The document provides an overview of global and domestic economic conditions and outlooks across various sectors in a monthly investment advisory. Some key points: - Global equity markets saw declines in September due to ongoing weakness in China and fears of rising US interest rates. Domestic Indian markets were also impacted by foreign outflows. - The RBI cut interest rates by 50 basis points to boost the Indian economy amid signs of recovery in industrial growth and moderating inflation. This was welcomed by markets. - Sector outlooks varied with IT, healthcare and financials expected to outperform while metals and utilities faced challenges due to global and regulatory factors. Government policy changes could boost infrastructure.

1. Advice for the Wise
October 2015

2. Contents
From the desk
of the CEO
Did you
know?
Domestic
Equity
Outlook
Global Equity
Outlook
Domestic
Debt Outlook
Domestic
Debt Strategy
Global Debt
Outlook
Global
Economy
Update
Foreign
Exchange
Commodities
Real Estate
Outlook
What’s
Trending?

3. From the desk of the CEO
Dear Investors,
September saw a spillover of the previous month’s equity
market correction. The main reason for this was the continuing
bleak global events, which also negated domestic macro green-
shoots to a large extent. In the West, the possibility of a US Fed
rate hike lingers, keeping investors globally on their toes.
Amidst this global weakness, uncertainties of global markets
with respect to the Euro have reduced after Alexis Tsipras’
Syriza party returned to power once again in Greece, this time
with a majority. The Chinese government is also taking
initiatives like tightening trading rules on forex and stock
market to stabilize their economy. The slowdown in China in a
way has been India’s gain, which has led to India emerging as
the top destination for FDI investments, attracting $30 billion
by the end of June 2015.
Closer home, better looking green-shoots portray a recovering
economy. Industrial growth has been above 4% for the past 2
months, whereas retail inflation continues to remain lower.
Although there has been a double digit deficit in the rainfall
this year, RBI is not too much worried about the pressure on
the food prices given the comfort it has derived from the
actions by the government to manage supply. An addition to
these positives was RBI increasing the foreign investment limit
in central government securities. This will help create a new
pool of money to compensate for the lowering SLR imposed on
banks.
Markets rejoiced at the bonnes nouvelles (good news) of the
50 basis points rate cut by RBI at the fourth bi-monthly
meeting. The main objective behind this was to enhance
growth in the economy. Mr. Raghuram Rajan hopes that
investment should respond more strongly after some certainty
about the extent of monetary stimulus in pipeline, even if the
transmission is low. With this transmission, investments in the
real economy would increase. This announcement was then
followed by a highly ‘dovish’ stance, with the RBI repeating
that it would remain in an ‘accommodative mode’. The rate cut
has increased the cumulative rate cut this year to 125 bps. It is
hearting that banks like SBI has cut its base rate by 40 bps.
All in all, the month saw events that were unexpected, events
that created a yin-yang sentiment among investors and events
that made India shining more convincing. RBI has taken the
first bold step on its part. The question now is what the
government will do on its part to grow our economy!

4. Did You Know?
#Source: huffingtonpost
The Japanese were the first to use
Technical Analysis to trade one of
the world’s first rice futures
markets in the 1600s.
Currency notes are made from the
material created out of special
blend of cotton and linen and not
from paper as may be ordinarily
perceived.
Apple's cash and investments are
now equal to the GDP of Hungary
and more than those of Vietnam
and Iraq.

