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The World This Week - December 9th to 14th December
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The World This Week - December 9th to 14th December


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The World This Week 9th Dec- 14th Dec

The World This Week 9th Dec- 14th Dec

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  • 1. The World This Week Dec 09 – Dec 14, 2013
  • 2. Equity View: The last meeting of Fed this year is expected on the 17th or 18th of December. A lot of expectations and speculations are there that some tapering of the QE which was expected since several months now might start. Our own sense is that till the time US fiscal issues are resolved in adequate fashion, we would not see meaningful tapering therefore either no tapering would be there or a very small tapering of US$ 5 Bn a month from the current US$ 85 Bn of bond buying program is expected. Thus, no significant threat is expected to the emerging market equities and bonds in the short term. We believe that US is going to face significant fiscal headwinds going to next year and therefore no meaningful tapering would begin as of now. Tough we saw the last couple of tapering activities had actually started with negative movement in Indian equities and currency. However we believe that this time, India is much better prepared both from a currency and market perspective and hence even the worst case reaction should not be similar to the one we saw last time in August and September. In India, there is an RBI meeting on the 18th this month and there are expectations of further Repo rate hike due to two key data points which came last week. CPI for the previous month came at 11.24% which is significantly higher than market expectations. We believe the Core CPI which is the number that RBI tracks has continued to be flattish at 8% thus there could be a 25 bps hike in the Repo which is largely priced in by both bond and equity markets hence it should be a non-event for the markets. It is important to note that food and vegetable prices are the leading causes of the elevated CPI that we have seen in the last few months and this should cool off in the next two months which could bring the CPI number below 10 however, we would expect both the CPI and WPI to stay at elevated levels with WPI around 6.57% and CPI around 10% in the remaining months of the current fiscal. A large part of the rate tightening would be finished by the end of this week and we would not expect the Repo rates to significantly go up after 8% levels. The Trade Deficit data for the last month was around US$ 9.2 Bn which is better than expectations. Rupee depreciation has led to a significant increase in exports and we expect good set of numbers to continue going forward hence we would expect the CAD situation to be largely under control and CAD for the full year would be 3.5% of the GDP which is more or less in line with government’s expectations. Hence we don’t expect a lot of pressure on the Rupee in the short to medium term.
  • 3. News: DOMESTIC MACRO:  Annual retail inflation accelerated to 11.24 percent in November from 10.17 percent the previous month while India's WPI inflation for November -is seen growing at 7 percent year-on-year.  India's industrial production contracted for the first time in four months with a 1.8 percent slump in October after growing 2 percent in September.  India's planned 500 billion rupee debt switch programme will be done through the bond market wherein the government will buy short dated debt maturing in fiscal years 2014/15, 2015/16 and 2016/17, but in turn selling longer-dated bonds to markets in a bid to spread out redemptions. GLOBAL MACRO EURO  An analysis of the third-quarter results of Europe's 30 largest banks found that almost two thirds of the 27 that report detailed quarterly figures said their balance sheets were less risky at the end of September than at the end of June. United States  The first Swiss banks have signalled their readiness to work with U.S. officials in a crackdown on wealthy Americans evading taxes and many more banks are expected to follow in the coming weeks China  Annual consumer inflation unexpectedly slowed to 3 percent in November from an eight-month high of 3.2%.  Prices for pre-owned homes and apartments in Beijing rose 19 percent in October from a year ago. Indices: Date Sensex Midcap Auto Bankex CD CG HC IT Metals O&G Power Realty Teck 9/12/2013 21,326 6,420 12,466 13,755 5,802 10,602 6,395 9,527 8,467 9,789 8,882 1,733 1,401 4,797 10/12/2013 21,255 6,403 12,455 13,511 5,749 10,286 6,451 9,565 8,642 9,879 8,850 1,662 1,380 4,867 11/12/2013 21,171 6,396 12,324 13,459 5,717 10,142 6,487 9,540 8,618 9,817 8,774 1,658 1,373 4,847 12/12/2013 20,926 6,383 12,054 13,268 5,675 10,039 6,444 9,456 8,557 9,682 8,659 1,665 1,369 4,811 13/12/2013 20,716 6,303 12,034 12,970 5,622 9,411 8,557 9,621 8,564 1,628 1,340 4,802 9,852 FMCG 6,401 -2.86% -1.82% -3.46% -5.71% -3.11% -7.07% 0.08% -1.22% 1.07% -1.71% -3.58% -6.09% -4.38% 0.11%
  • 4. Commodities and Currency: Gold (Rs. Per 10gms) Date USD GBP EURO YEN Crude (Rs. per BBL) 9/12/2013 61.18 100.01 83.82 59.38 6883 29921 10/12/2013 61.21 100.65 84.15 59.29 6692 30242 11/12/2013 61.33 100.79 84.38 59.72 6695 30443 12/12/2013 61.62 100.84 84.98 60.03 6728 30194 13/12/2013 62.13 101.53 85.41 59.90 6696 30025 -1.53% Rupee Depreciated -1.50% Rupee Depreciated -1.87% Rupee Depreciated -0.87% Rupee Depreciated 2.72% -0.35% Debt: Tenor Gilt Yield in % (Friday) Change in bps (Week) 1-Year 9.03 48 2-Year 8.50 4 5-Year 8.99 29 10-Year 8.91 -25
  • 5. Satadru Mitra Varun Goel Nupur Gupta Jharna Agarwal Kinjal Doshi Disclaimer The information and views presented here are prepared by Karvy Private Wealth (a division of Karvy Stock Broking Limited) or other Karvy Group companies. 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. 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 nor any person connected with any associated companies of Karvy accepts any liability arising from the use of this information and views mentioned here. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the abovementioned companies 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. The 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 investments Karvy Private Wealth (A division of Karvy Stock Broking Limited) operates from within India and is subject to Indian regulations. Karvy Stock Broking Ltd. is a SEBI registered stock broker, depository participant having its offices at: 702, Hallmark Business plaza, Sant Dnyaneshwar Marg, Bandra (East), off Bandra Kurla Complex, Mumbai 400 051 . (Registered office Address: Karvy Stock Broking Limited, “KARVY HOUSE”, 46, Avenue 4, Street No.1, Banjara Hills, Hyderabad 500 034) SEBI registration No’s:”NSE(CM):INB230770138, NSE(F&O): INF230770138, BSE: INB010770130, BSE(F&O): INF010770131,NCDEX(00236, NSE(CDS):INE230770138, NSDL – SEBI Registration No: IN-DP-NSDL-247-2005, CSDL-SEBI Registration No:IN-DP-CSDL-305-2005, PMS Registration No.: INP000001512”