from August's 4.1 %,matching economists' median forecast of 4.0 %. • Gross domestic product in China rose 7.8% from a year earlier, marking only the second quarter in the last 10 in which growth has accelerated. Emerging economies • India’s central bank lifted its policy repo rate by 25 basis points (bps) to 7.75%, and cut the MSF by 25 bps to 8.75%. • India's foreign exchange reserves rose to $279.24 billion as of October 11, compared with $277.73 billion in the earlier week. 5
  6. 6. Economy Outlook - Domestic 10.0% • The Indian economy grew at its slowest pace in four years at 4.4% in the first quarter (Q1, or April-June) of the current fiscal year 2013-14, compared with 4.8% during the preceding quarter (January-March) of the last fiscal. The country’s economy had grown by 5.4 % in same period of the previous fiscal. IIP 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 12 12 12 12 12 13 13 13 13 13 13 Jul Aug 13 13 • IIP unexpectedly slowed down to 0.6% YoY in Aug’13 as against our estimate of 2.0% and 2.8% in Jul’13. Continued slowdown was witnessed in capital and consumer durables sector which • India’s economy grew declined to 5 percent in 2012-13 from 6.2 percent in 2011-12. The economy had grown by 8 percent for two consecutive years prior to that. • While manufacturing and mining sectors have been one of the reasons behind the fall in the GDP, the fall in rupee, which hit a record low of 68.85 earlier this week, is seen as one of the major factors too. Agriculture grew 2.7% in the first quarter, mining and manufacturing contracted 2.8% and 1.2%, respectively.. contributed significantly to the sluggish growth. • IIP ex- capital goods grew by 1.0% YoY as against the 0.6% headline growth. Consumer Durables sector plunged by 7.6% YoY; this pushed down the headline growth in Industrial Production for the month of August. • Jul’13 IIP is revised upwards by 12bps to 2.8%YoY primarily driven by 1.2% upward revision in textile products which now stand at 0.9% YoY. May’13 IIP has also been revised upwards by 30bps to • The lower GDP at market price compared to GDP at factor cost is because the subsidy component is growing extremely fast and the government is borrowing to fund subsidy. 8.0 7.5 7.0 6.5 6.0 5.5 5.0 4.5 4.0 7.7 GDP growth 6.9 6.1 5.3 5.5 5.3 4.5 4.8 4.4 1.5% due to upward revision in Basic metals sector. 6
  7. 7. Economic Outlook - Domestic Growth in credit & deposits of SCBs 20.0% Bank Credit Aggregate Deposits 18.0% 16.0% 14.0% 12.0% 10.0% 8.0%  As on September 2013 Bank credits grew by 16.5% on a Y-o-Y basis which is about 3.5% higher than the growth witnessed in september 2012. Aggregate deposits on a Y-o-Y basis grew at 12.2%, viz-a viz a growth of 10.2% in Sept 2012.  On 29th October 2013, RBI carried out a 25bps increase in repo rate along with a 25 bps cut in MSF. The corridor between repo and MSF has been restored to 100 basis points. The liquidity provided through term repos of 7-day and 14-day tenor has been increased from 0.25% of net demand and time liabilities (NDTL) of the banking system to 0.5% further easing short term liquidity. With these latest steps, the extraordinary measures taken by RBI in September to defend the rupee have been argely reversed.  Headline WPI spiked unexpectedly to 6.46% YoY in Sept’13. The prices have risen across the segments in the month, while food inflation in particular contributed to the headline figure significantly. Vegetable prices continued to surge, and the vegetable prices have more than doubled so far this fiscal. Jul’13 WPI has been meagerly revised upwards by 6 bps to 5.85% YoY.  The average WPI recorded at 5.49% YoY in Apr-Sept’13, compared to 7.70% in the year-ago period. core inflation remained low at 2.06% YoY in Sept’13 vs. 1.96% in Aug’13  RBI governor Raghuram Rajan’s focus is moving towards CPI along with WPI which is on the rise nearing double-digit levels which he describes as worrisome and intends to bring CPI within the boundary.  India's annual consumer price inflation quickened more than expected to 9.84 percent in September from 9.52 percent in August. 9.0% 8.0% 7.0% 6.0% 5.0% Wholesale Price Index 4.0% * End of period figures 7
