The world this week Aug 25 - Aug 30

1. The World This Week
August 25 – August 30, 2014

2. Equity View:
The GDP data released on Friday last week showed better results than expected by most of the analysts. FYQ1 GDP growth of 5.7% was mainly due to recovery in manufacturing and industrial sector. We expect the recovery to continue to strengthen in the coming quarters and believe the GDP growth for FY15 to be ranging between 5.5-6%. This would be a significant recovery from 4.6% observed last year. IIP and Inflation number to be released in the second week of this month should also show a positive traction. We believe that the IIP number would range between 3.5-4% for last month and CPI Inflation below 8% along with WPI below 5.5-6%. Overall seasonal deficit of monsoon is 17-18% which is lower than expectations. Although there is a marginal dip in the area under cultivation when compared with last year, there is nothing substantial to impede agricultural activity for the year. The agricultural GDP growth for the fiscal should be between 2-2.5% which is a fall in growth from previous year however it is positive and any reduction would be compensated by the increase in manufacturing activity. The services sector continues to show good traction and we expect its growth to stay around 7%.
We believe that economic recovery is beginning to get firmer every day as there are a lot of steps being taken by the government on infrastructure and industries to ensure a durable recovery.
The next key trigger for the market remains global cues. In the last couple of weeks, the US Federal Reserve has given no sign that they are in a rush to hike interest rates so we believe that global factors also remain benign atleast at this point in time.
News:
DOMESTIC MACRO:
 Government notifies liberalised foreign direct investment (FDI) norms for the Railways, permitting 100% FDI through automatic route in several areas, including high speed trains.
 Rating agency Moody's expects India’s GDP to grow at 5.1% in the first quarter (April-June) of the current fiscal; also expects foreign currency bond issues in India for non-financial firms to touch a record high of $13-$14 bn in 2014
 Indian economy grew 5.7% in the quarter ended June, compared with 4.6% in the previous quarter.
 India's fiscal deficit in the first four months of the current financial year was Rs 3.25 lakh cr, or 61.2% of the full-year target; the deficit was 62.8% during the comparable period in the previous fiscal year.
GLOBAL MACRO
EURO
 Eurozone consumer price index came in at 0.3% in August on an annual basis, compared with 0.4% in July.

3.  Euro zone economic confidence index fell to 100.6 in August, the lowest score since December, from 102.1 in July.
United States
 The US economy expanded 4.2% in Q2 2014 according to the second estimate, higher than the previous estimate of 4%, following a contraction of 2.1% in Q1 2014.
 US pending home sales rose 3.3% in July after a 1.3% decrease in June
 US durable goods orders surged by a seasonally adjusted 22.6% in July following an upwardly revised gain of 2.7% in June
China
 China’s final HSBC/Markit Purchasing Managers' Index (PMI) retreated to 50.2 in August, roughly in line with a preliminary reading of 50.3.
Indices:
Date
Sensex
Midcap
Auto
Bankex
CD
CG
FMCG
HC
IT
Metals
O&G
Power
Realty
Teck 25/08/14
26,437
9,281
17,106
17,938
9,111
14,774
7,243
13,254
10,044
12,291
11,053
2,080
1,786
5,579 26/08/14
26,443
9,259
17,111
17,896
9,141
14,650
7,308
13,403
10,068
12,384
10,976
2,052
1,785
5,580 27/08/14
26,560
9,327
17,250
17,990
9,199
14,703
7,347
13,398
10,143
12,358
11,068
2,040
1,761
5,614 28/08/14
26,638
9,299
17,294
18,004
9,181
14,913
7,402
13,357
10,086
12,253
11,185
2,042
1,727
5,594
0.76%
0.19%
1.10%
0.36%
0.77%
0.94%
2.19%
0.77%
0.41%
-0.31%
1.19%
-1.84%
-3.27%
0.28%
Commodities and Currency:
Date USD GBP EURO YEN Crude (Rs. per BBL) Gold (Rs. Per 10gms) 25/08/2014 60.43 100.12 79.74 58.01 6182 27625 26/08/2014 60.50 100.33 79.91 58.24 6203 27831 27/08/2014 60.47 100.15 79.65 58.17 6201 27742 28/08/2014 60.47 100.35 79.86 58.27 6211 27923 29/08/2014 - - - - 6196 - -0.08% Rupee Depreciated -0.24% Rupee Depreciated -0.15% Rupee Depreciated -0.45% Rupee Depreciated 0.23% 1.08%

4. Debt:
Tenor Gilt Yield in % (Friday) Change in bps (Week) 1-Year 8.69 2 2-Year 8.51 5 5-Year 8.62 5 10-Year 8.57 4

5. Varun Goel
Jharna Agarwal
Nupur Gupta
Ridhdhi Chheda
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