Equity View:Last week, we saw the rally in the equity markets continuing with Nifty gaining around 1.5% and Sensexgaining around 1%. The current rally seems to be a globally synchronized rally in which global equitymarkets across the world are rallying sharply. We are witnessing U.S. Markets continuing to make freshlifetime highs, Japanese markets continuing to make fresh 5 year highs and even European markets,especially Germany, making new lifetime highs. Other equity markets across the world also joined thisrally with fresh 52 week highs being made in various Global Equity markets. Southeast Asian marketshave emerged clear leaders as far as the emerging markets are concerned. Argentinean markets too havemade new 52 week highs. We believe this equity market rally continues on the back of reversal in trendof other asset classes, primarily gold, as well as the sharp bounce back in global macro economic growththat we are seeing across the world.U.S. GDP growth data for Q1 came in last week at 2.9%. This was slightly higher than expectation and webelieve that U.S. Economy’s growth will continue to be strong for the next few quarters. Japan has alsodelivered a positive GDP growth after a long time and they are looking at an annualized GDP growth of3.5% - something quite phenomenal by their standards.In India, we have the Q1 FY14 GDP growth data coming on 31st of this month. Our sense is that IndianGDP growth has bottomed out at 4.5% last quarter and we would see our numbers closer to 5% whichwill also signal that growth has started to turn around and will continue to bounce back in the next fewquarters.We saw the WPI Inflation numbers for April at 4.89% - a 41 month low - on the back of which market isdiscounting a fresh repo rate cut on 17th of June. We expect that RBI will cut repo by 25 bps in this policyfollowed by one more cut by end of September. Inflation will continue to stay muted till end ofSeptember on the back of higher base and sharp fall in food price inflation.The Q4 earning season is almost coming to an end with most of the companies having delivered resultswhich are either in line with the expectations or better than expectations. Private sector banks have beenthe leaders with the best results of the whole pact. Pharma and FMCG have also delivered very goodnumbers in this quarter and we continue to be positive on all the three sectors mentioned above.The sector that we are increasingly turning more and more bullish is the oil and gas space. We’ve seen asharp cool off in crude oil prices in the global markets with Brent crude trading around $104- $105 perbarrel. This coupled with a gradual increase in diesel prices which has almost resulted in a scenario wherediesel subsidy has reduced from Rs 11/litre in Jan 2013 to Rs 2.5-3/litre currently, we believe that if thegovernment continues with the price hikes of 50 paisa per month, this under recovery will become closeto zero in the next 6 months. This would result in significant savings for both Oil & Gas upstream anddownstream companies and also positively impact the government on the subsidy front. Hence we haveturned quite bullish on the Oil & Gas marketing companies and the upstream companies and believe thatthe sector should do quite well in the times to come.
News:DOMESTIC MACRO: Standard & Poors reiterated its BBB- rating with negative outlook on Indias credit rating, which isone notch above "junk", warning of the need to follow through on reforms and dealing a blow to agovernment that had recently pitched for an upgrade. The wholesale price index rose 4.89 percent from a year earlier and was the lowest inflation ratesince November 2009 and well below 5.96 percent rise in March. India is set to start the long-awaited sale of inflation-linked government bonds next month, whileLarsen & Toubro became the first domestic company to issue such debt, offering higher effectiveyields in an economy plagued by high inflation. The Reserve Bank of India will sell 10-20 billionrupees of bonds linked to the wholesale price index (WPI) on June 4 to both domestic and foreigninstitutional investors.GLOBAL MACROEURO The International Monetary Funds executive board approved a $1.3 billion, three-year loan toCyprus on Wednesday, part of a larger international bailout to help the Mediterranean countryavoid defaulting on its debt. The 17-nation economy shrank 0.2 percent in the January to March period, the EUs statistics officeEurostat said.US The US consumer price index dropped 0.4 percent in April, bring the 12-month inflation rate downto 1.1 percent, the Bureau of Labor Statistics said Thursday. U.S. President Barack Obama on Monday urged Britons to watch whether European Union reformswere successful before deciding whether to leave the multi-nation bloc, backing the position takenby British Prime Minister David Cameron.China Annual industrial output grew 9.3 percent in April, according to data released by the NationalBureau of Statistics on Monday, up from a seven-month low hit of 8.9% in MarchIndices:Date Sensex Midcap Auto Bankex CD CG FMCG HC IT Metals O&G Power Realty Teck13/05/2013 19692 6445 11037 14381 7601 9732 6666 8821 5952 8611 8688 1748 1888 358214/05/2013 19722 6462 11015 14395 7513 9748 6660 8880 5965 8610 8717 1755 1880 360515/05/2013 20213 6564 11268 14963 7635 10040 6757 9062 5986 8770 8907 1783 1956 362716/05/2013 20247 6592 11200 15129 7597 10124 6686 9200 5927 8823 9054 1789 1992 359617/05/2013 20286 6614 11202 15214 7542 10423 6683 9164 5947 8794 9032 1844 2032 35943.0% 2.6% 1.5% 5.8% -0.8% 7.1% 0.2% 3.9% -0.1% 2.1% 4.0% 5.5% 7.7% 0.4%
Commodities and Currency:Debt:Tenor Gilt Yield in % (Thursday) Change in bps (Week)1-Year 7.59 152-Year 7.27 -135-Year 7.32 -1110-Year 7.41 -18Date USD GBP EURO YENCrude(Rs. per BBL)Gold(Rs. per 10 gms)13/05/2013 54.92 84.44 71.32 54.03 5667 2694114/05/2013 54.63 83.67 71.02 53.85 5646 2700515/05/2013 54.78 83.38 70.72 53.55 5605 2674616/05/2013 54.77 83.31 70.46 53.50 5680 2620317/05/2013 54.89 83.66 70.58 53.54 5684 2625518/05/2013 5743 261650.1%RupeeAppreciated0.9%RupeeAppreciated1.0%RupeeAppreciated0.9%RupeeAppreciated1.3% -2.9%
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