Twenty-one years ago China officially devalued its currency and the events following that eventually led to the Asian crisis. Last month experienced a similar scare when the Chinese markets took down the rest of the world with it after devaluating its currency once again on 11th August 2015. In hindsight the causality of this event has come into light. The main trigger was the bursting of the Chinese stock market bubble last month that triggered a huge sell off in the market. To add fuel to the fire, the Yuan was devalued creating a contagion affect leading to a global slowdown. The “Risk-Off” strategy made global funds pull out money from emerging markets and move to safer havens. The re-alignment of commodities affected countries like Australia, Malaysia, Brazil and Russia among others. Along with this gold prices fell too, which was noticed in the fall in gold futures in New York for four straight sessions, increasing gold’s volatility. Crude was no exception to the fall. However it showed improvements towards the end of the month after an announcement by OPEC to come up with a plan to boost prices. After a slump, U.S. markets rose after the release of the GDP data and improved consumer confidence. Across the ocean from US, European markets rose too on the back of improvement in German business confidence. Globally markets seemed to recover gradually towards the end of the month.

1. Advice for the Wise
September 2015

2. Contents
From the desk
of the CIO
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 CIO
Dear Investors,
Twenty-one years ago China officially devalued its currency and
the events following that eventually led to the Asian crisis. Last
month experienced a similar scare when the Chinese markets
took down the rest of the world with it after devaluating its
currency once again on 11th August 2015. In hindsight the
causality of this event has come into light. The main trigger
was the bursting of the Chinese stock market bubble last
month that triggered a huge sell off in the market. To add fuel
to the fire, the Yuan was devalued creating a contagion affect
leading to a global slowdown. The “Risk-Off” strategy made
global funds pull out money from emerging markets and move
to safer havens.
The re-alignment of commodities affected countries like
Australia, Malaysia, Brazil and Russia among others. Along with
this gold prices fell too, which was noticed in the fall in gold
futures in New York for four straight sessions, increasing gold’s
volatility. Crude was no exception to the fall. However it
showed improvements towards the end of the month after an
announcement by OPEC to come up with a plan to boost
prices. After a slump, U.S. markets rose after the release of the
GDP data and improved consumer confidence. Across the
ocean from US, European markets rose too on the back of
improvement in German business confidence. Globally markets
seemed to recover gradually towards the end of the month.
India is unlikely to remain absolutely insulated from adverse
global events, but has however been able to show far better
resistance than other emerging countries. But what was it that
India had that the others did not? India has shown
considerable improvement in the past one year in terms of
strengthening FX reserves, containing inflation, GDP and
generating positivity in the markets. The ramification of the
Chinese devaluation can also be seen in the possible delay of
US rate hike, which is another positive for India. On a similar
note, the appreciation of the USD will lead US to keep the rate
hike quantum lower. The sell-off in commodities and crude is
also a positive for a net importing country like India. With this
fall, valuations have once again become reasonable and near
long term averages. The risk-reward seems favorable even after
considering some negatives like bleak rainfall. Depreciation in
the home currency led to a fall in bond yields initially. However
this trend reversed as the rupee recovered once again.
Global corrections might still continue in the short term. But
this opens an opportunity to enter into the market and
accumulate stocks with a medium to long term outlook. We
should once again carry forward the momentum of positive
sentiments in the Indian economy going ahead.

4. Did You Know?
#Source: huffingtonpost, bankrate
Former Fed Chairman Alan
Greenspan has a poorly veiled tic
in his right eyebrow. Investors
measured how high he raised it
while talking, saying it was a
better indicator of whether
interest rates were going up.
The world’s oldest surviving bank
is Monte Dei Paschi di Siena,
founded in 1472 and
headquartered in Tuscany, Italy. It
still operates today.
On Dec. 5, 2012, Apple stock lost
$34.9 billion in market cap.
According to CNBC's Carl
Quintanilla, 417 of the S&P 500's
components had a total market
cap of less than $35 billion that
day.

