2. Equity View:
A sharp correction of 4.5% was witnessed in Indian Equity markets. IIP number for month of October came in at -5.1%,
worst IIP number in last couple of years. WPI came in at 9.11% for the month of November, which is slightly above
consensus expectation. Inflation has stayed above 9% for more than 12 months now.
On Friday, RBI came up with its mid quarter review policy, wherein it mentioned that the rate hikes is over and going
forward reversal of interest rate cycle can be witnessed. We expect the January inflation number to be around 8% on
back of significant decline in the food inflation number. Food Inflation number has softened and cooled off from around
10% to 4.35% last week. Also some cooling off in commodities prices has been witnessed in last week on back of
significant movement in the dollar index. Hence some cooling can be witnessed in the inflation number.
Historically, it has been seen that equity markets have bottomed out around the peaking of the interest rate tightening
cycle. We expect the reversal of interest rate cycle will happen in near future. We expect RBI to have policy action in
th
form of CRR or Repo Rate action on 24 January 2012 when RBI will meet for its policy review.
In US, macro-economic data continues to remain positive with retails sales, job data & consumer index all remaining
rd
positive. There are no signs of any recession for next 2 quarters. 3 quarter GDP number is expected to come during this
th
week followed by corporate earnings which will come on 10 January 2011.
Real Estate View:
Residential prices have been at the same levels now for long time & no price correction is been witnessed in the
residential space. Similar to restructuring that we are witnessing in debt which would continue till month of March, we
would witness a same kind of restructuring in real estate sector till March. Hence we expect prices not to correct till
March.
On commercial space it is good time to buy. Anything between Rs. 3000-5000 per sq. ft. is considered as good purchase.
News:
DOMESTIC MACRO:
India's food inflation eased to 4.35% in the year to December 3, from an annual 6.60% rise in the previous week.
Its lowest reading since late February 2008
The Reserve Bank of India sent a strong signal on Friday that its next move is likely to be an easing of monetary
policy as risks to economic growth increase, but left its policy rate on hold at a three-year high as it
acknowledged high inflation.
3. GLOBAL MACRO
Euro:
Fitch Ratings, the third-biggest of the major credit rating agencies, on Thursday downgraded Goldman Sachs,
Deutsche Bank and five other large banks based in Europe and the United States, citing "increased challenges" in
the financial markets.
Markit's Eurozone Composite Purchasing Managers' Index, which measures the activity of thousands of euro
zone companies, rose for a second month in December to 47.9 from 47.0 in November.
Greek Unemployment jumped to 17.7% the third quarter from 16.3% in the previous three-month period
US:
By a vote of 67-32, the Senate approved the legislation that passed a $915 billion bill to fund most federal
agency activities through next September and avert a government shutdown.
The fate of legislation in the U.S. Congress to extend a payroll tax cut for two months was uncertain on Saturday
as the measure appeared to face strong opposition in the House of Representatives
China:
China's economic growth could be slowing further as data on Thursday showed the first year-on-year drop in
foreign direct investment in 28 months and a fresh fall in new orders signaled a further contraction in factory
activity.
4. Swapnil Pawar Varun Goel Jharna Agarwal
Palak Nanjani Neha Arora Kanika Khorana
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