The document provides an economic and market outlook for September 2012. It discusses that September will be influential due to monetary policy announcements from the RBI, US Fed, and ECB. The RBI announcement is expected to have the least impact as no rate cut is anticipated. The ECB meeting may have a mildly positive impact on Indian equity markets. A QE3 announcement from the Fed could significantly boost risk asset prices including Indian equities. Domestically, growth is slowing across sectors but construction is growing strongly. Inflation is expected to remain around 7%, allowing for RBI rate cuts. The equity market outlook is cautiously positive with valuations attractive and the worst likely behind us.
Global economic developments remained in a sort of suspended animation through last month–especially coming on the back of the recent months of significant turbulence.
October turned out to be a rather positive and optimism inducing month - with most positive global news coming in along with the adaptation of dovish stance by RBI.
The turm oil in financial markets across the globe caused by the rating downgrade of US Government debt by S&P will continue to haunt the Indian markets also for quite sometime to come.
Our ‘Advice for the Wise’ monthly newsletter gives you an outlook across sectors along with economic updates both from a global and domestic perspective.
The economic data calendar was thin. The Institute for Supply Management’s (ISM) Non-Manufacturing Index rose to 50.9 in September, compared to 48.4 in August – 50 represents the breakeven level; anything greater than 50 indicates expansion. The trade deficit narrowed slightly in August – adjusted for inflation, so it appears that net exports will be a slight drag on gross domestic product (GDP) growth in the third quarter of 2009. Jobless claims fell somewhat, but there’s a fair amount of volatility in the numbers at this time of year.
Be realistic, be selective. We believe this market rally has pushed
valuations to the point where growth expectations have reached
implausible levels. In fact, profits have just begun to turn down. We are
not overly bearish – our Buy list is longer than our Sell list – but we
caution that optimism over growth can disappear as quickly as it
appeared. Domestic factors, particularly political developments, may
be a positive catalyst.
Profit recession has just begun. Industrial production peaked in
January 2008, but profits only began a broad-based decline in 1Q09.
Within our coverage, 63% of the companies that have released 1Q
earnings reported lower sequential quarterly net profits. In seven
sectors, our entire coverage list suffered profit contractions. This
suggests the recession in profits has just begun.
Market valuation implies an optimistic view of growth. The market
currently trades at 15.2x 2009 earnings, up from 12x earlier this year.
This is only 10% below the previous cycle’s mid-cycle value, but today,
we face growth of -7.7% (2009) and +9.7% (2010), taking market
earnings only 1% higher by the end of 2010 from its end-2008 level.
Market growth expectations seem to be running ahead of reality.
History tells us the bear market isn’t over. Two previous bear
markets over 1981-86 and 1993-98 lasted 57 and 58 months
respectively. It has now been 17 months from the January 2008
collapse. Those bear markets had 22-38 trend reversals of 5% or more;
we have now seen 12 since January 2008. These comparisons suggest
we are, at best, half way through this bear market.
Bet on Prime Minister Najib, but Sell hope. Our top stock picks are
in the construction sector. We expect PM Najib will deliver on the fiscal
spending promises, reinvigorating the construction and building
materials sectors. Our top Sells are stocks where high hopes and
expectations have been built in; where current prices have run well
ahead of both our and consensus target prices.
Politics a positive wildcard. Beyond rapidly executed fiscal packages,
the country’s new leadership could make further changes to longstanding
policies to attract foreign investment and win back broader
support from all Malaysians. These initiatives should be positive for
equity market at least in the short-term.
The economic calendar was thin this week. The Fed’s Beige Book noted that “economic activity continued to stabilize in July and August.” Not exactly a booming assessment of the economy, but better than the previous report. The July trade deficit showed improvement in both imports and exports – further evidence suggesting that the U.S. and global economies have bottomed. Consumer sentiment rose in early September.
During this week's Invast Insights we cover:
► A look at the Australian Banks
► Will falling interest rates help?
► The big 4 banks analysed
GRAB A 4 WEEK INVAST INSIGHTS FREE TRIAL (WEEKLY NEWSLETTER)
http://invast.com.au/insights
CONNECT WITH INVAST TODAY
Facebook ► https://www.facebook.com/invastglobal
Twitter ► http://twitter.com/InvastGlobal
Linkedin ► http://www.linkedin.com/company/invast
Invast ► http://www.invast.com.au
Google+ ► https://plus.google.com/+InvastAu/
Syz & co syz asset management - market outlook 27 february 2013SYZBank
After a start to the year buoyed by optimism, the last few weeks have been characterized by a kind of “reality check” which does not necessarily call into question the macro-economic outlook, but which reminds us that not everything can be wiped clean by floods of liquidity.
February was a significant and on the balance positive month for all Indian markets as well as the Indian economy. Here's a sneak peek at the markets and other facts required for the upcoming month.
Global economic developments remained in a sort of suspended animation through last month–especially coming on the back of the recent months of significant turbulence.
