The World This Week - 14th to 18th March, 2016

1. The World This Week
March 14 – March 18, 2016

2. Equity View:
The Indian equity market rallied 0.60% in the previous week. The reason for this was the rally in the
global markets and the strengthening of the currency. Since the budget, the Nifty and the Sensex have
rallied by more than 11% which is a big jump in a short time frame. In spite of the inflation being in the
range of 5%-5.5%, we do not expect a great jump in the near future. This has led the markets to believe
that a 25 basis points rate cut is assured. The rally in the 10 year G-Sec and the Banking & Financial
Stocks, suggests that a 25 basis point rate cut has been factored in. This rate cut can be expected
anywhere between today and the next monetary policy meet on 5th
April.
We can expect a 50 to 75 basis point rate cut for the calendar year as against the initial expectation of a
25 to 50 basis point rate cut. This is in line with the US Fed thought process. The US Fed kept the key
rates unchanged in the previous week’s Fed Policy meet. Due to uncertainties in the global markets, the
Fed has relaxed its aggressive stance on rate hikes. We expect 2 rate hikes in 2016, instead of the initial
expectation of 4 hikes. This has led to the hike in the global markets and the strengthening of emerging
market currencies.
The current week would be a short one with only 3 trading days, and with the expiry in the next week, we
would expect some profit booking during this period.

3. News:
DOMESTIC MACRO:
 The government cut interest rates on Friday for term deposits offered to millions of small savers to align
them with market rates, which have come down after rate cuts by the Reserve Bank of India (RBI) last year.
 The Indian government will borrow a gross 3.55 trillion rupees ($53.43 billion) via bonds in April-
September, or 59 percent of its borrowing plan for the next fiscal year.
GLOBAL MACRO
EURO
 European lenders have made important progress in talks with Greece on tax and pension reforms that are
part of a package of measures Athens must adopt to win new loans and debt relief.
 Deutsche Boerse AG and London Stock Exchange Group Plc (LSE) agreed to combine in a $30 billion deal to
create a European trading powerhouse better able to compete with U.S. rivals encroaching on their turf.
United States
 The S&P 500 closed in positive territory for the year for the first time in 2016, leading a gauge of stocks
across major markets to a fifth week of gains, its longest weekly run in more than two years.
 The U.S. dollar index dropped to a five-month low on Thursday while shares on Wall Street rallied to lead
global equities higher as a dovish U.S. Federal Reserve emboldened investors to take on more risk.
China
 Over two weeks after the United Nations slapped harsh new sanctions on North Korea, several Chinese
shipping and trade sources say they have not been told of any curbs on the import of coal from the isolated
nation - a lifeline for its struggling economy
 China's hedge fund industry has been thrown into disarray as managers rush to comply with stringent new
rules, introduced overnight, that could see over half the industry shut down by August

4. Indices:
Commodities and Currency:
Date USD GBP EURO YEN
Crude (Rs.
per BBL)
Gold (Rs.
Per
10gms)
14-03-2016 67.02 96.34 74.80 58.90 2583 29499
15-03-2016 67.23 95.92 74.64 59.31 2492 29034
16-03-2016 67.37 95.17 74.76 59.40 2443 28952
17-03-2016 66.88 95.16 75.07 59.59 2591 29496
18-03-2016 66.61 96.32 75.30 59.87 2689 29050
0.93% -0.42% -0.87% -0.94% 0.31% 0.06%
Debt:
Tenor
Gilt Yield in %
(Friday)
Change in bps
(Week)
1-Year 7.28 -5
2-Year 7.36 -10
5-Year 7.70 -6
10-Year 7.52 -11
Date Sensex Midcap Auto Bankex CD CG FMCG HC IT Metals O&G Power Realty Teck
14-03-2016 24,804 10,303 17,344 17,386 11,585 12,294 7,557 16,024 10,830 7,327 8,787 1,708 1,176 5,836
15-03-2016 24,551 10,222 17,223 17,450 11,587 12,268 7,440 15,541 10,738 7,341 8,812 1,705 1,175 5,782
16-03-2016 24,682 10,180 17,134 17,603 11,168 12,260 7,501 15,588 10,830 7,285 8,792 1,703 1,173 5,813
17-03-2016 24,677 10,233 17,101 17,592 11,176 12,392 7,537 15,395 10,926 7,277 8,991 1,708 1,162 5,864
18-03-2016 24,953 10,300 17,334 17,852 11,273 12,474 7,582 15,269 11,178 7,433 9,029 1,716 1,181 5,991
0.60% -0.02% -0.05% 2.68% -2.69% 1.46% 0.33% -4.71% 3.21% 1.45% 2.76% 0.48% 0.41% 2.66%

5. Kaushik Dani Jharna Agarwal
Nupur Gupta Mihir Vaidya
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