5. Domestic Equity Outlook
As on 25th
Aug 2015
1 month
change
1 year
change
Equity
Markets
BSE Sensex 26032 (7.40%) (1.50%)
CNX Nifty 7880 (7.50%) (0.30%)
BSE Midcap 10560 (5.30%) 13.10%
BSE Smallcap 10694 (8.30%) 3.80%
Equity markets turned out to be extremely volatile in August. Specter of weak monsoon loomed over the
domestic economy while concerns over the prospects of a currency war among emerging markets kept investors
anxious. China devalued its currency by 2.9% to ostensibly boost its economy by making its exports more
competitive. However the ensuing panic in global markets would ensure that China desist from devaluing its
currency as it eyes inclusion in the IMF’s SDR (Special Drawing Rights) portfolio which will mark a step forward in
its long term goal of being an international reserve currency. Emerging markets followed global markets in the
free fall as investors were anxious about the fall out of any competitive currency devaluation. Indian markets
corrected by 9% turning the annual returns into the negative zone. Markets are expected to be volatile in the first
half of September till the Fed meet on September 17. Long term investors are advised to take advantage of the
volatility and accumulate bluechips in sectors such as IT, FMCG and private banks.
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
Monsoon session could not extract any meaningful business while the government bowing to opposition
pressure has allowed the Land Acquisition Ordinance to lapse creating disappointment among investors.
However the silver lining came in the form of allowing pension behemoth EPFO access to equity markets.

7. Domestic Equity Outlook
 The Wholesale Price Index based inflation dipped further
into sub-zero level (4.05%) in July compared with May
2015, driven by 1.16% drop in food prices and 1.47% fall
in prices of manufactured items.
 Inflation of food articles and food products turned
negative at (1.4%) in July from 1.9% in June 2015 and
inflation of non-food items (all commodities excluding
food items) dipped to (5.2%) in July from (4.1%) in June
2015.
 Consumer price inflation cooled to 3.78 % in July giving
respite from the high level of 5.4 % in June helped by
the base effect and a major slump in food prices.
 Retail inflation in categories such as fuel, light and
housing also eased to 5.3% and 4.4% respectively in
July from 5.92% and 4.48% in June.
Wholesale Price Index Consumer Price Index
#Source: Business Standard, Livemint
-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00% WPI CPI

8. Domestic Equity Outlook
 The Index of Industrial output rose to a four-month high
of 3.8 %, compared to 2.7 % in the previous month.
The rebound was led by a turnaround in the
manufacturing sector, which rose 4.6% in June compared
to 2.9% growth in the year earlier period.
 The turnaround in consumer goods and consumer
durables also augured well but the capital goods sector
contracted after seven months, pointing to weakness in
investment conditions.
 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: Times of India
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
Jun
14
Jul
14
Aug
14
Sep
14
Oct
14
Nov
14
Dec
14
Jan
15
Feb
15
Mar
15
Apr
15
May
15
Jun
15
IIP
4.0
5.0
6.0
7.0
8.0
GDP

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 , poor SEB health, adverse CERC guidelines have compromised the ROE’s
leading to de-rating in near term. In long run, they are core to India’s infra story.
Cement
Cement volumes witnessing pressure. Going ahead 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
E&C
Order inflows expected to improve as spending and capital expenditure likely to move up on
economic recovery.
BFSI
Private sector banks continue to deliver healthy earnings in line with expectations. However, we
expect PSUs to deliver muted numbers on asset quality concerns.
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
Aug 2015
1 month
change
1 year
change
Equity
Markets
MSCI World 1584 -9.26% -9.25%
Hang Seng 21405 -14.82% -14.95%
S&P 500 1867 -10.20% -6.52%
Nikkie 17807 -13.33% 14.05%
Sharp correction in Chinese markets and lower growth rates is another matter of worry on the global front.
However, government seems committed to boost the growth and has taken various stimulus measures. Currency
devaluation in many countries such as Malaysia, Brazil, Indonesia and Australia apart from many of Russia’s
trading partners in central Asia and crude oil dependent Middle East is a potential cause of concern for global
growth
80
90
100
110
120
130
140
150
MSCI World Hang Seng S&P 500 Nikkie

