- India's industrial output grew at 9.8% in October, its fastest pace in 5 years, driven by manufacturing. However, further growth may slow to 4-5% levels. - The US Federal Reserve is widely expected to raise interest rates on Wednesday for the first time since 2006. The impact on Indian debt markets is expected to be minor as foreign inflows are low. - Global growth remains a concern. While lower oil prices provide relief, uncertainty creates opportunities for long-term investors.

1. The World This Week
December 7 – December 11, 2015

2. Equity View:
IIP data for the month of October released last week at 9.8%, it is the highest in last 5 years. We observed
that the base year played a crucial role as last year IIP for October was -2.7%. it is to be noted that Diwali
happened to be in October last year boosting IIP number for September and similarly this year’s October
data seems festive. IIP data is not a retail but factory data. It would be interesting to see IIOP data for
November to check whether it has a follow up demand. It may not be as good as 9/8% but levels of 4-5%
will be positive for economic turnaround.
The much awaited US Fed meet is coming up tomorrow and the rate hike is widely expected. Domestic
political factors are not helping GST pass in the parliament. If Fed hike is as per expectations with some
breakout in the GST then expect markets to bounce back. Passage of GST might boost earnings growth of
the companies 1-2 years down the line. . The impact of rate hike on debt markets will be an uptick in 10
year bond for very short term period. There are no major foreign inflows into the Indian debt markets so
rate hike won’t drive the movement of debt markets. It will be fiscal deficit which will play a vital role
which can affect debt markets going forward.
The global growth is a worrisome factor and economies like U.S are self sufficient in oil now so we do not
see crude oil prices going up, however, “Uncertainty is the biggest positive thing for long term investors
as it provides good entry points in the markets.”

3. News:
DOMESTIC MACRO:
India's central bank supports mergers among commercial lenders but they have to be focused and
strategic, a deputy governor of the Reserve Bank of India said on Monday.
India's industrial output grew at 9.8% its fastest pace in five years in October, powered by manufacturing,
bringing some cheer to investors fretting about a gridlock in parliament that has stalled vital reforms.
GLOBAL MACRO
EURO
Greece has accomplished more than half of the reforms agreed with euro zone creditors to get the next, 1
billion-euro tranche of bailout loans and is to legislate the remaining steps on Tuesday, a senior euro zone
official said on Sunday.
The IMF will not be excluded from Greece's third bailout programme review, Eurozone officials told Greece
on Saturday after its prime minister said the global lender was not playing a constructive role.
United States
Barring a shock, the Federal Reserve will raise U.S. interest rates on Wednesday for the first time since June
2006, a full year before the global financial crisis began.
U.S Retail inventories excluding autos, which go into the calculation of GDP, increased 0.4 percent in
October after an unrevised 0.5 percent gain in September, the Commerce Department said on Friday.
Overall business inventories were unchanged in October after ticking up 0.1 percent the prior month.
China
The plain four-storey Fanya exchange building in this southern Chinese city is teeming with investigators
trying to understand how an obscure metal trading business turned into one of China's most audacious
investment schemes.
China's activity data was stronger than expected in November, with factory output growth picking up to a
five-month high, signaling that a flurry of stimulus measures from Beijing may have put a floor under a
fragile economy.
Indices:
Date Sensex Midcap Auto Bankex CD CG FMCG HC IT Metals O&G Power Realty Teck
7/12/2015 25,530 10,924 18,443 19,383 12,148 14,319 7,646 16,632 10,704 7,224 9,261 1,865 1,342 5,817
8/12/2015 25,310 10,797 18,426 19,217 12,023 14,110 7,633 16,430 10,686 6,990 9,062 1,831 1,293 5,806
9/12/2015 25,036 10,607 18,106 19,054 11,948 13,929 7,586 16,099 10,599 6,775 8,907 1,819 1,278 5,750
10/12/2015 25,252 10,702 18,132 19,080 12,033 14,036 7,660 16,150 10,737 6,887 9,075 1,838 1,299 5,819
11/12/2015 25,044 10,576 17,822 18,651 11,857 13,846 7,660 16,142 10,752 6,903 9,008 1,811 1,266 5,809
-1.90% -3.19% -3.36% -3.77% -2.39% -3.31% 0.18% -2.95% 0.45% -4.45% -2.73% -2.87% -5.66% -0.15%

4. Commodities and Currency:
Date USD GBP EURO YEN
Crude
(Rs. per BBL)
Gold
(Rs. Per 10gms)
7/12/2015 66.62 100.65 72.40 54.05 2671 25545
8/12/2015 66.79 100.49 72.51 54.27 2508 25347
9/12/2015 66.75 100.29 72.89 54.40 2506 25415
10/12/2015 66.79 101.36 73.46 54.91 2580 25365
11/12/2015 66.86 101.10 73.10 54.75 2455 25274
-0.36%
Rupee
Depreciated
-0.45%
Rupee
Depreciated
-0.96%
Rupee
Depreciated
-1.28%
Rupee
Depreciated
-8.09% -1.06%
Debt:
Tenor Gilt Yield in % (Friday) Change in bps (Week)
1-Year 7.24 -2
2-Year 7.38 2
5-Year 7.75 -5
10-Year 7.78 4

5. Phani Sekhar Ponangi Jharna Agarwal
Nupur Gupta Aakash Mehta
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