The World This Week June 10 - June 14, 2013Document Transcript
The World This WeekJune 10 – June 14, 2013
Equity View:Last week we witnessed almost 1.2% correction in Nifty which was the fourth consecutive week ofnegative closing for Nifty. What we saw unfolding was a mild correction from the peak level of 6150 ofNifty. We believe that there are no changes in the macro economic stance and we continue to be positiveon the equity markets in the short to medium term.This week is going to be quite eventful in terms of policy events. Today, RBI came out with its monetarypolicy in which it kept the REPO rate and the CRR unchanged. We have seen significant easing in themonetary policy in the last several months with 75bps cut in Repo so far this calendar.For the month of May, the WPI inflation fell to 4.7% and the core inflation to around 2.4% which mightgive RBI the necessary quotient to go ahead with rate cuts in its future monetary policies. The CPIinflation number continues to remain high at 9.3% which is still above the comfort level. We believe thatwith a normal monsoon expected this year, the food and vegetable prices would cool off which wouldindeed lead to the reduction in the CPI numbers.Fitch changed the Indian sovereign debt outlook to “Stable” from “Negative” while the rating has beenmaintained at BBB(-) and this is largely on the back of the improvement in the fiscal deficit situation ofIndia. In FY13 the Fiscal Deficit came in at 4.9% of GDP, which was better than the expectations. This yearalso, the Finance Minister has promised a fiscal deficit number of less than 4.8% of GDP.We have a big event on Wednesday in terms of FOMC meeting in which the US Fed Governor, Mr.BenBernanke, is expected to announce his stance on Quantitative Easing (QE). While there has been a lot ofdiscussion in the market on whether the QE will be rolled back or will be reduced in quantum this year,we do not see that scenario coming out. We believe that QE in the United States will continue for nextseveral months and only in 2014 we will see some kind of tapering out of QE-3.Meanwhile, the US macro economic situation continues to improve as the US unemployment number isstill at 7.5% and the US Monetary and Fiscal Authority would want to see this number to come down to6% - 6.5% in near future.
News:DOMESTIC MACRO: The headline inflation slowed for a fourth straight month in May to 4.7 percent from 4.89 percentin April 2013. Fitch Ratings returned Indias sovereign outlook back to "stable" from "negative" a year after itsinitial downgrade, surprising markets with a validation of the governments efforts to contain thefiscal deficit and revive economic growth. Indias industrial production grew less than expected, at 2 percent in April from a year earlier whichthe analysts expected to grow 2.4 % annually.GLOBAL MACROEURO The use by banks of the European Central Bank’s overnight deposit facility fell to its lowest pointsince November 2011. The overnight deposits fell to just 72bn Euro’s on Wednesday night from103bn Euro’s on Tuesday night showing a positive sign for the economy. Euro Zone Industrial Output Shows Surprise Rise in April which rose by 0.4 percent on the month,after a nearly two-year high jump of 0.9 percent in March.United States Standard & Poors on Monday removed the near-term threat of another credit rating downgradefor the U.S. credit by revising its outlook to stable from negative, citing an improved economic andfiscal outlook. U.S. retail sales rose, more than expected, 0.6 percent after edging up 0.1 percent in April. Saleshad been expected to rise 0.4 percent. And first-time applications for jobless benefits fell last week,showing signs of resilience in the economy.China China’s Finance Ministry failed to sell all of the debt offered at an auction for the first time in 23months owing to a cash squeeze that threatens to exacerbate a slowdown in the world’s second-largest economy.
Satadru Mitra Varun Goel Jharna AgarwalAbbas Naheed Kinjal MehtaDisclaimerThe information and views presented here are prepared by Karvy Private Wealth (a division of Karvy Stock BrokingLimited) or other Karvy Group companies. The information contained herein is based on our analysis and upon sourcesthat we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is forpersonal 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 owninvestment decisions based on their specific investment objectives and financial position and using such independentadvice, as they believe necessary. While acting upon any information or analysis mentioned here, investors may pleasenote that neither Karvy nor any person connected with any associated companies of Karvy accepts any liability arisingfrom 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 disclosetheir individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysisand investment recommendations are restricted in purchasing/selling of shares or other securities till such a time thisrecommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restrictedto 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. Investorsare advised to consult their respective tax advisers to understand the specific tax incidence applicable to them. We alsoexpect significant changes in the tax laws once the new Direct Tax Code is in force – this could change the applicabilityand incidence of tax on investmentsKarvy Private Wealth (A division of Karvy Stock Broking Limited) operates from within India and is subject to Indianregulations.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-SEBIRegistration No:IN-DP-CSDL-305-2005, PMS Registration No.: INP000001512”