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The World This Week Apr 21 to Apr 26


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The World This Week Apr 21 to Apr 26

  1. 1. The World This Week Apr 21 – Apr 26, 2014
  2. 2. Equity View: The markets last week were flattish with no major changes in the macro data points. Yes bank, ICICI bank and Axis bank had announced their quarter earning results. Asset quality of all private sector banks has come out to be good along with good Net interest margins and reduced NPAs. We expect that a strong growth would be carried forward. The automobile industry is also working well due to the recent Excise Cut. On NASDAQ, biotech index corrected up to 20% with no major news related to data. Improvement in economic growth in India will be protracted and modest in the coming times till a broader policy framework for growth is put in place by the new government. CCI has cleared a lot of projects but it will be a while before assets become operational and capacity utilization and profitability ramps up. In the interim the result season will have a lot of explaining to do as markets move way ahead and faster than the reflection of fundamentals in the underlying business operations. We are in a much better position with our CAD set to shrink to around 2% of GDP vs ~5% of GDP last year which is driving currency stability and INR appreciating to sub 60 levels which in turn is also driving FII flows. FII flows YTD remain highest in the region at USD 3.6 Bn. One needs to be cognizant of the sustainability of the same as exports (the primary driver of GDP growth in current times) slowed down in the month of February (3.7% de-growth) and also as some of the measures to tackle the same are reversed and as growth picks up. We remain focused on the export story of India arising out of better growth dynamics in developed economies. Stance on consumption remains selective as low job growth, inflation and tepid economic growth puts brakes on the pricing power of companies. We remain positive on sectors such as Pharma and IT with our year end Sensex target of 24800. News: DOMESTIC MACRO:  India’s forex reserves rose by $2.8bn to $309.4bn during the week ended April 11  According to SEBI data, the total value of participatory note investments in Indian financial markets rose to Rs 2.08 lakh cr at the end of March from Rs 1.73 lakh cr in the previous month.  RBI fixes the quantum of intervention through Market Stabilisation Scheme (MSS) for the current fiscal at Rs 50,000 cr to manage liquidity.  Crisil pegs India's growth at an average of 6.5% over the next 5 financial yrs.
  3. 3. GLOBAL MACRO EURO  Eurozone composite PMI rose to 54 in April from 53.1 in March.  UK’s public sector net borrowing fell to 6.7 bn pounds (YoY) in March following a downwardly revised 8.8 bn pounds in February.  Euro zone consumer confidence unexpectedly rose to -8.7 in April, the highest since October 2007, from -9.3 in March. United States  US Fed Chair Janet Yellen says the Federal Reserve will keep its benchmark interest rates at exceptionally low levels for a considerable time until employment and inflation reach healthier levels.  US new home sales dropped 14.5% in March to a seasonally adjusted annual rate of 384,000 from February's upwardly revised 449,000.  US’ initial claims for state unemployment benefits rose 24,000 to a seasonally adjusted 329,000 for the week ended April 19. China  China’s HSBC manufacturing PMI for April came in at 48.3, slightly above from March. Indices: Date Sensex Midcap Auto Bankex CD CG FMCG HC IT Metals O&G Power Realty Teck 21/04/14 22,765 7,397 13,674 14,822 6,645 12,426 6,982 10,509 8,846 10,495 9,733 1,774 1,489 4,942 22/04/14 22,758 7,386 13,615 14,846 6,663 12,573 6,950 10,525 8,798 10,412 9,845 1,769 1,482 4,916 23/04/14 22,877 7,395 13,632 15,012 6,604 12,761 6,978 10,572 8,796 10,435 9,812 1,760 1,463 4,924 25/04/14 22,688 7,374 13,616 14,910 6,633 12,590 6,837 10,620 8,787 10,432 9,606 1,741 1,472 4,930 -0.34% -0.32% -0.43% 0.59% -0.17% 1.32% -2.07% 1.06% -0.67% -0.60% -1.30% -1.84% -1.11% -0.25% Commodities and Currency: Date USD GBP EURO YEN Crude (Rs. per BBL) Gold (Rs. Per 10gms) 21/04/2014 60.335 101.405 83.3835 58.85 6613 29472 22/04/2014 60.7147 102.0432 83.7695 59.25 6634 29625 23/04/2014 61.0683 102.7657 84.486 59.51 6634 29788 25/04/2014 61.1163 102.7059 84.522 59.73 6738 29904 -1.28% Rupee Depreciated -1.27% Rupee Depreciated -1.35% Rupee Depreciated -1.47% Rupee Depreciated 1.86% 1.44%
  4. 4. Debt: Tenor Gilt Yield in % (Friday) Change in bps (Week) 1-Year 8.63 3 2-Year 8.60 -10 5-Year 8.85 2 10-Year 8.89 3
  5. 5. Varun Goel Jharna Agarwal Nupur Gupta Ridhdhi Chheda 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”