5. Domestic Equity Outlook
As on 25th
Sep 2015
1 month
change
1 year
change
Equity
Markets
BSE Sensex 25863 -0.6% -2.3%
CNX Nifty 7868 -0.2% -0.5%
BSE Midcap 10598 0.4% 13.3%
BSE Smallcap 10942 2.3% 4.8%
Equity markets extended its August correction to early part of the September month. Fears of US Fed increasing
rates in September and no respite on the Chinese front ensured global weakness. Persistent foreign outflows led
to markets moving in line with the global markets. Rainfall deficit in double digits further dampened the
sentiment. However, positive macro data during the later part brought some recovery and kept the markets
steady. Industrial growth has been above 4% for two months in a row, indicating some signs of recovery. Monthly
retail inflation continues to trend lower and is comfortably below the target range. With US Fed once again
postponing the rate hike; subdued domestic outlook and lower inflation prompted RBI to cut the repo rates by
50bps to 6.75%. This time it is expected that banks will transmit larger part of rate cuts to the end users which
should give a positive flip to the economy.
90
95
100
105
110
115
120
125
130 S & P BSE Sensex CNX Nifty
BSE Midcap BSE Smallcap

6. Domestic Equity Outlook
Government Policy
With Monsoon session being a near washout, crucial bills like Real Estate and GST could be introduced for
approval in the next session of parliament. One can expect the winter session to be advanced so that GST bill
could still be possibly passed and effected before the April 2016 deadline. With an aim to channelize idle assets
for productive use, government also launched a gold sovereign bond plan and gold monetization scheme.
Market View (Contd.)
A visible economic recovery seems few quarters away and thus markets are likely to remain range-bound for
some extended period of time. Annual returns of large cap indices are now in negative zone. Thus any recovery
in growth from hereon can lead to better margin of safety for long term investors. In the near to medium term,
sectors like Healthcare, IT and Financials can out-perform over other segments. However, buying quality stocks
via bottom-up strategy should be the preferred way for long term investments.

7. Domestic Equity Outlook
 Deflationary trend continued for 10th month in a row
with WPI inflation plunging to a historic low of (4.95%) in
August as compared to (4.05%) in July.
 Overall, food inflation basket remained in the negative
territory for second month in a row at (1.13%). For
vegetables, it was (21.21%), helped by potato where
inflation was (51.71%). Inflation in the fuel and power
segment was (16.50%), while that of manufactured
products was (-)1.92% in August.
 CPI for the month of August came in at 3.66%,
marginally lower than the July CPI which stood at
3.78%.
 Food inflation for the month of August has come in
almost flat at 2.20% versus 2.15% month-on-month
(MoM), while vegetable price inflation stands at -6.36%
against (7.93)% (MoM). Cereals and products inflation
stands at 1.22% versus 1.06% in July.
Wholesale Price Index Consumer Price Index
#Source: Moneycontrol, Zee news
-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00% WPI CPI

8. Domestic Equity Outlook
 Industrial output growing at 4.2% in July, indicates a
revival in industrial activity. It had grown by 0.9% in
July last year.
 The manufacturing sector, which constitutes over
75% of the index, grew by 4.7% in July 2015 against a
contraction of 0.3% in the same month last year.
 Meanwhile, the mining sector output improved 1.3%
in July 2015, snapping (0.5%) decline in June 2015
 India's Gross Domestic Product (GDP) growth for the
first quarter of the current financial year grew at 7%
versus 6.7% YoY .
 Manufacturing growth slowed down to 7.2% versus
8.4% YoY, whereas agricultural growth also slowed to
1.9% versus 2.6% YoY. With the change method, India's
growth topped that of China in the first quarter this
year
#Source: Business today
4.0
5.0
6.0
7.0
8.0
GDP
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
Jul
14
Aug
14
Sep
14
Oct
14
Nov
14
Dec
14
Jan
15
Feb
15
Mar
15
Apr
15
May
15
Jun
15
Jul
15
IIP

