The World This Week - September 23 - September 27, 2013


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The World This Week - September 23 - September 27, 2013

  1. 1. 11 The World This Week September 23 – September 27, 2013
  2. 2. 2 Equity View: As we’re all aware, U.S. Federal Reserve’s Chairman Mr. Ben Bernanke’s term is scheduled to end around first week of January 2014. Ms. Janet L Yellen, the current Vice Chairwoman of the Board of Governors of the Federal Reserve System; is expected to become the next Fed chief. A formal announcement regarding the same should happen somewhere in the next two weeks. As far as the domestic events are concerned, soon we will see the beginning of Q2 FY14 earnings season. We expect sectors like IT, FMCG, Pharmaceuticals and Telecom to deliver very strong results this quarter. Selectively, Private Sector Banks and Automobiles are also expected to deliver decent earnings. A lot of Public Sector Banks will show sharp cut in the bond portfolios because of the turn up in the bond yields. Also, there has been no revival in the CAPEX cycle and we also expect the Capital Goods and the Real Estate space to deliver muted figures. In terms of Macroeconomic data points, Auto Sales numbers which would be coming up in the next few days would drive the equity markets. We expect the four wheeler sales number to stay muted. We have had a good monsoon this season and expect agricultural auto sales to look better as tractor sales during this time would go up and we believe that Auto companies would tap this opportunity. Soon we would also be seeing the beginning of the festive season and in the next few months we would expect good festive sales as far as two wheeler companies are concerned. Also, Infrastructure sector data would also be released shortly. We believe that CAPEX expansion activity continues to be really soft and there are no signs of any revival in that space. So we expect the sector data to continue to disappoint. Inflation continues to stay at elevated levels considering the fact diesel and the petrol prices have gone up in the recent past. Higher Fuel and Food Price Inflation are expected to take the headline inflation numbers further upwards when the WPI numbers would be released next. The WPI numbers which would be released in the second week of the October are expected to be around 6%.
  3. 3. 3 News: DOMESTIC MACRO:  The current account deficit, which hit a record high in the last fiscal year, is expected to rise in the June quarter from the previous three-month period before easing due to sharp fall in gold imports and improving exports. In a bid to narrow the gap, which has been fuelled by heavy oil and gold imports and sluggish exports, the government increased the gold import duty three times this year to 10 percent.  India-Africa trade has crossed USD 70 billion in 2012 and is expected to reach USD 100 billion by 2015. GLOBAL MACRO EURO  In Cyprus there have been 25% pay cuts. 40% increase in unemployment. Europe may be recovering but Cyprus is still battling for survival. Markit's Euro zone preliminary PMI measure jumped to 52.1 in September from last month's 51.5, its highest since June 2011 and beating expectations for a reading of 51.9. USA  In U.S, payrolls rose by 180,000 workers, the most since April, after a 169,000 gain the prior month. US manufacturing purchasing manager’s index (PMI) retreated to 52.8 this month from 53.1 in August, indicating expansion. The Fed surprised markets last week by postponing a reduction of its $85bn-a-month bond-buying programme, while downgrading its growth forecasts. China  The Chinese flash HSBC PMI climbed to 51.2 this month from 50.1 in the month of August, hitting a high not seen since March.  A free-trade zone in Shanghai, China's economic hub has been launched as the world's second- biggest economy prepares to test long-awaited economic reforms. Eighteen sectors, ranging from finance to shipping, will have regulations loosened in the zone. Indices: Date Sensex Midcap Auto Bankex CD CG FMCG HC IT Metals O&G Power Realty Teck 23/09/2013 19,901 5,605 11,073 11,631 5,956 7,807 6,935 9,259 7,882 8,659 8,595 1,512 1,231 4,478 24/09/2013 19,920 5,610 11,190 11,598 5,970 7,888 6,936 9,279 7,846 8,572 8,563 1,524 1,228 4,457 25/09/2013 19,856 5,616 11,182 11,489 5,949 8,003 6,858 9,397 7,850 8,673 8,446 1,552 1,221 4,481 26/09/2013 19,894 5,628 11,192 11,495 5,890 8,053 6,896 9,476 7,829 8,721 8,350 1,565 1,213 4,471 27/09/2013 19,727 5,622 11,162 11,284 5,829 7,938 6,926 9,472 7,835 8,581 8,362 1,547 1,195 4,459 -0.87% 0.30% 0.80% -2.98% -2.14% 1.69% -0.13% 2.31% -0.60% -0.90% -2.71% 2.28% -2.93% -0.43%
  4. 4. 4 Commodities and Currency: Date USD GBP EURO YEN Crude (Rs. per BBL) Gold (Rs. Per 10gms) 23-09-2013 62.52 100.25 84.67 63.17 6798 29489 24-09-2013 62.65 100.46 84.59 63.32 6762 29554 25-09-2013 62.69 100.27 84.45 63.57 6807 29902 26-09-2013 62.22 100.05 84.10 62.84 6791 30030 27-09-2013 61.81 99.49 83.42 62.66 6796 29818 1.15% Rupee Appreciated 0.76% Rupee Appreciated 1.50% Rupee Appreciated 0.81% Rupee Appreciated -0.03% 1.12% Debt: Tenor Gilt Yield in % (Friday) Change in bps (Week) 1-Year 9.28 35 2-Year 8.67 -2 5-Year 8.78 1 10-Year 8.71 14
  5. 5. 5 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”