The World This Week - 23rd to 27th May, 2016

1. THE WORLD THIS WEEK
May 23 – May 27, 2016

2. EQUITY VIEW

3. EQUITY VIEW
• The markets rose to 6 month highs in the previous week by around 5.5%. The Nifty crossed the 8000 level. This
was an unexpected move in the indices, the key reasons for which were, encouraging results and expectations of
a better monsoon.
• The next month will be an eventful one with a large number of expected news flows starting with the RBI Policy
meet during next week. We do not expect the central bank to tinker with the rates with the WPI coming in the
positive territory after more than 17 Months and the retail inflation recorded at 5.4%. The probability of the Fed
hiking the rates has gone up from 5% to 30%, even though the US economy has not been growing as per
expectations. This would also be a factor for consideration for the RBI governor

4. EQUITY VIEW
• The UK referendum is also expected during the latter part of the fortnight. This event can impact global currencies
and the growth shift in terms of outlook. If Britain opts to exit out of the euro, this can lead other countries to want
to do the same as well.
• Broadly, the markets have started on a good note, and the rally can sustain till 8300 levels. But we can see profit
booking at 8300 levels. Hence, one has to be optimistic, with a little caution for the current week.

5. NEWS

6. DOMESTIC MACRO
• The statistics department had forecast that the Indian economy will grow at 7.6% in the year ended 31
March. To meet the target, the economy needs to register 7.73% growth in Q4.
• India, the world’s third largest steel producer, was among the top 10 importers of the alloy last year,
according to the latest data by the global industry body World Steel Association (WSA). India imported
13.3 million tonnes (mt) of the metal in 2015 and was just a notch up from China, which imported 13.2
MT of steel during the same period.

7. GLOBAL MACRO
• A British exit from the European Union would be a serious risk to global
economic growth, Group of Seven leaders said in a summit declaration. A
UK exit from the EU would reverse the trend towards greater global trade
and investment, and the jobs they create, and is a further serious risk to
growth," G7 leaders said.
• Euro zone governments on Wednesday offered Greece debt relief in 2018,
but left key details for later in a bid to bridge Germany's view that no
immediate action was needed and the International Monetary Fund's call for
decisions now. The late-night compromise spared the battered European
Union the risk of another Greek crisis this year, less than 12 months after
Athens was on the brink of ejection from the currency area by rejecting
austerity measures and defaulting on an IMF loan.
EURO

8. GLOBAL MACRO
• The Federal Reserve should raise interest rates "in the coming months" if
the economy picks up as expected and jobs continue to be generated, U.S.
central bank chief Janet Yellen said.
• U.S. economic growth slowed in the first quarter although not as sharply as
initially thought, as a surge in home building and steady inventory
accumulation partially offset the drag from a steep decline in business
investment. Gross domestic product rose at a 0.8 percent annual rate as
opposed to the 0.5 percent pace reported last month, the Commerce
Department said.
UNITED STATES

9. GLOBAL MACRO
• China's top economic planner approved two projects with a total investment
value of 54.69 billion Yuan ($8.34 billion), according to National
Development and Reform Commission website. The projects include a 134-
kilometre (83-mile) highway in the northeastern province of Jilin and a 362-
kilometre high-speed railway that will run through northern Shanxi province
and neighboring Henan province.
• Reserve Bank of India (RBI) Governor Raghuram Rajan has warned that a
"sharp" slowdown in China's growth posed a threat to the global economy,
highlighting possible impact from the shadow banking system of its neighbor.
CHINA

10. INDICES
Date Sensex Midcap Auto Bankex CD CG FMCG HC IT Metals O&G Power Realty Teck
23/05/16 25,230 10,991 17,955 18,652 11,703 12,940 7,886 15,147 11,111 7,433 9,004 1,805 1,357 6,002
24/05/16 25,305 10,973 18,012 18,703 11,693 12,902 7,901 15,014 11,075 7,446 8,913 1,803 1,355 5,978
25/05/16 25,881 11,080 18,341 19,297 11,749 13,283 8,049 15,099 11,324 7,527 9,091 1,840 1,377 6,110
26/05/16 26,367 11,191 18,540 19,725 11,757 14,450 8,148 15,099 11,464 7,594 9,179 1,868 1,402 6,180
27/05/16 26,654 11,347 18,714 19,951 11,758 14,520 8,147 15,464 11,568 7,684 9,423 1,877 1,423 6,232
5.64% 3.24% 4.22% 6.97% 0.47% 12.21% 3.31% 2.09% 4.12% 3.38% 4.66% 4.03% 4.85% 3.83%

11. COMMODITIES AND CURRENCY
Date USD GBP EURO YEN Crude (Rs. per BBL) Gold (Rs. Per 10gms)
23/5/2016 67.35 97.76 75.62 61.38 3,329 29,648
24/5/2016 67.71 98.07 75.93 61.97 3,343 29,406
25/5/2016 67.45 98.56 75.21 61.32 3,292 28,911
26/5/2016 67.29 98.95 75.22 61.34 3,238 28,863
27/5/2016 67.06 98.39 75.09 61.12 3,263 28,580
0.43% -0.64% 0.70% 0.42% 1.98% 3.60%

12. DEBT
Tenor Gilt Yield in % (Friday) Change in bps (Week)
1-Year 7.03 -2
2-Year 7.12 1
5-Year 7.43 -2
10-Year 7.47 0

13. KIASL TEAM
Jharna Agarwal
Head- Advisory
Jharna.agrawal@Karvy.com
Nupur Gupta
Lead Advisor
Nupur.gupta@Karvy.com

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