October turned out to be a rather positive and optimism inducing month - with most positive global news coming in along with the adaptation of dovish stance by RBI.
The turm oil in financial markets across the globe caused by the rating downgrade of US Government debt by S&P will continue to haunt the Indian markets also for quite sometime to come.
Our ‘Advice for the Wise’ monthly newsletter gives you an outlook across sectors along with economic updates both from a global and domestic perspective.
The economic data calendar was thin. The Institute for Supply Management’s (ISM) Non-Manufacturing Index rose to 50.9 in September, compared to 48.4 in August – 50 represents the breakeven level; anything greater than 50 indicates expansion. The trade deficit narrowed slightly in August – adjusted for inflation, so it appears that net exports will be a slight drag on gross domestic product (GDP) growth in the third quarter of 2009. Jobless claims fell somewhat, but there’s a fair amount of volatility in the numbers at this time of year.
Be realistic, be selective. We believe this market rally has pushed
valuations to the point where growth expectations have reached
implausible levels. In fact, profits have just begun to turn down. We are
not overly bearish – our Buy list is longer than our Sell list – but we
caution that optimism over growth can disappear as quickly as it
appeared. Domestic factors, particularly political developments, may
be a positive catalyst.
Profit recession has just begun. Industrial production peaked in
January 2008, but profits only began a broad-based decline in 1Q09.
Within our coverage, 63% of the companies that have released 1Q
earnings reported lower sequential quarterly net profits. In seven
sectors, our entire coverage list suffered profit contractions. This
suggests the recession in profits has just begun.
Market valuation implies an optimistic view of growth. The market
currently trades at 15.2x 2009 earnings, up from 12x earlier this year.
This is only 10% below the previous cycle’s mid-cycle value, but today,
we face growth of -7.7% (2009) and +9.7% (2010), taking market
earnings only 1% higher by the end of 2010 from its end-2008 level.
Market growth expectations seem to be running ahead of reality.
History tells us the bear market isn’t over. Two previous bear
markets over 1981-86 and 1993-98 lasted 57 and 58 months
respectively. It has now been 17 months from the January 2008
collapse. Those bear markets had 22-38 trend reversals of 5% or more;
we have now seen 12 since January 2008. These comparisons suggest
we are, at best, half way through this bear market.
Bet on Prime Minister Najib, but Sell hope. Our top stock picks are
in the construction sector. We expect PM Najib will deliver on the fiscal
spending promises, reinvigorating the construction and building
materials sectors. Our top Sells are stocks where high hopes and
expectations have been built in; where current prices have run well
ahead of both our and consensus target prices.
Politics a positive wildcard. Beyond rapidly executed fiscal packages,
the country’s new leadership could make further changes to longstanding
policies to attract foreign investment and win back broader
support from all Malaysians. These initiatives should be positive for
equity market at least in the short-term.
The economic calendar was thin this week. The Fed’s Beige Book noted that “economic activity continued to stabilize in July and August.” Not exactly a booming assessment of the economy, but better than the previous report. The July trade deficit showed improvement in both imports and exports – further evidence suggesting that the U.S. and global economies have bottomed. Consumer sentiment rose in early September.
During this week's Invast Insights we cover:
► A look at the Australian Banks
► Will falling interest rates help?
► The big 4 banks analysed
GRAB A 4 WEEK INVAST INSIGHTS FREE TRIAL (WEEKLY NEWSLETTER)
http://invast.com.au/insights
CONNECT WITH INVAST TODAY
Facebook ► https://www.facebook.com/invastglobal
Twitter ► http://twitter.com/InvastGlobal
Linkedin ► http://www.linkedin.com/company/invast
Invast ► http://www.invast.com.au
Google+ ► https://plus.google.com/+InvastAu/
Syz & co syz asset management - market outlook 27 february 2013SYZBank
After a start to the year buoyed by optimism, the last few weeks have been characterized by a kind of “reality check” which does not necessarily call into question the macro-economic outlook, but which reminds us that not everything can be wiped clean by floods of liquidity.
February was a significant and on the balance positive month for all Indian markets as well as the Indian economy. Here's a sneak peek at the markets and other facts required for the upcoming month.
A welcome respite in softening of commodity prices provided some much- needed positive sentiment to the Indian equity markets last month.Most benchmarks recovered quite well from their early lows and are showing definite signs of positive near term movement.
‘Advice for the Wise’ newsletter for the month of October is out; it would give you a detailed outlook across sectors along with economic updates both from a global and domestic perspective, do take a look.
Advise for the wise is monthly journal which gives you a highlight of the current market analysis in terms of gold, equity, debt and forex market. Get the overview of the entire financial market in dew slides.
Our ‘Advice for the Wise’ is monthly newsletter which gives you an outlook across sectors along with economic updates both from a global and domestic perspective.
An in-depth research of the market enables us to give you some of the recommendations on Top Equity Mutual Funds, Top Debt Mutual Funds, Top Life Insurance policies and Top Health Insurance policies.
