The markets continue to rise in anticipation of a positive budget and that the government would work
hard to remove infrastructural bottlenecks. CII Quarterly Business sentiment index which indicates the
business confidence is positive above 50 and in Q1 FY15 this was 53.5. In the last few months, market
sentiments have improved; the car sales have risen in last month. Inflation has been flattish with a recent
slight increase but nothing serious to interpret out of the same.
Government has been working to resolve issues related to the environment ministry, power projects and
their pricing, roads, ports, etc. Thus there are hopes of big announcements in the budget. There are also
discussions that FDI could be allowed in Defence and Railways. This is an incremental positive for
companies linked to these spaces.
Monsoon in the month of June has been 40% below normal thus there are concerns over agricultural
production this year. However as per the recent forecasts, the rainfall post 7th
July would cover up for the
deficit seen. The fact is that the month of June contributes only 20-25% to the overall rainfall received
during monsoon in India thus the concerns to the agricultural production are not grave as of now. The
impact of rainfall on the agricultural production would be known after the statistics released this month.
Agricultural contribution to the overall GDP is less than 15% thus even in situation of severe drought the
GDP figures would not be completely changed from the forecasted figures though the impact would be
Q1 earnings should start from 11th
July. We expect strong earnings from IT companies with 3-4% volume
growth. We continue to like select IT and Pharma stocks as they are expected to deliver strong earnings
growth. With more reform measures being announced, we would be positive on Banking – both public
and private, Oil and Gas companies, esp. the downstream companies and select infrastructure
companies. The railway passenger fares have been hiked after 11 years and we expect more such price
hikes in the near future. A big movement could be an increase in kerosene prices which has not
happened in the last 12 years. There could be more strong steps to improve fiscal deficit whose target for
FY15 is 4.1%. We expect the disinvestment programme to be helpful in this with around 60,000 Crores
worth of government shares being sold this fiscal (the highest in a long past). Thus we remain positive on
the Indian equity markets.
According to RBI’s financial stability report, India’s economic growth, inflation, and banks’ asset quality are
Government imposes a minimum export price (MEP) of $450 per tonne on potatoes to augment domestic
supply of the vegetable.
Government extends excise duty concession for the automobile and consumer durables sectors by
six months to December 31; also mulls bringing back excise duty in the branded garments category in the
According to a CARE Ratings report, Indian retail asset securitization market volumes decreased marginally
by around 6% to Rs 28,300 cr in FY14 as against Rs 30,300 cr in FY13.
RBI directs banks to give data about willful defaulters every month or more frequently to the credit
information companies from the beginning of 2015.
UK’s annual GDP growth rate in the first quarter of 2014 was revised down to 3% according to the
final estimate from 3.1% estimated earlier.
Euro zone economic sentiment slumped to 102 in June from a revised 102.6 in May
US personal income rose 0.4% in May, after gaining 0.3% in April, while personal spending rose 0.2% last
month, compared with a flat reading April.
US Services PMI hit 61.2 in June, the highest reading since the survey began in October 2009, compared
with May's final reading of 58.1; composite PMI hit 61.1 in June, a record high, versus 58.4 in May
China's June official PMI seen at a six-month high at 50.8 in May.
Varun Goel Jharna Agarwal
Nupur Gupta Ridhdhi Chheda
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