9. Sector Outlook
Sector Stance Remarks
IT/ITES
Select verticals displaying better growth. Long term outlook to improve once global
uncertainties come down.
Automobiles
Passenger vehicles and CVs to outperform two-wheeler segment. Tractors to continue weak
show. Auto-ancillaries expected to do well due to revival of demand.
Healthcare
Huge global opportunity as a generic and bulk drug supplier. Better placed against peers in
terms of technology and labor cost arbitrage. To continue to gain global share and thus
generate strong earnings growth.
FMCG
We prefer “discretionary consumption” theme within FMCG. Key beneficiaries such as
durables and branded garments, as the growth in this segment will be disproportionately
higher vis-à-vis the increase in disposable incomes. Gross margin expansion to continue.
Power Utilities
Lack of fuel linkages and clearances have led to poor performance for utility companies.
Proposed measures to support Discoms would act as a positive for power finance companies.
Cement
Cement prices showing traction. Volumes still under pressure. Going ahead raw material
costs, pricing and realizations would be key for sector valuations.

10. Sector Outlook
Sector Stance Remarks
Energy
With the price deregulation of diesel, we believe the total subsidy burden on Oil PSU’s will come
down significantly this year. Govt. has decided to pay full subsidy to OMC’s . International crude
price movements key to future performance.
E&C
Order inflows expected to improve as spending and capital expenditure likely to move up on
economic recovery.
BFSI
Private sector banks are expected to continue to deliver healthy earnings in line with
expectations. However, we expect PSUs to deliver muted numbers on asset quality concerns.
Recent rate cuts to benefit housing and other finance companies
Telecom
Regulatory uncertainties have come down. However, aggressive bids for spectrum has revived
fears of sub-optimal returns on capital.
Metals
Lower global growth and Chinese slowdown has kept the growth subdued. Absence of US
monetary stimulus will lead to further downward pressure on prices.

11. Global Equity Outlook
As on 25th
Sep 2015
1 month
change
1 year
change
Equity
Markets
MSCI World 1594 0.68% -6.36%
Hang Seng 21186 -1.02% -10.86%
S&P 500 1931 3.41% -1.76%
Nikkie 17880 0.41% 9.20%
US Fed once again postponed its rate hike for future months citing global volatility as the major reason. With
revised second quarter GDP at 3.9%, the recovery seems better on back of increased construction and consumer
spending. Most of the FOMC officials indicate a rate hike by December this year. Brazil credit rating has been
downgraded to Junk by S&P. This adds woes to the depreciating currencies of most emerging markets. Chinese
officials have taken various measures during the month so as reduce the market damage and improve economy. A
steady Chinese economy will play a large role in tackling the global slowdown.
80
90
100
110
120
130
140
150
MSCI World Hang Seng S&P 500 Nikkie

12. Global Economy Update
United States
• Contracts to buy previously owned U.S. homes decreased
in August, indicating the robust housing market could be
losing some steam. The Pending Home Sales Index rose
6.1% from the same month a year ago, marking 12
straight months of year-over-year gains.
• US gross domestic product rose at a 3.9 % annual pace in
the April-June quarter, up from the 3.7 % pace reported
last month.
Emerging Economies
• The Reserve Bank of India (RBI) lowered the benchmark
repo rate by 50 basis points to 6.75%, while keeping the
CRR unchanged at 4%. However, it has lowered its FY16
GDP growth target to 7.4% from 7.6%.
• China's giant factory sector likely shrank for the second
month in a row in September the official manufacturing
Purchasing Managers' Index (PMI) is forecast to inch
down to 49.6 from August's 49.7.
Japan
• Japan Tobacco Inc is in advanced talks to buy assets worth
about $5 billion from Reynolds American Inc , including
some of the Natural American Spirit tobacco brand.
• Bank of Japan Gov. Haruhiko Kuroda vowed Monday the
central bank will remain strongly committed to
overcoming deflation, admitting that it will take more
time for firms and households to adapt to inflationary
changes.
Europe
• Loans to households and non-financial corporations,
extended their steady but sluggish recovery. They
respectively grew by 1.0% and 0.4% year-on-year in
August, or 10bps faster than July's figures, which had
been revised down last week.
• Ireland plans to bring in legislation linking residential
rents to the rate of inflation, in a bid to curb soaring
rental costs.
#Source: New York Times, Yahoo Finance