  8. 8. Equity Outlook Indian equity markets made fresh life time highs on the back of improving domestic macros, supporting global equity and expected governance improvement in India after next general elections. Sensex crossed the level of 21,200 after a gap of almost six years. FII have been looking at Indian equities again with a lot of enthusiasm with more than 2.5 billion dollars invested in the month of October. BSE SENSEX 22000 20000 18000 16000 14000 12000 10000 31-Oct-13 31-Jul-13 30-Apr-13 31-Jan-13 31-Oct-12 31-Jul-12 30-Apr-12 31-Jan-12 31-Oct-11 31-Jul-11 30-Apr-11 31-Jan-11 31-Oct-10 31-Jul-10 30-Apr-10 31-Jan-10 31-Oct-09 31-Jul-09 30-Apr-09 31-Jan-09 31-Oct-08 31-Jul-08 30-Apr-08 31-Jan-08 31-Oct-07 31-Jul-07 30-Apr-07 31-Jan-07 8000 Global markets have turned supportive of equity. In their recent meeting, US Federal Reserve has expressed concern about the quality of macroeconomic recovery in US and has decided to maintain the current pace of bond buying program. This dovish stance from the Federal Reserve will help sustain upwards bias in Emerging market equities, currencies and bonds. The revival in global risk appetite has resulted in fresh FII inflows into emerging market equities with India turning out to be a big beneficiary. India has been one of the top performing equity markets since the middle of September when Federal Reserve first announced the postponement of tapering program. 8
  9. 9. Equity Outlook Global Equity Market Performance NIFTY 6.8% Sensex 6.0% DAX 4.6% All Ordinaries (Australia) 3.6% Nasdaq 3.6% CAC 40 3.1% Taiwan Weighted 2.9% FTSE 100 2.6% All Share (Sri Lanka) 2.6% KLSE Composite 2.0% S&P500 1.8% Seoul Composite 1.2% Jakarta Composite 1.1% Straits Times 0.5% Hang Seng 0.4% -0.4% Dow Jones Ind. Avg. Nikkei 225 -1.2% SSE Composite Index (Shanghai) -2.3% Bovespa -2.6% -3.0% -1.0% 1.0% 3.0% 5.0% 7.0% Rise in Global Equities since 18th September, 2013 9
  10. 10. Equity Outlook The tough measures to ensure financial discipline in the peripheral eurozone area in the last few years have began to show results. European economies have seen rebound in growth with Spain recently coming out of recession. We expect this macroeconomic recovery in the Euro area to get stronger in the next few quarters. RBI carried out the review of Indian monetary policy last week. As expected, it carried out a 25bps increase in repo rate along with a 25 bps cut in MSF. The corridor between repo and MSF has been restored to 100 basis points. The liquidity provided through term repos of 7-day and 14-day tenor has been increased from 0.25% of net demand and time liabilities (NDTL) of the banking system to 0.5% further easing short term liquidity. With these latest steps, the extraordinary measures taken by RBI in September to defend the rupee have been largely reversed. The trade data also reflects significant reduction in CAD and we believe that the worst is behind us on that front. GDP growth in the last two quarters has remained below 5%. Capital formation growth in the country has further with no sign of pickup as yet. The forecast for FY14 GDP growth has been cut from 5.5% to 5% by RBI We believe that growth in the next two quarters will improve due to strengthening export growth and expected pick-up in agriculture. Also, revival of large stalled projects cleared by the Cabinet Committee on Investment will give a boost to capital formation activity. The worst seems to be behind us from a growth perspective and we believe we will see a multi-year revival of the growth and earnings cycle in next few quarters. 10
  11. 11. Equity Outlook The political activity in the country is going to get more and more interesting as we approach the General elections scheduled in May. The recent opinion polls indicate support building up for Gujarat Chief Minister Narendra Modi led National Democratic Alliance (NDA). There have been several concerns about governance and populist schemes in the last few years and markets are getting excited about prospects of a better government emerging from the next election. We would expect a bigger rally building up going into the election. While Sensex has made fresh life time highs, the performance of various sectors have been quite divergent. Pharma, IT and Auto have been best performers in the last six years, while Banking, Oil & Gas, Capital Goods and Metals have been worst performers. We expect this trend to start to reverse going forward. With the normalization of Repo MSF corridor, we believe RBI might pause in the immediate future. With monetary policy risk out of the way, we have turned positive on interest rate sensitive sectors like banks and automobiles. We expect export oriented sectors like IT to continue to benefit from the significant rupee depreciation seen this year. Telecom is another sector which might deliver strong earnings due to return of pricing power & reduction in competitive intensity. We maintain our year-end Sensex target of 22,400. A good monsoon, strong export sector, continued monetary stimulus in US & a stable Euro area are significant positives for equity markets. With domestic macro-economic data also on the mend, we are aggressive buyers of Indian equity. 11
