The World This Week -21st to 26th Sept, 2015

1. The World This Week
September 21 – September 25, 2015

2. Equity View:
The US Fed Chairperson Janet Yellen, last week, reiterated the possibility of a rate hike. While this was
already anticipated by sensible investors to happen in three-six months, the short term guess could be
dangerous as there is no certainty about the time and quantum of this rate hike.
In India, RBI bi-monthly monetary policy review is due on 29th
September. As per the Governor Dr. Rajan,
the recent CPI (Consumer Price Index) number of 3.6% is low due to change in base effect and if
normalized it would be around 5 – 5.5%. Thus, there may not be a steep rate cut but since the macro
economic factors are low and inflation is expected to be well below the March 2016 forecast of 5% there
could be a 25bps rate cut with a strong caveat that further rate cuts will totally depend on transmission
seen by banks ultimately passing the benefit to consumers. Such a small rate cut will not actually improve
the health of the economy to a great extent because large banks may pass on benefit to the extent of 10
- 15bps in the form of a lower base rate. It is symbolic step in the right direction but this may not lead to
any dramatic effect in the economy however markets will be excited for a short term period. Sectors like
Auto, Private Banks, IT, FMCG and selectively, Pharma or Infrastructure are positive from 2 – 3 years
point of view and if the tenor is longer and buying may happen on declines then wider choices could be
available in Infrastructure and Public Sector Banks space.
The position of large private banks is relatively better than their public sector counterparts in terms of
NPA’s (Non Performing Assets). They have taken important steps in last three years and a lot of pain is
actually out of system in terms of prudent provisioning. They might not run up a lot but as happened in
the last correction, they corrected but many of them bounced back. These are the stocks which should be
bought on declines and should be held for long term with patience.
News:
DOMESTIC MACRO:
 Government says the minimum alternate tax (MAT) will not apply to foreign companies that do not have a
permanent establishment or a place of business in India.
 Government is in discussions with the RBI to ease some of the rules for external commercial borrowings.
 Government is planning to push for the passage of bills like GST and Real Estate in the next session of
Parliament.
 Asian Development Bank (ADB) lowers growth projections for India for the current fiscal to 7.4%, from the
7.8% earlier, citing weak monsoon, poor external demand and inability of the government to push
economic reforms in Parliament.
GLOBAL MACRO
EURO
 Eurozone manufacturing PMI fell to 52 in September from 52.3 in August.

3.  Eurozone services PMI came in at 54 in September compared to 54.4 in August; the composite
PMI was 53.9 in September compared to 54.3 in August.
 Public-sector net borrowing in the UK (excluding banks) rose to 12.1bn pounds in August, marking an
increase of 1.4bn pounds compared to the same month last year.
United States
 US GDP rose at an annual rate of 3.9% in April-June, higher than the previous estimate of 3.7%; in the
previous quarter the economy grew at a rate of 0.6%.
 US new home sales increased 5.7% to a seasonally adjusted annual rate of 552,000 units in August; the
reading for July was upwardly revised to 522,000.
 US durable goods fell 2% in August compared to July’s rise of 1.9%.
China
 Government is in discussions with the RBI to ease some of the rules for external commercial borrowings.
Indices:
Date Sensex Midcap Auto Bankex CD CG FMCG HC IT Metals O&G Power Realty Teck
21/09/15 26,193 10,693 17,601 20,113 10,135 15,646 7,531 17,446 11,230 7,286 8,726 1,872 1,341 6,144
22/09/15 25,652 10,525 17,297 19,502 10,123 15,160 7,465 17,365 11,206 6,977 8,615 1,814 1,307 6,115
23/09/15 25,823 10,574 17,300 19,785 10,295 15,230 7,500 17,487 11,246 6,984 8,701 1,809 1,320 6,113
24/09/15 25,864 10,598 17,317 19,696 10,499 15,058 7,573 17,617 11,473 6,888 8,635 1,809 1,328 6,211
-1.26% -0.89% -1.62% -2.07% 3.60% -3.75% 0.56% 0.98% 2.16% -5.46% -1.05% -3.38% -0.93% 1.09%
Commodities and Currency:
Date USD GBP EURO YEN
Crude
(Rs. per BBL)
Gold
(Rs. Per 10gms)
21/09/2015 65.75 102.16 74.37 54.83 3129 26630
22/09/2015 65.62 101.73 73.26 54.50 3217 26177
23/09/2015 65.96 101.19 73.37 54.92 3221 26146
24/09/2015 66.09 100.88 73.95 55.08 3150 26424
25/09/2015 - - - - 3184 -
-0.51%
Rupee
Depreciated
1.27%
Rupee
Appreciated
0.57%
Rupee
Appreciated
-0.45%
Rupee
Depreciated
1.76% -0.77%
Debt:
Tenor Gilt Yield in % (Friday) Change in bps (Week)
1-Year 7.50 2
2-Year 7.66 0
5-Year 7.86 1
10-Year 7.71 0

4. Phani Sekhar Ponangi Jharna Agarwal
Nupur Gupta Aakash Mehta Ridhdhi Chheda
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