Indian equity markets witnessed an upward movement of approx. 2.5% during the last week. This
particular rally was accompanied with equity markets rallying across the world with most of the emerging
markets outperforming the developed markets. In India, one of the reasons to this rally was better than
expected earnings released by some big companies in the last few days.
Preferred sectors like IT and Pharma were not the only sectors which came up with good earnings but
also some of the laggards like Public Sector Banks (PSB), which came up with earnings which were far
better than what market was expecting. On the back of good earnings released by the public sector
banks, we have revised our stance on the overall banking sector space. We already had a positive view on
private sector banks and after witnessing the results of most of the public sector banks we have turned
bullish on PSB’s as well. Considering this, our view on the overall banking sector continues to be
positively biased and we have also changed our sector preference in the PSI portfolio from Pharma to
As far as the macro economic factors are concerned, various factors are expected to be proven positive
for the Indian markets. Lately, we witnessed the Current Account data turning out to be extremely good
than what was expected by the street. In this reference, the Finance Minister on Friday made a statement
in which he clearly mentioned that the Current Account Deficit (CAD) of India is going to be below $60
billion for the Financial Year 2013-14 which is much lower than the level of $88 billion which India
witnessed in the last financial year. We believe, going forward we should see a much more comfortable
situation as far as the CAD is concerned and considering this, there should be much more stability in the
Rupee movement as compared to the movement seen so far in this calendar year.
In terms of global data flow, we saw markets liking the US coming up with softer macro economic data as
compared to what was expected. On back of this, there is a growing consensus that the QE3 tapering
would be postponed to the second quarter of the next calendar year i.e. 2014. Therefore, we believe that
the easy monetary conditions in the US are likely to continue at least for the next 2 quarters which would
lead to further positive momentum in the Emerging Equity, Currency and Bond Markets.
Fiscal deficit was 4.12 trillion rupees during April-September, or 76 percent of the full-year target.
Following are the highlights of the central bank's second quarter review of the Annual Monetary
Policy Statement for 2013/14:
* Repo rate hiked by 25 bps to 7.75 pct
* Marginal Standing Facility Rate (MSF) cut by 25 bps to 8.75 pct
* Increases cash provided to banks through term repo to 0.50 pct of net demand and time
liability from 0.25 pct
India's infrastructure sector output rose 8.0 percent year-on-year in September, at its fastest clip
in one year, mainly driven by higher production of coal, electricity and cement.
UK manufacturing PMI edged slightly lower to 56.0 from a downwardly revised 56.3 in
September. The latest number remains within striking distance of Augusts’ two-year peak of 57.1.
The Federal Reserve extended its support for a soft U.S. economy as it announced plans to keep
buying $85 billion in bonds per month.
Employers in the private sector added 130,000 new jobs to their payrolls in October, the lowest
reading since April and was below economists' expectations for a gain of 150,000 jobs.
The official Purchasing Managers' Index (PMI) stood at 51.4 in October, up from September's
51.1 and above a forecast of 51.2 in a Reuter’s poll of economists.
China's maturing economy is set to grow at its slackest pace in 23 years this year, at 7.5 percent,
as its export sales falter on fragile global demand.
Sensex Midcap Auto Bankex
28/10/2013 20,570 5,920 11,790 12,296 6,023
29/10/2013 20,929 6,006 12,077 12,831 6,118
30/10/2013 21,034 6,021 12,071 12,839 6,144
31/10/2013 21,165 6,107 12,075 13,087 6,307
01/11/2013 21,197 6,177 12,231 13,276 6,261
3.05% 4.35% 3.74% 7.97% 3.96% 3.24% 1.00% 1.56% 0.31% 5.40% 1.96% 3.83% 6.37% 1.39%
Commodities and Currency:
Depreciated Appreciated Appreciated Depreciated
Gilt Yield in % (Friday)
Change in bps (Week)
(Rs. per BBL)
(Rs. Per 10gms)
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