  12. 12. Sector View Sector Stance Remarks Overweight The measures taken to stabilize the rupee have largely been reversed and we expect RBI to pause in the short term. We like the private sector more than public sector due to better management quality and higher balance sheet discipline. Overweight We like the secular consumption theme. We prefer “discretionary consumption” beneficiaries such as Cigarettes, IT hardware, durables and branded garments, as the growth in this segment will be disproportionately higher vis-à-vis the increase in disposable incomes. Overweight The regulatory hurdles and competitive pressures seem to be reducing. Incumbents have started to increase tariffs slowly and pricing power is returning. We believe that consolidation will happen sooner than expected. Healthcare Overweight We believe in the large sized opportunity presented by Pharma sector in India. India’s strength in generics is difficult to replicate due to quality and quantity of available skilled manpower. With the developed world keen to cut healthcare costs, and a vast pipeline of drugs going off-patent, Indian pharma players are at the cusp of rapid growth. IT/ITES Overweight Demand seems to be coming back in US. North American volume growth has also remained resilient. With significant rupee depreciation in the last few months, margins will get a boost. BFSI FMCG Telecom 12
  13. 13. Sector View Sector Stance Remarks Automobiles Neutral We are more bullish on SUV’s and agricultural vehicles segment due to lesser competition and higher pricing power. Power Utilities Neutral We like the regulated return charteristic of this space. This space provides steady growth in earnings and decent return on capital. Underweight With the ongoing price deregulation of diesel, we believe the total subsidy burden on Oil PSU’s will come down during the course of the year. However, rupee depreciation will reverse most of those gains. Metals Underweight Commodity prices have corrected significantly over the last few months due to concerns about growth in China and developed parts of the world. Steel companies will benefit because of rupee depreciation. Cement Underweight Cement industry is facing over capacity issues and lacklustre demand. With regulator taking a strong view against pricing discipline, the profits of the sector are expected to stay muted. E&C Underweight The significant slowdown in order inflow activity combined with high interest rates has hurt the sector. It will take some time before capex activity revives Energy 13
  14. 14. Debt Outlook Yield curve 10-yr G-sec yield 9.500 9.3000 (%) 8.500 8.8000 8.3000 7.8000 7.3000 8.000 6.8000 7.500 0.0 0.7 1.5 2.2 2.9 3.7 4.4 5.1 5.8 6.6 7.3 8.0 8.8 9.5 10.2 11.0 11.7 12.4 13.1 13.9 14.6 15.3 16.1 16.8 17.5 18.2 19.0 19.7 (%) 9.000 • The 10 yr g-sec closed the month at 8.59% which is 10 bps lower than the last month. • RBI had announced changes to benchmark policy rates and unveiled measures for market development and regulation on 29th October 2013: • Repo rate hiked to 7.75% from 7.50%. • MSF rate has been reduced by 25 bps to 8.75%. • Accordingly, the bank rate stands revised down to 8.75% and the rate corridor is normalized to 100 bps. • Cash Reserve Ratio (CRR) is unchanged at 4.00% • The policy outcome was along expected lines, reflecting the continued shift in central bank’s focus from managing rupee volatility to containing inflationary pressures, while being mindful of growth trends. 14
  15. 15. Debt Strategy Category Outlook Details Short Tenure Debt With the current 25 bps repo rate hike and influence of domestic and global factors in the market, some uncertainty is coupled with the interest rate scenario in the coming quarters, hence, we would suggest to invest in and hold on to current investments in short term debt. Due to liquidity pressures increasing in the market as RBI has a huge borrowing plan, short term yields would remain higher. Short Term funds still have high YTMs (9.5%–10%) providing interesting investment opportunities. Credit Some AA and select A rated securities are very attractive at the current yields. A similar trend can be seen in the Fixed Deposits also. Tight liquidity in the system has also contributed to widening of the spreads making entry at current levels attractive. Long Tenure Debt Our recommendations regarding long term debt is that currently either buying nor selling for now. And after the volatility settles Investors could look to add to dynamic and medium to long term income funds over the next few months. Long term