12. Global Economy Update
United States
• United States’ flash manufacturing purchasing managers’
index (PMI) dipped to 52.9 in August from 53.8 in July.
• US Q2 prelim GDP growth came in at 3.7% versus the
Advance GDP growth rate of 2.4%.
• US existing home sales rose 2% in July to a seasonally
adjusted annual rate of 5.59mn, the fastest rate since
February 2007.
Emerging Economies
• India’s exports fell for the 8th straight month in a row
contracting 10.30% in July while imports fell 10.28%. The
trade deficit widened to $12.8 bn in July from $10.8 bn in
June.
• China's Industrial production rose 6% Y-o-Y in July,
compared with a 6.8% rise in June. Its Caixin/Markit
preliminary manu. PMI stood at 47.1 in August.
Japan
• The 0.6 % decline in output in July was much worse than
the median estimate for a 0.1 % increase and follows a 1.1
rise in June
• Japanese household spending fell (0.2)% from the year
before, while the jobless rate for July came in at 3.3%.
Job-To-Applicant ratio was 1.21 for July.
Europe
• The European GDP growth slowed to 0.3% Q-o-Q in Q2
from 0.4% in Q1. Its industrial production fell by 0.4%
M-o-M in June following 0.2% decline in May.
• Eurozone trade surplus rose to a six-month high in June,
as exports grew at a faster pace than imports. It rose to a
seasonally adjusted €21.9bn in June, up 2.8% month-on-
month and the highest level since December last year.
#Source: New York Times, Yahoo Finance

13. Domestic Debt Outlook
•The yields on 10 Yr G sec closed at 7.81% which is 2 bps lower than the
last months close of 7.83%.
•The central bank continued to provide banks with opportunities to park
funds by holding reverse repo auctions. The banking regulator also
infused funds through two term repo auctions
•Bond yields surged initially during the last week on the back of fall
in the domestic currency .
•Spread between AAA Corporate Bond and Gilt expanded by up to 7
bps across the maturities. However, 15-year paper contracted by 2 bps.
As on 25th
Aug 2015
1 month
change
1 year
change
Debt Markets
10-Yr G-Sec Yield 7.81% (2bps) (84bps)
Fixed Deposit 7.50% (25bps) (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 (9.0%-10.5%) 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 and an
improved economic outlook. The credit opportunities funds are better placed due to
stable returns and a change in taxation warranting a minimum holding period of three
years to avail indexation benefits.
Secondly, as we expect RBI to lower policy rates during the course of next 3-9 months,
dynamic bond funds are likely to outperform in the due course. Hence one could look at
dynamic bond funds having medium term of investment horizon.
G-sec funds may be less attractive now as the longer holding period (more than three
years) will neutralise any capital gains in the near term because of lower accrual income.
Hence our recommendations regarding long term debt is that investors could look to book
profits by reducing long term debt funds / Gilt funds in their portfolio.
Short Term
Debt
Corporate
Bond Funds
Dynamic
Bond Funds
Long Term
Debt Funds

15. Global Debt Outlook
• Ukraine has clinched a deal that would see its largest
private creditors write down 20 % of its $18 billion debt
pile. Restructuring its debt will help Ukraine meet the
terms of the $17.5 billion aid package from the
International Monetary Fund.
• China has cut its holdings of U.S. Treasuries this month
to raise dollars needed to support the yuan in the wake
of a shock devaluation two weeks ago
• Japan’s central government’s debt hit a record high of
¥1.057 quadrillion at the end of June, up by some ¥3.87
trillion from the end of March. The latest figure means
that the government owed ¥8.32 million per person
based on the nation’s estimated population of 126.95
million as of July 1.
• The United States posted a budget deficit of $149.2
billion in July, up 58 % from the same period last year,
the U.S. Treasury Department said. The current fiscal
year-to-date deficit stood at $465.5 billion at the end of
last month. