The World This Week May 06 - May 10 2013


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The World This Week May 06 - May 10 2013

  1. 1. The World This WeekMay 06 – May 10, 2013
  2. 2. Equity View:Last week, equity markets across the world had risen with S&P in US, Nikkei in Japan and DAX in Europereaching their five year highs and both S&P 500 and DAX reached their lifetime highs. Broader stockmarkets across the world have continued to move up alongwith the other emerging markets like Mexico,Argentina, also reaching their life time highs. Globally we have witnessed a synchronized equity marketrally where most of the stock markets have risen on the back of expectations of a strong macro economicrecovery this year.We’ve seen a strong macro economic data in US with the 2.5% GDP growth last quarter and theexpectation is that this kind of growth will continue during next few quarters. US unemploymentnumbers continue to fall and are currently at a 5 year low. Hence, there is no data which points to anymeaningful slowdown in US economic activity despite all the concerns about the fiscal cliff and its impacton the US recovery.In Japan, we have seen a very aggressive monetary stance by the government which is leading to a verystrong performance in Japanese equity markets. Nikkei has delivered returns of more than 30% in the last3 months and is also one of the top performing equity markets. So we are witnessing a strong globalsynchronized rally and we believe that India would also participate in because of huge flow of money, wehave already seen more than a billion dollars money flow this month and more than a billion dollarswhich came last month. Since the beginning of January, we have seen more than 12 billion dollars of FIImoney and it continues to come in on the back of strong cyclical recovery that is expected in India also.Our stance continues to be the same as earlier i.e. we are positive on the equity markets for the yearwith a guidance of 25000 on Sensex for the end of the year.The earning season continued last week and results announced so far were more or less been in line orslightly better than the expectations. The private sector banking space, consumer space, pharma spaceetc have all delivered very strong set of earnings. PSU banks would announce their quarterly earningsstarting this week and it would be critical for the market direction in short term.IIP numbers for the month of March came in at 2.5% which shows some kind of a bounce back inmanufacturing and electricity numbers compared to the previous month, which reflects into a very smallrevival in manufacturing activity, although the number still looks better from what it has been from thewhole of last year. This could be an early sign of a small uptick in the core industrial activity but it is stillearly to make a conclusive remark and we would wait for next few months to see if cyclical recovery hasstarted.This week, inflation for the month of April would be released. We are expecting that the core inflation i.e.the non food manufacturing products inflation to stay below 4% and we expect WPI to stay below 6% onthe back of high base and cooling of commodity prices. We believe that lower inflation would give RBI thenecessary cushion to carry out further rate cuts in the next monetary policy. As we mentioned earlieralso, we are expecting another 25 basis points cut in repo rate cut.
  3. 3. News:DOMESTIC MACRO: Indias industrial production growth accelerated to 2.5% in March from a year earlier, governmentdata showed on Friday. The government revised the output growth for February to 0.5% from 0.6%earlier. Manufacturing, which constitutes about 76% of industrial production, grew 3.2% from ayear earlier.GLOBAL MACROEURO Portugal sold 3 billion eurosin its first 10-year bond in more than two years on Tuesday, with keen,mostly foreign investors putting the country on course to exit its bailout on time and qualify for anECB debt support programme. Greece has made progress in reducing government debt and improving its competitiveness, butneeds to follow through on structural reforms to ensure its economy recovers, the IMF said onMonday after a mission visit to the country.US The number of Americans filing new claims for jobless aid fell last week to its lowest level in nearly5-1/2 years, signaling labor market resilience in the face of fiscal austerity. Initial claims for stateunemployment benefits fell 4,000 to a seasonally adjusted 323,000, the lowest level since January2008China Consumer inflation quickened to 2.4% in April from Marchs 2.1% due to higher food costs. Foodprices rose 4.0% in April from a earlier, quickening from the 2.7% rise in March.Indices:Date Sensex Midcap Auto Bankex CD CG FMCG HC IT Metals O&G Power Realty Teck06/05/2013 19674 6451 10982 14182 7534 9956 6527 8798 5992 8960 8798 1773 1907 361907/05/2013 19889 6505 11105 14437 7591 10045 6658 8875 6008 8967 8840 1786 1933 363808/05/2013 19990 6535 11054 14453 7586 9980 6753 8882 6007 8935 8850 1780 1933 363509/05/2013 19939 6507 11021 14406 7519 9986 6759 8738 6060 8805 8796 1781 1912 365310/05/2013 20083 6519 11263 14584 7672 9991 6855 8769 6073 8785 8817 1776 1919 36582.1% 1.1% 2.6% 2.8% 1.8% 0.4% 5.0% -0.3% 1.4% -2.0% 0.2% 0.2% 0.6% 1.1%
  4. 4. Commodities and Currency:Debt:Tenor Gilt Yield in % (Thursday) Change in bps (Week)1-Year 7.44 -202-Year 7.40 -55-Year 7.43 -910-Year 7.59 -15Date USD GBP EURO YENCrude(Rs. per BBL)Gold(Rs. per 10 gms)06/05/2013 53.95 84.03 70.72 54.36 5621 2729007/05/2013 54.28 84.32 71.00 54.84 5690 2705908/05/2013 54.16 83.88 71.00 54.77 5667 2695609/05/2013 54.24 84.30 71.36 54.95 5651 2726810/05/2013 54.54 84.19 71.11 53.97 5667 2694011/05/2013 5667 27119-1.1%RupeeDepreciated-0.2%RupeeDepreciated-0.5%RupeeDepreciated0.7%RupeeAppreciated0.8% -0.6%
  5. 5. Satadru Mitra Varun Goel Jharna AgarwalAbbas Naheed Kinjal MehtaDisclaimerThe information and views presented here are prepared by Karvy Private Wealth (a division of Karvy Stock BrokingLimited) or other Karvy Group companies. The information contained herein is based on our analysis and upon sourcesthat we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is forpersonal 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 owninvestment decisions based on their specific investment objectives and financial position and using such independentadvice, as they believe necessary. While acting upon any information or analysis mentioned here, investors may pleasenote that neither Karvy nor any person connected with any associated companies of Karvy accepts any liability arisingfrom 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 disclosetheir individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysisand investment recommendations are restricted in purchasing/selling of shares or other securities till such a time thisrecommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restrictedto 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. Investorsare advised to consult their respective tax advisers to understand the specific tax incidence applicable to them. We alsoexpect significant changes in the tax laws once the new Direct Tax Code is in force – this could change the applicabilityand incidence of tax on investmentsKarvy Private Wealth (A division of Karvy Stock Broking Limited) operates from within India and is subject to Indianregulations.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-SEBIRegistration No:IN-DP-CSDL-305-2005, PMS Registration No.: INP000001512”