There have been several important developments in the recent weeks. Sustained high inflation and RBI’s hawkish stance in light of it has fundamentally shifted the growth expectations downwards.
• Momentum halted US equities indices were in a +/-1% range, after Treasury
Secretary Geithner said the “vast majority” of banks have enough capital and
comments allayed concerns about next month’s “stress test” results, after an earlier
leak indicating otherwise. Big European banks also reported a brighter 1Q09 results or
guidance. Regional markets were mixed, with profit taking in Indonesia, Hong Kong
and Singapore, while Thailand and Malaysia were up.
• 14 painful years to breakeven at 5.4% p.a. Based on the available sample of MSCI
FExJ data, the long term capital returns for the MSCI FExJ markets works out to 5.4%
p.a. Including dividends, the total returns go up to 8.4% to 9.4%. The bad news is that
at this rate, it would take 14 miserable years before breakeven is achieved for
investments made at the October 2007 market.
• But 6.8% is probably more accurate The good news is that the 8.4% to 9.4% p.a.
returns is likely to be an underestimation of the potential returns of Asian equities. A
sanity check based on the historical cost of equity and the underlying ROE of the
countries under our coverage suggests that the long term returns are likely to be in the
10-18% range. Adding a trendline – albeit crude – to the FExJ index throws up an
implied 6.8% p.a. long term capital returns, or close to 12% total returns if dividends
are accounted for. This is also consistent with the long term returns of 10.7% that have
been documented for US equities.
• Juicing the returns beyond long term returns Returns are determined by the timing
of entry into the market. By definition, markets tend to oscillate around the long term
trendline. The FExJ index is currently below the trendline of its long term growth profile,
as expected. If investors are accurately discounting the GDP turning point that is
months away, risk tolerance should improve and equities should continue its march
upward. A reversion to the long term growth profile of the FExJ markets by the end of
this year implies an annualised return of 52%, while a less optimistic view of a
reversion only by the end of next year produces annualised returns of 24%. At 3.5x and
7.6x long term returns on conservative forecasts, the timing factor favours investors.
Weekly Market Snapshot, October 16, 2009Jeff Green
Earnings reports helped fuel stock market gains, although most contained relatively cautious outlooks. Retail sales fell in September, reflecting an unwinding of the “Cash for Clunkers” impact. However, the decline was less than anticipated. Ex-vehicles, building materials, and gasoline, sales advanced 0.5%, following a 0.7% gain in August. The figures are consistent with a moderate economic recovery. Inventories fell more than expected in August, suggesting that a slower pace of inventory reduction may not make as strong a contribution to third quarter 2009 gross domestic product (GDP) as had been expected. GDP will be reported later this month.
Rong Viet Securities - Investment Strategy Report September 2017Thomas Farthofer
In this month's report Rong Viet explains why they expect a continuation of the current sideway trend in September and how to play the growth in the Vietnamese constrcution sector.
Access to this presentation has been made possible through "Sao Bien. Room for Education", an Austrian-based non-profit organization and cooperation partner of Viet Dragon Securities.
Reprinted with the permission of Viet Dragon Securities. Not for US investors.
Similar to Advice for the wise september 2012 (20)
Introduction of GST in the Rajya Sabha has significance because it could have been passed in the Lok Sabha also. However, Rajya Sabha is where the government does not have majority and since it’s a constitutional amendment that requires two thirds majority, convincing all the parties is a key milestone and to that extent, introduction and subsequent passage of the bill in the Rajya Sabha will be important.
•Earnings Data for 8 core industries including mining, infrastructure and electricity was received which indicated a growth by 5.2% which augers well. However, one needs to see if this is a onetime occurrence or will it continue. Also, since rainfall was moderate, by the end of July, rural consumption is expected to be strong. To that extent, GDP is likely to grow anywhere between 7.5-8% this year. The government’s earlier projections in the budget carry an upward bias.
Dear Investors,
The month of July has seen the heavens literally open their doors and shower their blessings on us. After a late start in June, the monsoon picked up
smartly and the country as a whole received abundant rainfall, bringing cheer to one and all and definitely a sense of relief. The same good cheer
seems to have percolated to the global equity markets as well. Having brushed off the Brexit issue, markets have continued their upward move
relentlessly through the month of July. The US benchmark index, the S&P 500 hit a new lifetime high earlier in the month on the back of good jobs
data and an optimistic view of growth in the US economy. Not wanting to be left out in any way, the Nifty set a new 52-week high and the Sensex
scaled 28,000.
The quarterly results have been a mixed bag so far. While there have been more hits than misses, the IT sector as a whole and some pharma
companies have been the major pockets of underperformance. Most of the private sector retail banks and NBFCs have shown a stellar performance,
while growth in public sector banks was stagnant due to liquidity and NPA issues. In the consumer space, lower costs have added to the profits of
several companies, but revenue growth and volume growth were disappointing. There is hope that these will see a significant pick up in the second
half of the financial year once the benefits of the 7th Pay Commission and a good monsoon kick in.
