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The World This Week October 17 - October21 2016


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The world this week October 17 - October21 2016

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The World This Week October 17 - October21 2016

  1. 1. THE WORLD THIS WEEK October 17 – October 21, 2016
  3. 3. EQUITY VIEW • Markets continue to show a flattish trend for the past couple of weeks. This is an outcome of mixed global news flows. Domestic news has not been interesting either. This goes without keeping into consideration quarterly results. • The minutes of the US Fed meeting showed that despite the count being in favour of keeping rates steady, many members had opted for a rate hike. • At the global front there is a set of nations that want to have softer rates where as developed nations want to have harder rates. There is some divergence in this respect. • The ECB kept its rates steady. Therefore once again the deposit rates are at -0.4%. The ECB has stated that it wants to carry on the stimulus for extended periods of time but has not given any more specifics. .
  4. 4. EQUITY VIEW • China also came out with its growth numbers which stood within an agreeable range of 6.5-6.7%. Thus, the panic of hard lending is no more. • At the domestic end, last week the CPI came in at 4.3% against 5.05% and prior to that it was 6.07%. This indicates that the trend has been southwards which is positive news. The quarterly earnings season that has just begun is more important and that is where the whole focus will be. • IT continues to disappoint whether it is Infosys, TCS, to some extent Wipro and Mindtree. HCL however could be stated as one of the best performers among the IT pack. • In certain sectors specific large caps like cement has been disappointing. Companies with nationwide spread would not benefit unlike regional players. Therefore, in this quarterly result the regional players will come out with good numbers. Ultratech is an exception because despite being a pan India player, we are bullish on this stock.
  5. 5. EQUITY VIEW • Banking sector particularly the private sector banks and within private sector the new generation banks continued to come up with strong numbers and we remain optimistic about it. • After almost 30-35% rally over 6-8months markets gave a small correction of 5-7% and since then it has been consolidating in the range of 8500-8700 nifty levels. If results surprise on the upside this range can very well be broken and markets will resume a new uptrend. We continue to remain bullish with the long term point of view and in the near term it is the results that will matter.
  6. 6. NEWS
  7. 7. DOMESTIC MACRO • The Indian government has proposed a 4 percent tax on gold under the proposed goods and services tax. GST would harmonize a slew of state and federal levies into a national sales tax. • The Reserve Bank of India is expected to take advantage of expectations that inflation will remain low in the near-term and cut interest rates again early next year with an aim to boost already-solid growth a little bit more. Inflation cooled to a 13-month low of 4.31 percent in September and it is expected to average 4.8 percent in the January-March quarter of 2017, just under the RBI's near-term target.
  8. 8. GLOBAL MACRO • The euro zone economy should continue to improve slowly, European Central Bank President Mario Draghi said on 20th October, with inflation creeping up in the coming months. But the risks are to the downside, he said, meaning performance is more likely to be worse than better. Draghi said it was mainly economic events outside the euro zone that would affect the economy "The economic recovery in the euro area is expected to be dampened by subdued foreign demand," he told a news conference follwing the ECB's decision to leave monetary policy unchanged."We will continue to act, if warranted by using all the instruments available in our mandate," he said.. • The European Central Bank left ultra-loose monetary policy unchanged on Thursday but kept the door open to more stimulus in December, firmly shooting down any talk of tapering its 1.7 trillion euro asset-buying programme.. EURO
  9. 9. GLOBAL MACRO • The U.S. economy showed some signs of rising wage pressures in September and early October but overall compensation growth remained modest, the Federal Reserve said on 19th October, a further sign of the cloudy outlook facing Fed policymakers as they mull a rise in interest rates. Policymakers have been keenly watching for signs of increasing wage pressures spurred by an unemployment rate that now stands at 5.0 percent. • U.S. industrial production barely rose in September as a rebound in manufacturing and mining output was offset by surprisingly weak demand for utilities, pointing to a moderate acceleration in economic growth in the third quarter. Still, the mixed report from the Federal Reserve on Monday suggested that the industrial sector downturn has probably run its course. Gains in output are likely to be muted as the sector remains constrained by the lingering effects of the dollar's past rally, a collapse in oil prices and weak global demand. UNITED STATES
  10. 10. GLOBAL MACRO • China's economy expanded at a steady 6.7 percent in the third quarter and looks set to hit Beijing's full-year target, fuelled by stronger government spending, record bank lending and a red-hot property market that are adding to its growing pile of debt. • China's economic growth is expected to cool to 6.6 percent this year and slow further to 6.5 percent in 2017, even as the government keeps up policy support to help ward off a sharper slowdown. The world's second-largest economy faces nagging downward pressure due to slack global demand that has hurt its exports, as well as risks from painful reforms to cut industrial overcapacity and a growing pile of debt that some analysts fear could spark a financial crisis. CHINA
  11. 11. INDICES Date Sensex Midcap Auto Bankex CD CG FMCG HC IT Metals O&G Power Realty Teck 17-10-2016 27,530 13,292 22,076 21,826 12,784 14,674 8,449 16,029 10,097 10,038 12,107 1,980 1,514 5,525 18-10-2016 28,051 13,544 22,361 22,343 12,894 14,977 8,575 16,292 10,283 10,221 12,131 1,999 1,537 5,618 19-10-2016 27,984 13,553 22,240 22,227 12,904 14,970 8,482 16,375 10,307 10,239 12,221 2,022 1,523 5,632 20-10-2016 28,130 13,560 22,232 22,542 12,987 15,061 8,473 16,317 10,281 10,379 12,232 2,027 1,538 5,634 21-10-2016 28,077 13,602 22,245 22,585 12,767 15,101 8,508 16,342 10,352 10,314 12,236 2,027 1,551 5,669 1.99% 2.33% 0.76% 3.48% -0.13% 2.91% 0.71% 1.95% 2.52% 2.75% 1.07% 2.39% 2.43% 2.61%
  12. 12. COMMODITIES AND CURRENCY Date USD GBP EURO YEN Crude (Rs. per BBL) Gold (Rs. Per 10gms) 17-10-2016 66.78 81.31 73.37 64.12 3366.00 29738.00 18-10-2016 66.73 81.71 73.55 64.14 3335.00 29845.00 19-10-2016 66.71 81.79 73.21 64.4 3356.00 29957.00 20-10-2016 66.74 81.91 73.15 64.35 3442.00 30011.00 21-10-2016 66.89 81.96 72.98 64.4 3352.00 29950.00 -0.17% -0.80% 0.54% -0.44% 0.42% -0.71%
  13. 13. DEBT Tenor Gilt Yield in % (Friday) Change in bps (Week) 1-Year 6.57 -25 2-Year 6.57 -26 5-Year 6.73 -28 10-Year 6.85 -26
  14. 14. KIASL TEAM Shantanu Awasthi Head- Advisory Nupur Gupta Lead Advisor
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