2. Equity View:
Last week Indian equity markets corrected by 0.5% over previous week’s closing. This small correction
was largely on the back of concerns about the status of the finance bill that has been discussed in the
parliament. In the last couple of weeks the government has been pushing ahead with various bills.
However, there are some concerns that the new banking reforms might bring some problems, which
would not allow smooth passage of the bill in the parliament. We believe that government will continue
to push through some of these reform methods. This week we might see the tabling of the Insurance Bill
and the Pension Bill which seeks to increase the FDI limit in Insurance from current 26% to 49% and allow
FDI in Pension.
The government has decided to clear the land acquisition bill which has been formulated keeping in mind
the new compensation policy for the land owners. According to this any acquisition of land by private
parties will require mandatory 80% consent from land owners which will result into manifold increase in
the settlement and compensation load. Once we have more clarity, it would help in clearance on lot of
large projects which are held up in the last few years because of lack of clarity in the land acquisition bill.
We also have the monetary policy tomorrow where we are expecting a cut in CRR of 25 bps. We are not
expecting any repo rate cut from tomorrow’s review. We believe that RBI will carry out repo cuts in
January review. We expect 50 basis points repo cut in January review by RBI.
In terms of global events the markets continue to discuss and talk about the impending Fiscal Cliff in US.
We believe that there might be last minute compromises being made and the markets will continue to
swing in the short term. This will not have an immediate big negative impact for the markets, at least
from a base rate expectations point of view. We continue to look at it but we don’t believe that it has
potential to change the trajectory of the Indian stock market.
News:
DOMESTIC MACRO:
The wholesale price index (WPI), India's main inflation gauge, rose 7.24 percent from a year earlier,
below expectations for a rise of 7.6 percent and below October's 7.45 percent. An easing in annual fuel
and manufacturing inflation helped rein in price pressures.
The index of industrial production (IIP) grew 8.2 percent annually. September output growth was revised
down to a contraction of 0.7 percent from a contraction of 0.4 percent.
The RBI proposed in its draft guidelines to raise the Tier I capital requirement for non-bank lending
institutions with significant exposure in stocks, real estate, and commodities to 12 percent from the
minimum of 7.5 percent now.
GLOBAL MACRO
EURO
Fitch Ratings stuck by its triple-A rating on France in a much-awaited review on Friday but warned that an
expected peak in debt in 2014 was the limit it could agree to for a country with a top-notch credit grade.
Britain's prized triple-A credit rating came under fresh threat on Thursday, after ratings agency Standard
& Poor's cut its outlook for UK government debt to negative.
3. European leaders agreed on Friday to press on with further steps to tackle their debt crisis but German
Chancellor Angela Merkel threw out a proposal to boost risk-sharing with a fund to help euro zone states
in trouble.
US
The U.S. Federal Reserve, announcing a new round of monetary stimulus, took the unprecedented step
on Wednesday of indicating interest rates would remain near zero until unemployment falls to at least
6.5 percent. Officials committed to buy $45 billion in longer-term Treasuries each month on top of the
$40 billion per month in mortgage-backed bonds they started purchasing in September.
The "fiscal cliff" impasse is raising the odds that Congress will fail to meet a year-end deadline to avert
steep tax hikes and budget cuts that could push the nation into another recession.
China
China's foreign exchange regulator has removed the $1 billion limit for foreign sovereign wealth funds,
central banks and monetary authorities buying Chinese assets through the Qualified Institutional Investor
Programme (QFII).
4. Satadru Mitra Varun Goel Jharna Agarwal
Abbas Naheed Kinjal Mehta
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 above-
mentioned 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”