Global bond yields are at historical lows which mean global bond prices have rallied across developed markets while S&P 500 is close to its historical high. This by itself is a dichotomy as bond prices and equity prices are not expected to rally together at the same point. Either of the two has to be true.
•Bond prices and yields are inversely related therefore, bond prices rally when yields and interest rates are expected to be low. Interest rates are expected to be low because growth prospects are low. This would entail the central banks to cut rates and because the demand for credits will be low due to the low growth prospects, the yields are expected to be low which explains the rally in bond prices. Considering this, the rally in the equity markets is not possible as there is no expectation for growth. This is the dichotomy that the global world is at particularly in the developed markets. In the light of the current scenario, either of the two has to give in i.e. either bond prices correct leading to normalcy in yields or equity markets give in.
how can i use my minded pi coins I need some funds.DOT TECH
If you are interested in selling your pi coins, i have a verified pi merchant, who buys pi coins and resell them to exchanges looking forward to hold till mainnet launch.
Because the core team has announced that pi network will not be doing any pre-sale. The only way exchanges like huobi, bitmart and hotbit can get pi is by buying from miners.
Now a merchant stands in between these exchanges and the miners. As a link to make transactions smooth. Because right now in the enclosed mainnet you can't sell pi coins your self. You need the help of a merchant,
i will leave the telegram contact of my personal pi merchant below. 👇 I and my friends has traded more than 3000pi coins with him successfully.
@Pi_vendor_247
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
Exploring Abhay Bhutada’s Views After Poonawalla Fincorp’s Collaboration With...beulahfernandes8
The financial landscape in India has witnessed a significant development with the recent collaboration between Poonawalla Fincorp and IndusInd Bank.
The launch of the co-branded credit card, the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card, marks a major milestone for both entities.
This strategic move aims to redefine and elevate the banking experience for customers.
Introduction to Indian Financial System ()Avanish Goel
The financial system of a country is an important tool for economic development of the country, as it helps in creation of wealth by linking savings with investments.
It facilitates the flow of funds form the households (savers) to business firms (investors) to aid in wealth creation and development of both the parties
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
@Pi_vendor_247
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
2. Contents
Index Page No.
Economic Update 4
Equity Outlook 8
Debt Outlook 11
Forex 13
Commodities 14
Real Estate 15
2
3. From the Desk of the CIO…
Dear Investor,
September is likely to be a decisive month as regards investor sentiment as do not expect a QE announcement to be very likely.
well as broad equity market direction. This is owing to the three monetary
A very positive development in recent weeks has been a finance ministry-
policy “events” – RBI monetary policy announcement, US Fed stand on QE-
driven top-down “directed” transmission of earlier repo rate cuts made by
3 and ECB’s monetary policy meeting. Over last few weeks, investors
RBI into lower cost of loans extended by banks. This helps to correct the
globally have come to hope positive outcomes from the second and third
unusual divergence which had developed between some monetary easing
while the Indian investors have started to assume no change in RBI’s
– which RBI did do earlier this year – and almost no change in cost of credit
hawkish stance as regards the first.
for the real economy – which was because banks held their base rates
We expect these three “events” to have very different degrees of impact nearly unchanged through this monetary easing. Now that the finance
on Indian equity and debt markets. The RBI policy announcement is likely ministry has forced some of the monetary easing into the banking system,
to be least influential – largely owing the widespread expectation of no we may expect some delayed positive influence on infrastructure spending
repo rate cut. ECB policy is likely to somewhat more influential – to the and automobile sales, and potentially end-user driven real estate
extent that it is widely believed to be at least incrementally useful in transactions. That might help boost the sagging growth momentum.
resolving the sovereign debt crisis in Eurozone. We expect a mildly positive
This does open up a very interesting debate though – if banks are reluctant
influence on Indian equity markets from the ECB meeting. The Fed
to lend at lower interest rates, that was probably because their credit
announcement of QE-3, if it does happen, is likely to be a massive
growth was satisfactory at the earlier lending rates. This is also borne out
sentiment and liquidity boost to all risk assets including Indian equities.
by the deposit and credit growth numbers through last few months. If that
Also, owing to at least some anticipation having already been built into
is the case, it remains to be seen if the lower cost of credit brought about
global investors’ calculation as regards this, a decisive lack of anything like a
by finance ministry intervention would increase inflationary pressure. If so,
QE would also lead to a mild dampening of sentiment, leading potentially
RBI’s cautious stance on interest rates would not be incorrect.
