The World This Week
Mar 03 – Mar 08, 2014
Equity View:
The Nifty and Sensex both rallied by 4% last week. Markets closed at lifetime highs on the back of
political ...
News:
DOMESTIC MACRO:
 India's Q3 FY14 CAD drops to a 4yr low of $4.2 bn; services PMI rises to 48.8 in Feb.
 India's HS...
Indices:
Date Sensex Midcap Auto Bankex CD CG FMCG HC IT Metals O&G Power Realty Teck
3/3/2014 20,947 6,481 12,450 12,181 ...
Satadru Mitra Varun Goel Jharna Agarwal
Nupur Gupta Kinjal Doshi
Disclaimer
The information and views presented here are p...
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The World This Week Mar 03 to Mar 08

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The World This Week Mar 03 to Mar 08

  1. 1. The World This Week Mar 03 – Mar 08, 2014
  2. 2. Equity View: The Nifty and Sensex both rallied by 4% last week. Markets closed at lifetime highs on the back of political bet about NDA coming to power. The recent opinion polls indicate further support building up for NDA and Modi. From a macroeconomic perspective, the good news is that the CAD (Current Account Deficit) is expected to come down further in this fiscal. This could be even lesser than 2% of the GDP versus 4.5% of the last fiscal. This has led to sharp strengthening of rupee to the levels of almost 61/USD as compared to most of the other Asian market currencies which have been weakening in the last couple of months. Another point of comfort is the fiscal deficit which has been kept under constraint for this FY. Also, the PMI data for the last three months has continuously moved upwards which shows some revival in the manufacturing space. Though these data points are encouraging, it would take additional measures to conclude whether the economy is actually reviving. Similarly, even though both CPI and WPI inflation have shown downward trend in the last couple of months, only these two parameters might not be sufficient for an expectation of a rate cut in the second half of this year. We expect the IIP data to be published tomorrow and WPI inflation on Thursday to show month-on-month improvement. Hence this would lead to RBI pausing from the rate hike atleast in the April policy. And, actual reduction in the interest rate is going to be contingent on how inflation – CPI and WPI - play out during the rest of the year. Thus there are still lots of concerns about the pace of economic revival on which we believe that the economy has bottomed out at around 4.5% of GDP. However the pace of revival will depend on a lot of things including the kind of monsoons and interest regime floats in the country during this year. Our March-end target quoted last year was 22,400 and we have almost achieved the same with a difference of 2%. In the beginning of the year we had also mentioned that in last six general elections, the markets tend to rally during the three and six months period going into the elections and this time again the markets are turning out to be exactly the same. We believe that this rally will continue until 16th May and we continue to have a positive bias for the equity markets with the year end target of 24,800.
  3. 3. News: DOMESTIC MACRO:  India's Q3 FY14 CAD drops to a 4yr low of $4.2 bn; services PMI rises to 48.8 in Feb.  India's HSBC manufacturing PMI grows to 52.5 in February  The Reserve Bank of India accepted all 26 bids for 78.23 billion rupees at its one-day reverse repo auction last week, through which it absorbs liquidity from the banking system.  Indian banks' loans rose 14.3 percent in the two weeks to Feb 21, 2014 from a year earlier, while deposits grew 15.8 percent. GLOBAL MACRO EURO  The European Central Bank left interest rates on hold at 0.25% and unveiled no other measures to bolster a fragile euro zone recovery, despite forecasting low inflation for years to come.  Greece's major banks must raise an extra 6.4 billion Euros ($8.9 billion) in capital to make themselves strong enough to deal with the fallout from future crises, the central bank said. United States  The Institute for Supply Management said US services sector index fell to 51.6 last month, the worst read for the index since February 2010 as bad weather impacted business activity. The results were below the January read of 54, as well as analyst expectations for a read of 53.5.  The jobless rate rose to 6.7 percent in February from 6.6 percent in January.  U.S. trade deficit steady in January as exports bounce back. The trade gap was at $39.1 billion from December's revised shortfall of $39.0 billion. China  China's consumer prices rose at their slowest rate in 13 months in February to 2% as pork prices fell by their most in over a year, a sign that slowing growth rather than rising prices poses a bigger risk to the world's second-biggest economy.
  4. 4. Indices: Date Sensex Midcap Auto Bankex CD CG FMCG HC IT Metals O&G Power Realty Teck 3/3/2014 20,947 6,481 12,450 12,181 6,055 10,268 6,465 10,672 9,670 8,648 8,446 1,511 1,203 5,207 4/3/2014 21,210 6,566 12,508 12,482 6,173 10,473 6,522 10,629 9,669 8,935 8,579 1,538 1,216 5,217 5/3/2014 21,277 6,628 12,479 12,665 6,027 10,592 6,547 10,613 9,687 8,995 8,566 1,544 1,239 5,227 6/3/2014 21,514 6,708 12,585 12,878 6,118 10,784 6,576 10,585 9,712 9,196 8,757 1,582 1,290 5,252 7/3/2014 21,920 6,693 12,721 13,567 6,183 11,221 6,612 10,370 9,520 9,348 9,077 1,611 1,360 5,191 4.65% 3.28% 2.18% 11.38% 2.11% 9.28% 2.28% -2.82% -1.55% 8.10% 7.46% 6.64% 12.99% -0.31% Commodities and Currency: Date USD GBP EURO YEN Crude (Rs. per BBL) Gold (Rs. Per 10gms) 3/3/2014 61.86 103.52 85.31 61.01 6770 30606 4/3/2014 61.90 103.26 85.14 60.84 6879 30411 5/3/2014 61.86 103.06 84.92 60.56 6766 30386 6/3/2014 61.32 102.54 84.19 59.74 6665 30158 7/3/2014 60.99 102.07 84.53 59.22 6629 30504 1.44% Rupee Appreciated 1.42% Rupee Appreciated 0.93% Rupee Appreciated 3.02% Rupee Appreciated 2.08% 0.33% Debt: Tenor Gilt Yield in % (Friday) Change in bps (Week) 1-Year 8.91 4 2-Year 8.65 0 5-Year 8.96 -2 10-Year 8.81 -5
  5. 5. Satadru Mitra Varun Goel Jharna Agarwal Nupur Gupta Kinjal Doshi 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”

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