debt is likely to see capital appreciation owing to the expected monetary easing. There is lesser probability of rate cuts in the near future and there could be a lot of volatility in the g-sec yields as well. An important point to note is that as commodity prices are cooling down, current account deficit may reduce to some extent. But all this is coupled with uncertainty. We suggest matching risk appetite and investment horizon to fund selection. Hence we recommend that if investing for a period of 2 years or above then long term can be looked upon or else holding/profit booking could be a good idea. Investors who may want to stay invested for the medium term (exiting when prices appreciate) and those who would want to lock in high yields for the longer term can also invest in longer tenure papers/Funds. 15
  16. 16. Forex Rupee movement vis-à-vis other currencies (M-o-M) 3.50% Trade balance and export-import data 15 10 5 0 -5 -10 -15 -20 3.00% 2.50% 2.00% Export(%) Import 0 Trade Balance (mn $) -5000 -10000 -15000 -20000 -25000 1.50% 1.00% 0.50% 0.00% USD GBP EURO YEN • The Indian Rupee appreciated against all the four major currencies in the last month. It strengthened by 1.52% against the US Dollar, 0.49 against the EURO and 1.69% against Japanese Yen. The major appreciation out of the four currencies was seen in GBP against which the Indian Rupee appreciated by 2.88% in last one month. • Strength in Rupee against all the 4 major currencies came in on the back of strong data released for the Current Account Deficit for Q2 FY 2014 and the Trade Deficit data released during the month. Rupee in the last month traded in the range of 60.50 and 63.46 against USD and was trading at two month high levels in the first half of the previous month. • Poor Inflation and Industrial Output numbers put some weight on the Rupee during the later part of the month but that was compensated by the pressure which was on US Dollar due to US Budget deal as it gave way to worries over economic impact of the government shutdown and prospects of a re-run early next year. Exports during September, 2013 were valued at US $ 27.68 bn which was 11.15 % higher than the level of US $ 24.90 bn during September, 2012. Imports during September, 2013 were valued at US $ 34.44 Bn representing a negative growth of 18.10% over the level of imports valued at US $ 42.05 Bn in September 2012 translating into a trade deficit of $6.76 Bn. 140000 Capital Account Balance 90000 40000 -10000 FY 11 (Q4) FY 12 (Q1) FY 12 (Q2) FY 12 (Q3) FY 12 (Q4) FY 13 (Q1) FY 13 (Q2) FY 13 (Q3) • The projected capital account balance for Q3 FY 13 is projected at Rs. 171984 crores along with the Q1 and Q2 being at 88013 Cr and 130409 Cr respectively. • We expect factors such as higher interest rates to attract more investments to India. Increased limits for investment by FIIs would also help in bringing in more funds though uncertainty in the global markets could prove to be a dampener. 16
  17. 17. Commodities Precious Metals Gold tested $1900 during the last debt ceiling issue when S&P downgraded US in 2011. With the debt ceiling now postponed to mid of January amid no meaningful resolution visible, gold prices are likely to remain firm in the near term. The 4QCY is seasonally strong for the metal further support the price levels. The pattern that is unfolding during the last few years increasingly now seems to be nearing an end or rather ended on how one looks at it technically. In either case, it’s time to bet on the metal. Further, the sentiment today is largely bearish - both internationally and domestically - and for a gold feverish nation like India, this is something unusual and such extremes are a perfect indication of major turning points. Expect gold prices to remain firm. 34000 33000 Gold 32000 31000 30000 29000 28000 27000 26000 25000 24000 125 Oil & Gas The WTI crude dropped to the lowest level in four months as US stockpiles increased and a dollar strength further capping any potential upside. The crude output by OPEC increased to an average 30.621 million barrels and with no fresh triggers to keep oil prices boiling amid ample supplies and increasing inventories, crude oil prices are likely to be stay weaker. 120 Crude 115 110 105 100 95 90 17