to a mild correction. As we highlighted in the last month’s newsletter, we
“Advisory services are provided through Karvy Stock Broking Ltd. (PMS) having SEBI Registration No: INP000001512. Investments are subject to market risks. Please read the disclaimer on slide no.18”
4. Economic Update - Snapshot of
Key Markets
120 Sensex Nifty S&P 500 Nikkei 225
As on 31st Change over Change over 115
110
Aug 2012 last month last year 105
100
BSE Sensex 17429 1.1% 4.5% 95
90
85
Equity S&P Nifty 5258 0.6% 5.1%
Markets S&P 500 1406 2.0% 16.0% 10 yr Gsec
9.30
Nikkei 225 8839 1.7% (1.3%) 8.80
8.30
7.80
7.30
10-yr G-Sec Yield 8.24% (1 bps) (8 bps) 6.80
Debt Markets Call Markets 7.95% (8 bps) (7 bps)
32000
Fixed Deposit* 9.00% 0 bps (25 bps) 30000 Gold
28000
26000
24000
RICI Index 3813 4.8% (5.2%) 22000
Commodity
Gold (`/10gm) 30735 2.8% 14.8%
Markets
60
Crude Oil ($/bbl) 112.6 6.3% (2.6%) `/$
55
50
45
Forex Rupee/Dollar 55.7 0.2% (17.4%)
40
Markets Yen/Dollar 78.6 (0.4%) (2.4%)
• Indicates SBI one-year FD 4
•New 10 Year benchmark paper(8.15%, 2022 Maturity) was listed in the month of June, the 1 year yield is compared to the earlier benchmark(2021 Maturity)
5. Economy Update - Global
• Gross domestic product expanded at a 1.7% annual rate in the second quarter. Industrial production
increased 0.6% in July after a 0.1% gain in June, offering more hope the economy was improving after
growth slowed in the second quarter
US
• The US unemployment rate increased to 8.3% in month of July, slightly higher than 8.2% in June. Gross
domestic product expanded at a 1.5% annual rate between April and June, the weakest pace of growth
since the third quarter of 2011.
• Markit's final PMI was 45.1, above July's three-year low of 44.0. However, the figure was the 13th month
in a row that it was below the 50 mark that indicates growth. The PMI has now signalled contraction for
Europe 12 consecutive months.
• The 17-nation euro zone contracted by 0.2% on the quarter.
• Euro zone inflation held steady at 2.4% in July - just above the ECB's target of close to but below 2%.
• The Markit/JMMA Japan Manufacturing Purchasing Managers Index (PMI) fell to a seasonally adjusted
47.7 in August from 47.9 in July. Japanese manufacturing production declined for a Third successive
Japan month in August, and at an accelerated rate.
• The inflation rate in Japan was recorded at -0.40% in July of 2012, which was at -0.2% in the month of
June 2012.
• The HSBC Flash China manufacturing purchasing managers index (PMI) - a preliminary read-out that
provides an early peek at data for August - fell to 47.8 this month, its lowest level since November and
Emerging well down from July's final figure of 49.3.
economies • India's wholesale price index (WPI) Inflation dropped to 6.87% in July from 7.25% in June as domestic
petrol and vegetable prices fell in July & consumer price inflation slowed slightly in July to 9.86% lower
than 10.02% in June.
5
6. Economy Outlook - Domestic
10.0% • India's economic growth fell below the psychologically
8.0% IIP
significant 6% level for the Second consecutive time in last 3
6.0%
4.0% years, signalling that country’s slowdown is deepening and
2.0% affecting all sectors of the economy. GDP marginally grew by 2
0.0% bps when compared with the Last quarter of FY 12 reading of
-2.0%
-4.0%
5.3%. Sharp falls in the manufacturing & Agriculture sectors
-6.0% have led to India’s GDP growing only at 5.5% as compared to
Dec 11
Dec 11
Jun 11
Jun 11
Jun 11
Aug 11
Aug 11
Sep 11
Sep 11
Feb 12
Feb 12
Mar 12
Mar 12
May 12
May 12
May 12
Jul 11
Jul 11
Oct 11
Oct 11
Nov 11
Nov 11
Nov 11
Apr 12
Apr 12
Jan 12
Jan 12 7.7% growth a year earlier.
• India's industrial output fell for the third time in four months in • While the deceleration in the overall economy is apparent
June. India's industrial production has contracted 1.8% during June across all industry groups, the construction sector has seen a
2012 compared with 2.5% growth in May 2012. The cumulative sharp year-on-year growth of 10.9% in the June quarter, which
growth for the period April‐June 2012‐13 stood at ‐0.1% against is a five-year high. This has also driven demand for steel and
6.9% recorded in the corresponding period of the previous yea cement. The activities which gained substantially in this quarter
r. IIP grew by 8.8% a year earlier in June 2011. The May’12 IIP has compared to a year-ago were ‘Financing, insurance, real estate
been revised to 2.5% from earlier estimate of 2.4%. and business services’ at 10.84% and ‘Community, social
and personal services’ at 7.92%.
