3. EQUITY VIEW
• The Q4 results during the previous week were broadly in line with estimates. Going forward, the results will be
similar or slightly higher than expectations this results season. There might be an optical improvement in the
performance of poorly run banks, be it PSU banks or smaller private sector midcap banks on the back of the
breather given by RBI to these banks with respect to recognition of bad assets. On this backdrop, these high beta
stocks saw a sharp rally during the previous week. Such rallies should be used to sell off such stocks rather than
buying into them.
4. EQUITY VIEW
• This relief or laxity in terms of recognising bad assets does not change the fundamentals of these banks. The
hawkish attitude of the RBI enabled us to know the bad assets which these banks were sitting on. Investors should
not compound their mistakes by buying into these banks basis the leeway given by RBI to these banks. As an
illustration, we can refer to the aftermath of the 2008 crisis. The RBI had given banks a regulatory forbearance and
many PSU banks to not recognise or gave them a long rope in recognising bad Assets. The result of this was that
many PSU banks outperformed the market to a large extent. But as of 2016, many of these banks are not even
50% of their market caps in their 2010 peak levels.
• On the global front, we had disappointing earnings from Microsoft and tepid growth from Google. This does not
bode well for the markets and we can expect some selling pressure in the market. The rally which we saw from
7200 to 7900 was dictated to a large extent by Risk on, which was a sharp rally in the commodities and the global
indices. The current market scenario can be looked at as a buy on decline market.
6. DOMESTIC MACRO
• Foreign Direct Investment into India touched the "highest ever" mark of $51 billion during the April-
February period of last fiscal ended March 31, The Secretary the Department of Industrial Policy and
Promotion (DIPP) said that healthy business climate has been created in the county so that investments
are promoted
• Building on their buying momentum, foreign investors have poured close to $2 billion into capital markets
so far in April, driven by hopes of a good monsoon and positive macroeconomic data. It comes following
a staggering inflow of Rs. 19,967 crore in the capital markets — both equities and debt — last month.
7. GLOBAL MACRO
• Several more countries and offshore territories have joined a scheme to
clamp down on tax evasion and corruption launched by the continent's
biggest nations, Britain's finance ministry said. Nineteen additional
authorities have agreed to automatically share information on who ultimately
owns companies after the plan was announced last week by Britain,
Germany, France, Italy and Spain.
• Germany announced Wednesday a growth forecast for its economy in the
current year and the next, vowing that an unprecedented flow of refugees
into the West European country could be mastered. Economy Minister
Sigmar Gabriel said Berlin is penciling in an economic growth of 1.7 percent
for 2016 and 1.5 percent for 2017.
EURO
8. GLOBAL MACRO
• U.S. Federal Reserve policymakers are expected to hold interest rates
steady when they meet this week, but may tweak their description of the
economic outlook to reflect more benign conditions, leaving the path open
for future rate rises.
• Borrowing by U.S. companies to spend on capital investment declined 11
percent in March from a year earlier, trade association Equipment Leasing
and Finance Association (ELFA) said. Companies signed up for $8.1 billion
in new loans, leases and lines of credit last month, up 33 percent from
February, said ELFA, a Washington-based trade association that reports
economic activity for the $1 trillion equipment finance sector
UNITED STATES
9. GLOBAL MACRO
• China's future monetary policy will avoid encouraging companies to take on
more debt and will consider the impact of money supply on prices, an
influential central bank economist was quoted saying by the Financial News.
• China’s property-led economic rebound gathered pace in April, according to
the earliest batch of private indicators for the month. Gauges from four
providers all increased in April from March, while sub-indexes for
employment showed stronger demand for workers. Still, not all the clouds
have parted: data tracking the outlook of businesses show companies
remain reluctant to invest.
CHINA
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