13. Domestic Debt Outlook
•The yields on 10 Yr G sec closed at 7.72% which is 5 bps lower than
the last months close of 7.77%.
•Advance tax and value-added tax payments tightened systemic
liquidity. The overnight rate settled at 6.50% during the end of
Sept, as against 8.00-8.10% during the mid-month.
•The RBI’s 13-day term repo auction during the first half of Sept saw
strong demand, with bids received totaling nearly Rs 32,000
crore compared with the notified amount of Rs 24,000 crore.
•Gilts rose sharply as sentiment for dated securities was boosted by
the RBI’s interest rate reduction.
As on 25th
Sep 2015
1 month
change
1 year
change
Debt Markets
10-Yr G-Sec Yield 7.72 (5bps) (71bps)
Fixed Deposit 7.50 0bp (125bps)
0
50
100
150
200
250
300
AAA AA+ AA AA- A+ A A- BBB+
Corporate Bond Spreads
5 Years 10 Years 15 Years
7.40
7.60
7.80
8.00
8.20
8.40
8.60
8.80
9.00
9.20
9.40
G-Sec
10 YR Gsec Yield 5 YR Gsec Yield
15 YR Gsec Yield

14. Domestic Debt Strategy
Our recommendations regarding short term debt is that investors with the time horizon
of 1 year to 2 years can look for short term debt funds. Even though, most of the short
term fund’s YTMs have fallen to sub-9%, our recommended short term debt funds still
have high YTMs (8.1%-10.7%) providing interesting investment opportunities.
The corporate bond market segment continues to be attractive over the medium term,
especially with expectations of an improvement in corporate profitability; an improved
economic outlook and due to the benefits of credit easing. With credit easing, there are
chances that the companies’ rating will be upgraded that would further cause a rally in
bonds, which in turn will benefit corporate bond funds.
As RBI has reduced the key policy rates, dynamic bond funds have benefited alot as most
of them have a mix of gilt and long term bonds in their portfolio. A rally caused by easing
yields could lead to capital appreciation in gilts as well as corporate bonds, which means
over medium to long term we could see more gains coming from these funds.
As RBI has done the front loading of rate cut, we expect it to halt it for some time and go
for further rate cuts over medium to long term as inflation comes down. Long term debt
and Gilt funds looks attractive over medium to long term and is advisable for aggressive
investors only.
Short Term
Debt
Corporate
Bond Funds
Dynamic
Bond Funds
Long Term
Debt Funds

15. Global Debt Outlook
• The top five largest sovereign EM (emerging
market) debt issuers, as of end-2014, were China
(with $3.5 trillion total sovereign debt outstanding),
India ($1.3 trillion), Brazil ($1.2 trillion), Mexico
($387.5 billion) and Turkey ($265.5 billion).
• Referencing a recent report from consultants
McKinsey, Moody's said that between 2007-14
debt-to-GDP ratios increased by 20 percentage
points or more in the corporate sectors of China,
Turkey, Hungary and Chile, and in the household
sector in Thailand.
• The U.S. Federal Reserve kept interest rates
unchanged on Thursday in a nod to concerns about
a weak world economy, but left open the possibility
of a modest policy tightening later this year.
• US 10 years yields depreciated to 2.084 down by
0.5% as demand for the safe haven status propped
up amidst global market weakness.
#Source: Economic Times, Reuters
Ratings Country
10 Yr G-Sec
Yield
1 month
change
AAA
Germany 0.59% (13bps)
Hong Kong 1.71% (1bp)
Sweden 0.69% 5bps
Switzerland -0.12% 3bps
AA+ USA 2.07% (7bps)
AA-
China 3.33% (15bps)
Japan 0.35% (4bps)