9.0
• This was mainly due to sharp fall of 27.9% in capital goods & a 8.4 8.3
slump in manufacturing. Manufacturing, which constitutes about 7.8 7.7
8.0 GDP growth
76% of industrial production, shrank an annual 3.2% from a year 6.9
7.0
earlier. 14 out of the 22 industry groups have reported positive
6.1
growth on year-on-year basis. 6.0 5.5
5.3
• Mining reported a growth of 0.6% after prolonged contraction 5.0
for a year on the back of series of bans in various states
4.0
following illegal mining activities. Electricity surprisingly rose by
FY11(Q2) FY11(Q3) FY11(Q4) FY12(Q1) FY12(Q2) FY12(Q3) FY12(Q4) FY13(Q1)
8.80% y-o-y from 5.90% y-o-y in the previous month. 6
7. Economic Outlook - Domestic
Growth in credit & deposits of SCBs
25.0% The annual rate of inflation, based on monthly WPI
23.0% Bank Credit Aggregate Deposits (Wholesale Price Index), stood at 6.87% for the month of
21.0% July, 2012 as compared to 7.25% for the previous month and
19.0% 9.36% during the corresponding month of the previous year.
17.0%
15.0% The Food inflation, which plays a major role in influencing
13.0% the headline number, grew at 10.06% in July against 10.81%
11.0% in June. The index for ‘Food Articles’ group rose by 1.4% to
9.0% 212.2 from 209.2 for the previous month due to higher prices
7.0% of certain food items. the Core inflation is estimated to have
5.0% inched up to 5.44% from 4.9% in June.
India's new consumer inflation rate, based on the all-India
General Consumer Price Index (CPI) (Combined) declined
As on 27th July 2012, Bank credits grew by 17.4% on a Y-o-Y basis slightly to 9.86% in July 2012. Based on the Consumer Price
which is 189 Bps lower than the growth witnessed in July 2011 Index (CPI), the inflation for June was revised downwards to
(i.e. 19.3%). Aggregate deposits on a Y-o-Y basis grew at 13.9%, 9.93% from the provisional estimate of 10.02%
viz-a viz a growth of 18.1% in July 2011.
10.0%
Normally, banks try to make their balance sheet stronger before 9.5%
Wholesale Price Index
9.0%
March 31, and meet their targets, and so there was a spurt in
8.5%
short-term deposits and advances, post that there has been a 8.0%
decline in both the months. 7.5%
7.0%
On 31st July 2012, Reserve Bank of India kept the key policy rates 6.5%
unchanged and cut the Statutory Liquidity Ratio (SLR) by 100 bps 6.0%
to 23%, as the primary focus of policy remained on inflation
control in order to secure a sustainable growth path over the
medium-term
* End of period figures 7
8. Equity Outlook
Global equity markets continued to be positively biased in anticipation of further monetary easing from European central bank and US
Fed. In the month of August, FIIs brought over Rs. 8,000 crores in Indian Equity Markets taking the calendar year till date (CYTD) number
to 65000 crores. Nifty crossed the 5,400 mark but couldn’t sustain it because of profit booking. Markets await positive policy action and
reforms announcements by the central government.
After a very turbulent CY11 in which nifty corrected 24%, Indian equity markets have bounced back this year with a 14% return on CYTD
basis. In last six months, sectors like consumer, healthcare and private sector banking have done quite well with robust earnings growth
and double digit stock price gains.
India's GDP for first quarter grew by 5.5% which was in line with market expectations, driven by a rebound in construction and financial
services. We believe that growth might have bottomed out this quarter. Monsoon rains continued to pick up momentum with the
seasonal deficit narrowing to 12% and agricultural growth for the year should moderate only slightly.
With Indian government expected to raise petrol and diesel prices very soon, pressure on fiscal side should ease off. This should also
give some comfort to RBI when it carries out the mid-quarterly monetary policy review on 17th September. We are expecting a 25bps
cut in repo rate in this policy. As interest rates come down, corporate investment cycle will revive leading to a bounce back in economic
growth.
The inflation number for the month of July came in at 6.9%. We expect inflation to stay around 7% for this fiscal thus giving the
necessary comfort to RBI to carry out the required monetary easing
We believe that macro-economic environment should stabilize going forward before growth starts trending up by year end. While
headlines remain weak, markets continue to trade at attractive valuations with the worst behind us. We believe cautiousness in the near
term should be used to accumulate quality stocks with a slightly longer-term view
8
9. Sector View
Sector Stance Remarks
We believe in the large sized opportunity presented by Pharma sector in India. India’s strength in
generics is difficult to replicate due to quality and quantity of available skilled manpower. With the
Healthcare Overweight developed world keen to cut healthcare costs, and a vast pipeline of drugs going off-patent, Indian
Pharma players are at the cusp of rapid growth. We would bet on the opportunity in Generics and
CRAMS space
.The reversal of the interest rate cycle will assist in managing asset quality better and would lead to
BFSI Overweight increase in credit growth. However, we like the private sector more than public sector due to better
management quality and higher balance sheet discipline
We prefer “discretionary consumption” beneficiaries such as Cigarettes and branded garments, as
FMCG Overweight the growth in this segment will be disproportionately higher vis-à-vis the increase in disposable
incomes.
