The World This Week September 24 - September 28 2012
The World This WeekSept 24 – Sept 28, 2012
Equity View: Last week, Indian equity markets touched 5700 levels for the first time since 26th July 2011. We have seen a big inflow of foreign money in the month of September with more than 20,000 Crores coming in. From the beginning of the year in January we have almost seen 76000 Crores of FII money being directed towards Indian markets. This is turning so far has turned out to be a great year in terms of total foreign investment in the Indian equity markets. Indian equity markets continue to be one of the best performing markets in Asia and also in the emerging markets and as such we continue to be positive on the markets. We believe that going forward, as the monetary easing starts; we will see a rebound in growth which would take care of some of these pressures and a lot of negative momentum that we were seeing in various infrastructure indicators at this point of time. We believe that going forward there is a chance that the IIP might have bottomed out and we would see some rebound in infrastructure growth numbers. We have seen the core sector growth for the last month coming at 2.1% which is largely being flattish as it has been in the last 4 -5 months and probably we will see a small off-take going forward. The Rupee seems to be moving on the appreciating trend. We have seen rupee moving from around 55 levels to almost 52.5 - 53 against the Dollar now. The kind of foreign inflows which is coming in is causing the rupee to appreciate. Also the fact is that Interest rates in various parts of the world continue to come down whereas in India they have been constant for a long time. So the interest rate differential between India and other countries specially the US has become even more because of which we see some kind of a depreciating trend in US because of QE3 and rupee has been holding forth for quite some time. The current account deficit which has come in for the June quarter ($16.55 Bn) has also come in lower than the March quarter ($21.76 Bn) which also eases off some pressure from the rupee. We believe that if this kind of positive momentum in Indian equity markets continues, we might see some more appreciation in the Indian rupee because of which we would have a very cautious way on the IT space as of now.News:DOMESTIC MACRO: Indias consumer price index (CPI) for industrial workers at 10.31 percent in August from a year earlier, higher than an annual rise of 9.84 percent in July The Reserve Bank of India data released on Friday showed India ran a balance of payments surplus of $0.5 billion in the April-June quarter, versus a deficit of $5.7 billion in the previous three months. In the June quarter last year, India had posted a $5.4 billion surplus. The current account deficit fell to $16.55 billion in the June quarter, down from an all-time high of $21.76 billion in the March quarter, and also below the $17.54 billion deficit posted in the June quarter last year.
GLOBAL MACROEURO Germany is the last country in the 17-member euro zone to complete ratification of the European Stability Mechanism (ESM), an important tool to stem the three-year debt crisis that has forced bailouts of Greece, Ireland and Portugal and now threatens big countries like Spain and Italy. European Central Bank President Mario Draghi offered a vigorous defence of the banks bond-buying plans to a sceptical German audience on Tuesday and said it was now up to governments to follow with decisive policy steps of their own.US The euro zone has stepped back from the brink of disaster for now, but the global economy could soon be staring into another abyss if U.S. politicians fail to head off $600 billion in automatic austerity that all but guarantees a new recession.China Chinas central bank said on Tuesday that it will "fine tune" policy to cushion the economy against global risks while closely watching the possible impact from recent policy loosening in the United States and Europe. Chinas economy is expected to grow at a much slower pace of about seven percent over the next decade, but its stock market still has the most attractive upside among "BRIC" countries, according to Jim ONeill, Chairman of Goldman Sachs Asset Management.
Satadru Mitra Varun Goel Jharna Agarwal Abbas Naheed Kinjal Mehta DisclaimerThe 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”