Equity View:Last week, we saw a big bounce back in the Indian equity markets with almost a 4% move in Nifty andSensex. The concerns about the budget which have been bothering the markets have been largelyaddressed. There were a lot of concerns about the FII taxation and the TRCs (Tax residency Certificates)for various entities operating out of Mauritius. Those have been adequately addressed by the FinanceMinister Mr. P. Chidambaram.As we have mentioned earlier, we believe that the budget was a non-event for the market and themarket seems to have shoved off budget and will now look forward to the global cues for the short termdirection. We also have the very important RBI policy on the 19th of this month. There is also anexpectation of further repo rate cuts; and we expect a 25 bps repo rate cut in this policy.In terms of key data points which will help the RBI take a call on further monetary easing, there will be IIPand WPI inflation numbers being released for last month. We expect WPI inflation to continue to bebelow 7% and more importantly - the core inflation to be around 4 – 4.5%. This will give RBI thenecessary cushion to go out and do further rate cuts. In terms of IIP data we’ve seen a muted industrialproduction output for last 8-9 months and we expect this month’s number to show a slight uptick. The 9months average is around 1 - 1.5% and we think that this month’s number can be closer to 2-2.5%.In terms of global markets, we saw Dow Jones Index crossing its lifetime high. The previous high of DowJones was in September 2007 which was 14,167 and it closed at 14,300 levels which is on back of thegrowing optimism about the revival in U.S economy. We have seen continuous improvement in the U.Seconomy in terms of jobs being added, unemployment rate coming down and also uptick in PMI both inmanufacturing and services.We believe that India would also participate in the global rally which has been unfolding for some timeand we maintain a positive stance on the markets. We believe that in the last 1-1.5 month’s correctionthere is a significant cool off in mid-cap stocks. The mid-cap index as a whole corrected almost 15% fromits peak and there are several stocks which corrected in the range of 15%, 20% and 25%. This correctionleaves a very good entry opportunity for most of these Mid-cap ideas.So one must recommend investors to go out and increase allocation to equities, specifically in the mid-cap segment.
News:DOMESTIC MACRO: India is set to halt all crude imports from Iran because insurance companies in the country have said refineries processing the oil will no longer be covered due to Western sanctions, the head of refiner MRPL said on Friday. So far this fiscal since April 6, banks advances grew around 9.2 percent, compared with 11.8 percent a year earlier, while deposit growth was also around 7.6 percent compared with 11.7 percent in the same period a year ago.GLOBAL MACROEURO Las week, the 17-country blocs central bank discussed cutting interest rates, but decided to keep them on hold, citing positive economic survey indicators, which in turn suggest the ECB is ready to keep rates at 0.75 percent barring the economy taking another turn for the worse. The euro zone may need higher inflation in countries like Germany and lower interest rates across the bloc to ensure a sustained economic recovery brings palpable benefits, the head of the IMF said on Friday.US The unemployment rate in February fell to 7.7 percent, the lowest since December 2008 as more people found work and others gave up the hunt. In January 2013, the rate was 7.9% President Barack Obama said he is looking for compromise in the coming months to end a two- year fight with Congress over how to reduce the deficit, promising Americans in his weekly radio address that he will try to find common ground with lawmakers.China Chinese imports for February were surprisingly weak, falling 15.2 percent from a year earlier. Exports rose 21.8 percent in February from a year earlier. China put its fast-growing consumer class at centre-stage as outgoing Premier Wen Jiabao set out a reform plan on Tuesday to spread the fruits of economic growth more evenly in the country of 1.3 billion.
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