16. Commodities
Gold continues to be range-bound with a negative bias. With
global currencies remaining weak, the larger band of $1000-1200
remains.
.
As on 25th Sep, 2015 : `26426 per 10gm
1 month change : -1.03%
1 year change : -0.16%
MCX Gold October futures are likely to trade with sideways trend
during today's session. MCX Gold finds strong support at 26620
and resistance at 26850. Oil prices dropped in Asian trading hours
on Monday despite a fourth weekly fall in US drilling activity, with
analysts pointing to the weak economic outlook as the main
reason for low crude prices.
As on 21st Sep, 2015 : $47.64per bbl
1 month change : 4.10%
1 year change : (50.80%)
*RICI: Rogers International Commodity Index – Tracks 38 commodity futures from 13 international exchanges.
2,000
2,500
3,000
3,500
RICI
24000
25000
26000
27000
28000
29000
Gold
0.00
50.00
100.00
150.00
Crude

17. Foreign Exchange
• The Indian rupee has appreciated against all the major currencies. It has appreciated by 4.26% against the EURO,
4.18% against GBP, 1.69% against YEN and 0.92% against USD.
• The rupee ended at a near one-month high against the US dollar on heavy dollar sales following the US central bank’s
interest rate decision.
• Dollar purchases by state-owned banks for oil companies and defence payments prevented the rupee from rising
higher.
• Yen traded on a marginally negative note and is expected to remain volatile before the Bank of Japan Chairman s
speech at 11.00 IST
Currency
As on 25th
Sep 2015
1 month
change
1 year
change
USD/INR 66.09 0.92% -7.68%
GBP/INR 100.88 4.18% -1.45%
Euro/INR 73.96 4.26% 5.25%
Yen/INR 55.08 1.69% 1.43%
USD/Euro 0.89 2.51% 14.39%
0.92%
4.18% 4.26%
1.69%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
USD GBP EURO YEN

18. Real Estate Outlook
Tier I
RBI has exceeded expectations with a 50 bps rate cut in
September. SBI has followed suit and cut lending rates by 40 bps
for home, car and other retail loans. The home loan rates are
among the lowest in recent times. Developers have unsold
inventory and are constantly innovating lower down payment and
large backended payment schemes with/without requirement of
a home loan . New launches have reduced and focus has been on
completing projects on hand.
Tier II
Larger demand is being seen in Bangalore, Hyderabad and Pune
by E commerce and consulting firms. Rentals are expected to
largely remain stable in 2015–16 as supply pipeline is still strong.
Absorption volumes have been surpassing new completions
consistently since H1 2014, as a result of which, the vacancy levels
in India have been dwindling
Low unit sizes have played an important role in maintaining
the absorption levels in these markets. Lease rentals as well as
capital values continue to be stable at their current levels in
the commercial asset class.
With improvements in infrastructure across cities like
Chandigarh, Jaipur, Lucknow, Ahmedabad, Bhopal, Nagpur,
Patna and Cochin and quality products being offered the end
users /investors are being spoilt for choice. The Demand
drivers remain increasing nuclearization, rising disposable
incomes and easier availability of credit.
Residential
Commercial

19. Tier I Tier II
The Mall concept is new to Tier II cities and High Street retail
is still popular. Anecdotal evidence suggests that rentals have
remained stagnant in this space.
Not much has changed for retail market in the last few months
and capital values and rentals remain flaccid. The absorption is
low and vacancy remains high.
Land in Tier II and III cities along upcoming / established
growth corridors have seen good %age appreciation due to
low investment base in such areas.
Fringe areas with improving connectivity to Metro cities and
other top 8 to 10 cities in India have seen interest in purchase of
Plotted / Villa developments due to lower ticket size and better
marketing by developers /aggregators. There is an uptick in
demand for warehousing with the growth of E commerce.
Retail
Land
Real Estate Outlook