The regulatory hurdles, competitive pressures and leverage prevent any return to high profitability
Telecom Neutral levels in the short to medium term. However, incumbents have started to increase tariffs slowly
and we believe that consolidation will happen sooner than expected.
The significant slowdown in order inflow activity combined with high interest rates has hurt the
E&C Neutral sector. Now since the interest rate cycle has started to reverse, we have turned more constructive
on this space.
9
10. Sector View
Sector Stance Remarks
Raw material prices have started coming down which would boost margins. We are more bullish on
Automobiles Neutral
two-wheeler and agricultural vehicles segment due to lesser competition and higher pricing power.
Cement industry is facing over capacity issues and lackluster demand. With regulator taking a strong
Cement Neutral
view against pricing discipline, the profits of the sector are expected to stay muted.
We like the regulated return Characteristics of this space. This space provides steady growth in
Power Utilities Neutral
earnings and decent return on capital.
We would stay away from oil PSUs, due to issues of cross subsidization distorting the underlying
Energy Underweight
economics of oil exploration and refinery businesses.
Commodity prices have corrected significantly over the last few months due to concerns about growth
Metals Underweight
in China and developed parts of the world.
With the US and European customers of Indian IT companies are struggling, Order inflows might slow
IT/ITES Underweight
down in near term. Most companies are loosing pricing power due to high competitive intensity.
10
11. Debt Outlook
9.0
8.8
Yield curve 9.30
10-yr G-sec yield
8.80
8.6
8.4
(%)
(%)
8.30
8.2 7.80
8.0
7.30
7.8
6.80
7.6
0.0
0.8
1.6
2.4
3.2
4.0
4.9
5.7
6.5
7.3
8.1
8.9
9.7
10.5
11.3
12.1
12.9
13.7
14.5
15.3
16.1
16.9
17.7
18.5
19.4
• The 10-year benchmark G-sec yield fell marginally by 1 bps to 8.24%, during the month August 2012.
• In G-sec auction, RBI auctioned 4 G-Sec (Rs. 16,000 cr) -namely -8.19% GS 2020 (Rs. 4000 cr), 8.33% GS 2026 (Rs. 7000 cr),
8.28% GS 2032 (Rs, 2000 cr) and 8.83% GS 2041 (Rs. 2000 cr) with cut-off yield of 8.34%, 8.40%, 8.58% and 8.62%
respectively.
• The spread a 10 year AAA rated corporate bond spread marginally decreased to 100 Bps (31st August 2012) from 102 bps
(31st July 2012). The AAA Rated bonds were yielding 9.24% on 31st August 2012.
12
12. Debt Strategy
Category Outlook Details
With the policy rates remaining unchanged by RBI along with the 100 bps
SLR cut in july’12 and trend reversal of the interest rates which started with
a 50 Bps rate cut in April’12, we would recommend investment in short term
Short Tenure debt as further rate cuts are not going to be aggressive and early too. Due to
Debt liquidity pressures increasing in the market as RBI has a huge borrowing
plan, short term yields would remain higher. Short Term funds still have high
YTMs (9.5% – 10%) providing interesting investment opportunities.
Some AA and select A rated securities are very attractive at the
current yields. A similar trend can be seen in the Fixed Deposits also.
Credit Tight liquidity in the system has also contributed to widening of the
spreads making entry at current levels attractive.
With the policy rates remaining unchanged by RBI along with the 100 bps SLR
cut in july’12 and trend reversal of the interest rates which started with a 50 Bps
rate cut in April’12, and signals passive cuts in near future, we would
recommend to hold on to the current investment for a horizon of 18-24 months
Long Tenure
in Longer term papers and not to increase the exposure in the same. These,
Debt while being available at attractive yields, also provide an opportunity for Capital
appreciation due to a decrease in interest rates. Hence, these would be suitable
for both - investors who may want to stay invested for the medium term (exiting
when prices appreciate) and those who would want to lock in high yields for the
longer term.
13
13. Forex
Rupee movement vis-à-vis other currencies (M-o-M) 100 Trade balance and export-import data 0
80 -5000
1.00% 60
Export Import Trade Balance (mn $)
-10000
0.44% 40
0.50% 20
-15000
0.15%
0 -20000
0.00% -20 -25000
-0.50% -0.32%
-1.00% • Exports during July, 2012 were valued at US $ 22.44 bn which
was 14.80% lower than the level of US $ 26.34 bn during July,
-1.50% 2011. Imports during July, 2012 were valued at US $ 37.94 Bn
-2.00% -1.73% representing a negative growth of 7.61% over the level of
USD GBP EURO YEN imports valued at US $ 41.06 Bn in July, 2011 translating into a
trade deficit of $15.49 Bn.
