The World This Week - October10 - October15'2011


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Last week Indian Equity markets closed on a positive note up by around 4.5%.

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The World This Week - October10 - October15'2011

  1. 1. The World This WeekOct 10 – Oct 14, 2011
  2. 2. Equity View:Last week, Indian Equity markets closed on a positive note up by around 4.5%. RIL came out with Q2FY12 results over theweekend. Its net profit grew by 15.8% YoY which was in line with the expectations. Revenue grew by around 35% YoY.The results were lead by very strong numbers on the refining front, however oil & gas continue to decline & there iscontinuous weakness in gas output from KG-D6.The Index of Industrial Production (IIP) expanded by 4.1% in August 2011, which was below consensus expectations.Economic activities have been sluggish in the last several of months and there are expectations that the GDP growth forFY12 will be between 7%-7.5%.US markets ended the week on a positive note; up by 8%. The rally was due to a good set of numbers coming in from ITmajors including Google. We have seen a very sharp movement in risky assets across the world. The dollar index moveddown from 79 to 76 in a span of 5-6 trading sessions leading to a sharp rally in metals, crude & emerging market equities.This was because of the news that some kind of temporary solution to the European crisis could be possible.In the G-20 Summit last Saturday, European leaders promised that they would come out with some solution to theEuropean crisis by 23rd October 2011, when European nation meeting is planned. Also the EU Debt Summit will takeplace on the 3rd & 4th November wherein the three key measures expected are plan for recapitalization of Europeanbanks so they are able to cope with any further market turmoil, a long-term solution to the Greek debt crisis andincreasing the capacity of the European Financial Stability Fund (EFSF).This week is laden with Q2FY12 results, with BAL, L&T, HDFC Ltd and Axis bank coming out with their numbers. Wecontinue to expect good set of results from Bajaj Auto with growth of around 17-18% in profits. Axis bank is also comingwith its Q2 results on Saturday; we continue to remain positive on private sector banking names. We expect that theearnings season to be led by private sector banking names like Axis bank, ICICI bank & HDFC bank.On the global front we have China coming with its GDP numbers on Thursday. There is an expectation that this will be asofter number as compared to last quarter. The number is expected to be close to 9% lower than 9.6%-9.7% reportedpreviously.News:DOMESTIC MACRO:  Inflation number came at 9.72% in September from the year earlier & which is lower than 9.78% for the month of August, girding the market for a possible rate hike this month despite weakening domestic growth and bleak global outlook.  Indias July headline inflation was revised upwards to 9.36% from 9.22 earlier.  Indias September exports rose an annual 36.1 percent to $24.8 billion, while imports for the month rose 17 percent to $34.6 billion, the trade secretary said on Wednesday.
  3. 3. GLOBAL MACROEuro:  France will use public money to recapitalise its banks if needed and will not have to fall back on the euro zones EFSF rescue fund, government spokeswoman Valerie Pecresse said on Wednesday.  Euro zone countries will ask banks to accept losses of up to 50 percent on their holdings of Greek debt, officials said on Wednesday, as part of a grand plan to avert a disorderly default and stem a crisis that threatens the world economy.US:  U.S. gross domestic product (GDP) was seen rising to an annualized 2.0 percent in the third quarter, slightly up on 1.3 percent in Q2. The poll put GDP growth at 1.9 percent in Q4 and 1.8 percent in the first quarter of 2012.  The Commerce Department showed the trade deficit fell to $45.61 billion in August from $45.63 billion the prior month.China:  Chinas consumer inflation dipped to 6.1 percent in September from 6.3 in August, retreating further from three- year highs, although stubborn food price pressures will deter the central bank from loosening its policy reins anytime soon.  Chinas trade surplus narrowed for a second straight month in September to $14.5 billion, less than Augusts $17.8 billion.  China has formalised a pilot scheme to allow foreign businesses to invest in the country with yuan legally obtained overseas, as the country moves to internationalise its currency.
  4. 4. Swapnil Pawar Varun Goel Jharna AgarwalPalak Nanjani Neha Arora Kanika Khorana DisclaimerThe information and views presented here are prepared by Karvy Private Wealth or other Karvy Groupcompanies. The information contained herein is based on our analysis and upon sources that we considerreliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personalinformation 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 maketheir own investment decisions based on their specific investment objectives and financial position and usingsuch independent advice, as they believe necessary. While acting upon any information or analysis mentionedhere, investors may please note that neither Karvy nor any person connected with any associated companies ofKarvy 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 theabove-mentioned companies from time to time. Every employee of Karvy and its associated companies arerequired to disclose their individual stock holdings and details of trades, if any, that they undertake. The teamrendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares orother securities till such a time this recommendation has either been displayed or has been forwarded to clientsof 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 applicableto them. We also expect significant changes in the tax laws once the new Direct Tax Code is in force – this couldchange the applicability and incidence of tax on investmentsKarvy Private Wealth (A division of Karvy Stock Broking Limited): Operates from within India and is subject toIndian regulations. Mumbai office Address: 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 registrationNo’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”