20. Base Rate
• What is it?
The Base Rate is the minimum interest rate of a Bank below which it cannot lend, except in cases allowed
by RBI. The Base Rate system has replaced the BPLR system with effect from July 1, 2010.
• How will it impact markets?
With the banks reducing their base rate, there is likely to be some impact on the net interest margin
(NIM) in the coming quarters. The pressure on it will depend on the quantum of rate cut by each bank;
most analysts broadly expect it to be in the range of 10-15 bps in the third quarter of this financial year. If
Banks shift their Base Rate calculation from Average Cost of Funds to Marginal Cost of Funds than they
will have more room to cut their Base Rate further.
• How will it impact consumers?
Lower Base Rate brings down the interest rate on loans. This helps corporate as well as individuals
because it helps them to borrow at cheap interest rate.
What’s Trending?

21. Karvy Investment Advisory Services Limited [KIASL] is a SEBI registered Investment Advisor and provides advisory services. The information in this newsletter has been prepared by
KIASL based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness
guaranteed and the same are subject to change without any notice. This newsletter and information herein is solely for informational purpose and may not be used or considered as
an offer document or solicitation of offer to buy or sell or subscribe to the securities mentioned. The securities discussed and opinions expressed in this newsletter may not be taken
in substitution for the exercise of independent judgment by any recipient as the same may not be suitable for all investors, who must make their own investment decisions, based on
their own investment objectives, financial positions and needs of specific recipient. The information given in this document is for guidance only. Final investment decisions have to be
made by the recipients themselves after independent evaluation of the investment risk. Recipients are advised to consult their respective tax advisers to understand the specific tax
incidence applicable to them. Affiliates of KIASL may from time to time, be engaged in any other transaction involving such securities/commodities and earn brokerage or other
compensation or act as a market maker in the securities/commodities discussed herein or have other potential conflict of interest with respect to any recommendation and related
information and opinions. Wherever products offered by the Karvy Group entities may be recommended, it is to be noted that KIASL does not provide execution services and further
KIASL does not receive any monetary or non monetary benefit as regards such recommendations made.This newsletter and information contained herein is strictly confidential and
meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or
reproduced in any form, without prior written consent of KIASL. Past performance is not necessarily a guide to future performance. KIASL and its Group companies or any person
connected with it accepts no liability whatsoever for the content of this newsletter, or for the consequences of any actions taken on the basis of the information provided therein or
for any loss or damage of any kind arising out of the use of this newsletter.
Nothing in this newsletter constitutes investment, legal, accounting and tax advice or a representation that any of the investment mentioned is suitable or appropriate to your specific
circumstances. The information given in this document on tax is 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. While we would endeavor to update the information herein on reasonable basis, KIASL , its associated
companies, their directors and employees (“Karvy Group”) are under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other
reasons that may prevent KIASL from doing so. KIASL will not treat recipients as customers by virtue of their receiving this newsletter. The value and return of investment may vary
because of changes in interest rates or any other reason. Karvy Group may have issued other reports that are inconsistent with and reach different conclusion from the information
presented in this newsletter.Recipients are advised to see the offer documents provided by the Issuers/ Product Providers to understand the risks associated before making
investments in the products mentioned. Recipients are cautioned that any forward-looking statements are not predictions and may be subject to change without notice.KIASL
operates from within India and is subject to Indian regulations. This newsletter is not directed or intended for distribution to, or use by, any person or entity who is a citizen or
resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would
subject KIASL and affiliates to any registration or licensing requirement within such jurisdiction. Certain category of investors in certain jurisdictions may or may not be eligible to
invest in securities mentioned in the newsletter. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.Entities
of the Karvy Group provide execution services in the capacity of being stock broker, depository participant, portfolio managers and the like. Recipients may choose to execute their
transactions through entities of the Karvy group and pay applicable charge for the same.
Registered office Address:Karvy Investment Advisory Services Limited, ‘Karvy House’, 46, Avenue 4, Street No. 1, Banjara Hills, Hyderabad - 500034
SEBI Registration No: INA200001959
Disclaimer