140000
Capital Account Balance
• INR has appreciated against USD & Japanese Yen, whereas it
witnessed a depreciation against GBP & Euro. INR appreciated 90000
by 0.15%, in Aug (Appreciated by 0.9% in July 2012) against the
US Dollar. But, since the beginning of the calendar year it has
40000
depreciated by 4.4%
• Growth and inflation worries in India keeps Indian currency rate -10000 FY 10 (Q3) FY 10 (Q4) FY 11 (Q1) FY 11 (Q2) FY 11 (Q3) FY 11 (Q4) FY 12 (Q1) FY 12 (Q2)
under pressure. After starting July with strong gains, the rally • The projected capital account balance for Q2 FY 12 is revised
started to fizzle out towards the second half but ended the from Rs. 84,400 Cr to Rs. 78,800 Cr also the Q1 figure was
month with an appreciation. revised downwards to Rs. 99,500 Crores from Rs. 1,02,100
Crores.
• The Reserve Bank of India (RBI) has been taking a series of steps • We expect factors such as higher interest rates to attract more
to rein in the currency’s loss, including curbing banks’ abilities investments to India. Increased limits for investment by FIIs
to speculate in the currency market since last two months. The would also help in bringing in more funds though uncertainty
central bank sold at least $20 billion to stabilize the currency. in the global markets could prove to be a dampener.
14
14. Commodities
32000
31000
Gold
We continue to maintain our bullish stance on gold. The 30000
bond purchase program of ECB is viewed as a big positive 29000
Precious steps supporting prices amid the German Constitutional
28000
Court verdict awaited on the status of ESM. This shall
Metals bound to impact the currency markets. Having said that, 27000
gold is entering into its seasonally best quarter and one 26000
can expect only prices to go north. 25000
24000
140
130
Crude
As the central bankers across the world pumping liquidity
into the system, oil prices are unlikely to see any major 120
fall. Combined with this is the refinery shutdowns due to
Oil & Gas hurricane Issac triggering a reduction in supplies. Oil 110
prices are likely to be firmer after an industry report
100
showed stockpiles shrank to the lowest in more than five
months in the U.S., the world’s biggest crude consumer.
90
Expect prices to move higher.
80
15. Real Estate Outlook - I
Asset Classes Tier I Tier II
With new DCR regulations Mumbai market saw some confidence
coming back for investors. Rates remained at peak levels and
shows no sign of stress. The sales in many premium pockets have
Prices surged since last quarter, factors being
seen over 60% plunge. Thane and Panvel sees lot of end user
largely growth of infrastructure and young aspiring
transactions. All other prime markets like Pune, Banaglore,
first time home. Cities like Jaipur, Bhopal,
Residential Chennai, Hyderabad, NCR are seeing rate stagnancy well over 2
Trivandrum, Madurai, Lucknow, Patna, Chandigarh
quarters now. With new supply being announced every month,
highly attractive for apartments in 600-1100 sqft
the stress on sales continues. Given the overall average of these
range
markets, any project having Rs. 4000 per sqft entry point with a
good developer sees lot of interest (keeping the unit size well
under 1500 sqft)
Lease transactions are under pressure and new rate/sqft trends
Very less benchmarks available but the rents are
getting established in all major IT driven pockets/cities. Mumbai
Commercial/IT growing 8-10% every year for commercial
still manages to stay afloat due to heavy investment in small
properties in Tier-II cities
office spaces from investors
15
16. Real Estate Outlook - II
Asset Classes Tier I Tier II
Still to re-cover from the 2008 shock, many malls have
been experiment grounds for retailers. The FDI is well
Hi-street rules the roost, the mall culture is repeated
awaited for re-starting the retail phenomenon in major
beaten in the Tier-2 markets and predominantly seeing a
Retail cities. 60% of the mall in India are not even 60% occupied
re-structure of plans to suit schools, hospitals, commercial
and if occupied, unable to get rent on time. Investment in
offices, call centers, super-market etc
prime mall spaces can get good returns due to opening up
of FDI.
Land has given better appreciation in these markets than
30-40 kms radius near in prime markets are becoming Tier 1, since there is a natural demand to own land
Land expensive month on month. Interest from investors has property. Also, scarcity in old locations and new upcoming
drawn lot of attention in well connected areas. areas due to infrastructure is making many invaluable land
valuable
Please Note:
Tier I* markets include Mumbai, Delhi & NCR, Bangalore, Pune, Chennai, Hyderabad and Kolkatta
Tier II* markets includes all state capitals other than the Tier I markets
The IC note is proposed to be presented every quarter
16
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• Offering COMPREHENSIVE choice of investing across all asset classes
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Intensive Research
We closely track the historical performance across asset classes, sub-asset classes and product providers to identify, evaluate and
recommend investment products (KPW’s or third-party). We have our own proprietary methodology for evaluating products; for
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truly exceptional performers to be added to your portfolio
Honest, unbiased advise
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broking houses), who are doing wealth management. Neither do we have exclusive tie-up with any single insurance company like
all banks do.
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A talented team of leaders with global and Indian experience, having a unique blend of backgrounds of wealth management,
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18
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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
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20