2. Equity View:
Display of the much awaited GST committee report marked an important development last week. One of
the key concerns was 1% inter-state tax which the government wanted other states to compensate to the
Goods manufacturing states like Maharashtra, Gujarat, Tamil Nadu, etc however opposition and the
committee report did not agree to it. This week the debate may continue to Rajya Sabha. Another issue
was the Revenue neutral rate. As per the committee, the revenue neutral rate should be between 15% -
17% which is not very different from current rate of 14%. However this point is important because once
agreed, taxation on services sector might go up and for goods it might come down.
Inflation data is touching the RBI’s upper end of the target and in its recent monetary policy review, RBI
kept policy rates unchanged. While GDP growth was in line with the expectations there will be a close
watch on how inflation behaves in the coming months.
On global front, US Fed rate hike is the talk of the town and it is expected that this time they will move on
with the rates. There can be two scenarios of the impact of US Fed’s decision. If the rates are not raised
then there would be hawkish commentary in turn impacting expectations of rate hike next time and, if
the rates are hiked then the quantum would be observed. A 10 bps is expected and if it holds true then it
would be non-event for markets as they have already discounted it and if the quantum is about 25 bps
which is highly unlikely then approx. 200 points correction in Nifty could be seen. Tax free bonds
issuances may not impact market movements much.
The factors which will impact domestic market movements in the coming few months are – GST bill,
Budget, Pay commission, etc. Asset class allocation on a broader level is done on margin of safety. This
means whenever equities have underperformed for a year followed by another year and if it continuous
for 3 years then generally, 4th
and 5th
year outperform. This year markets are down 8% (Y-o-Y). Entering
into the markets after 2 years of underperformance has higher margin of safety than entering after 1
year of underperformance. The caveat remains holding high beta stocks in which case, if markets are
down 5% then stocks could be down 30%. There is a higher margin of safety in large caps.
3. News:
DOMESTIC MACRO:
The country's central bank is engaging in a tricky balancing act with domestic yields to keep volatility out of
its bond markets ahead of the Federal Reserve's historic policy decision this month.
The Nikkei/Markit Services Purchasing Managers' Index fell sharply to 50.1 in November from October's
eight-month high of 53.2.
GLOBAL MACRO
EURO
Hints by Mario Draghi ahead of last Thursday's ECB rate meeting that the euro zone may need another big
injection of money backfired.
Greek banks could return to normal European Central Bank funding before international lenders conclude
a first review of the country's new bailout programme early next year, the euro zone's central bank said on
Thursday.
United States
Federal Reserve Chair Janet Yellen has the clear signs she wanted of labour market healing to push ahead
with the first U.S. rate rise in a decade in December, but may have a tougher time selling further hikes to a
sceptical board.
U.S. employment increased at a healthy pace in November, in another sign of the economy's resilience,
and will most likely be followed by the first Federal Reserve interest rate rise in a decade later this month.
China
China will set up pilot zones to quicken the pace of financial reform, the official China Securities Journal
reported, the latest effort by Beijing to support cash-starved enterprises amid a slowing economy.
Chinese President Xi Jinping told African leaders on Friday his country would pump $60 billion
into development projects.
Indices:
Date Sensex Midcap Auto Bankex CD CG FMCG HC IT Metals O&G Power Realty Teck
30/11/15 26,146 10,990 18,964 19,916 12,466 14,587 7,912 16,298 10,950 7,118 9,328 1,902 1,344 5,943
1/12/2015 26,169 11,076 18,855 19,858 12,424 14,580 7,997 16,473 10,943 7,345 9,406 1,910 1,348 5,929
2/12/2015 26,118 11,098 18,845 19,654 12,405 14,477 8,053 16,616 10,849 7,374 9,426 1,910 1,349 5,892
3/12/2015 25,887 11,051 18,688 19,539 12,228 14,392 7,934 16,437 10,792 7,274 9,366 1,897 1,354 5,861
4/12/2015 25,638 10,935 18,480 19,325 12,112 14,333 7,838 16,506 10,695 7,280 9,303 1,864 1,336 5,811
-1.94% -0.50% -2.55% -2.97% -2.84% -1.75% -0.94% 1.27% -2.33% 2.27% -0.27% -2.01% -0.61% -2.23%
4. Commodities and Currency:
Date USD GBP EURO YEN
Crude
(Rs. per BBL)
Gold
(Rs. Per 10gms)
30/11/2015 66.81 100.36 70.68 54.41 2784 25054
1/12/2015 66.51 100.43 70.43 54.13 2783 25253
2/12/2015 66.61 100.34 70.66 54.12 2784 25184
3/12/2015 66.74 99.61 70.66 54.08 2661 24895
4/12/2015 66.83 100.04 70.04 54.51 2742 25143
-0.03%
Rupee
Depreciated
0.32%
Rupee
Appreciated
0.91%
Rupee
Appreciated
-0.18%
Rupee
Depreciated
-1.51% 0.36%
Debt:
Tenor Gilt Yield in % (Friday) Change in bps (Week)
1-Year 7.26 -2
2-Year 7.36 -7
5-Year 7.80 2
10-Year 7.74 3
5. Phani Sekhar Ponangi Jharna Agarwal
Nupur Gupta Aakash 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”