  18. 18. Real Estate Outlook Asset Classes Residential Tier I Tier II Due to a flurry of new launches in the first quarter of the year, most markets witnessed an increase in the unsold inventory levels even with relatively steady sales. Consequently, last quarter saw lesser new Demand in Tier II cities is largely driven by the trend towards nuclear families, increasing disposable launches. income, rising aspiration to own quality products and With reduced new launches and steady absorption, the demand supply the growth in infrastructure facilities in these cities. Price appreciation is more concentrated to specific gap is expected to reduce over the coming months. micro-markets in these cities. Cities like Chandigarh, Mid-income residential segment with Rs. 4,000 – 6,000 per sq. ft. Jaipur, Lucknow, Ahmedabad, Bhopal, Nagpur, Patna entry pricing with good developers in Pune, Bangalore, NCR and and Cochin are expected to perform well. Mumbai suburbs cane be expected to continue generating good percentage returns with relatively lower risk. The over-supply in commercial asset class still continues, thereby dampening the capital values. Commercial/IT While rentals have been seen increasing at a slow pace over the last couple of months, they still remain lower than the peal values achieved in the past. In relative terms, Bangalore market continues to outperform other markets owing primarily to the demand from the IT industry. Lease rentals as well as capital values continue to be stable at their current levels in the commercial asset class. Low unit sizes have played an important role in maintaining the absorption levels in these markets. Specific pre-leased properties with good tenant profile and larger lockin periods continue to be good investment opportunities over a longterm horizon. Please Note: Tier I* markets include Mumbai, Delhi & NCR, Bangalore, Pune, Chennai, Hyderabad and Kolkatta Tier II* markets includes all state capitals other than the Tier I markets 18
  19. 19. Real Estate Outlook Asset Classes Tier I Tier II Retail Capital values as well as lease rentals continue to be stagnant. The effects of the change in FDI policy to allow 51% foreign ownership in multi-brand retail and 100% in single-brand retail are yet to have any effect of the market for retails assets. Developers continue to defer the construction costs as absorption continues to be low unsold inventory levels high. Land Agricultural / non-agricultural lands with connectivity to Tier I cities and in proximity to upcoming industrial and other Land in Tier II and III cities along upcoming / established growth infrastructure developments present good investment corridors have seen good percentage appreciation due to low opportunities. Caution should however be exercised due to the investment base in such areas. complexities typically involved in land investments. Tier II cities see a preference of hi-street retail as compared to mall space in Tier I cities. While not much data on these rentals gets reported, these are expected to have been stagnant. The mall culture has repeatedly failed in the past n the Tier-2 cities. Whether the FDI in retail can change this phenomenon can be known with more certainty once the effect of FDI is more visible in Tier I cities. Please Note: Tier I* markets include Mumbai, Delhi & NCR, Bangalore, Pune, Chennai, Hyderabad and Kolkatta Tier II* markets includes all state capitals other than the Tier I markets 19
  20. 20. Disclaimer The information and views presented here are prepared by Karvy Capital Ltd. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. The investments discussed or recommended here may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned here, investors may please note that neither Karvy Capital Ltd nor any person connected with any associated companies of Karvy Capital Ltd accepts any liability arising from the use of this information and views mentioned here. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Karvy Capital Ltd, its affiliates, directors, its proprietary trading and investment businesses (hereinafter referred to as Karvy) may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above-mentioned assets from time to time. Every employee of Karvy and its associated companies are required to disclose their individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Stock Broking Ltd and Karvy Comtrade Ltd. Any information given in this document on tax are for guidance only, and should not be construed as tax advice. Investors are advised to consult their respective tax advisers to understand the specific tax incidence applicable to them. We also expect significant changes in the tax laws once the new Direct Tax Code is in force – this could change the applicability and incidence of tax on equity investments. Karvy Capital Ltd Operates from within India and is subject to Indian regulations. Mumbai office Address: 702, Hallmark Business plaza, Sant Dnyaneshwar Marg, Bandra (East), off Bandra Kurla Complex, Mumbai 400 051 20