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The World This Week - Oct 28 - Nov 1


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The World This Week - Oct 28 - Nov 1

  1. 1. The World This Week Oct 28 – Nov 1, 2013
  2. 2. Equity View: 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 Banking Sector. 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.
  3. 3. News: DOMESTIC MACRO: 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. GLOBAL MACRO EURO 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. United States 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. China 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. Indices: Date Sensex Midcap Auto Bankex CD CG FMCG HC IT Metals O&G Power Realty Teck 28/10/2013 20,570 5,920 11,790 12,296 6,023 8,974 6,685 9,485 8,412 8,829 8,720 1,549 1,296 4,738 29/10/2013 20,929 6,006 12,077 12,831 6,118 9,078 6,729 9,617 8,450 9,016 8,808 1,575 1,328 4,762 30/10/2013 21,034 6,021 12,071 12,839 6,144 9,085 6,804 9,732 8,463 9,020 8,809 1,583 1,334 4,793 31/10/2013 21,165 6,107 12,075 13,087 6,307 9,152 6,814 9,609 8,478 9,176 8,936 1,604 1,343 4,815 01/11/2013 21,197 6,177 12,231 13,276 6,261 9,265 6,752 9,633 8,437 9,306 8,891 1,609 1,379 4,804 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%
  4. 4. Commodities and Currency: Date 28/10/2013 29/10/2013 30/10/2013 31/10/2013 01/11/2013 USD GBP EURO YEN 61.50 99.49 84.88 63.01 61.46 98.99 84.72 63.01 61.49 98.71 84.49 62.61 61.41 98.29 84.12 62.44 61.90 99.19 83.88 63.21 -0.65% 0.31% 1.20% -0.32% Rupee Rupee Rupee Rupee Depreciated Appreciated Appreciated Depreciated Debt: Tenor 1-Year 2-Year 5-Year 10-Year Gilt Yield in % (Friday) Change in bps (Week) 8.60 8.40 8.57 8.70 8 1 2 12 Crude (Rs. per BBL) Gold (Rs. Per 10gms) 6,737 6,742 6,794 6,633 6,570 31,714 31,174 31,184 30,683 30,626 -2.48% -3.43%
  5. 5. Satadru Mitra Varun Goel Nupur Gupta Jharna Agarwal 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 abovementioned 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”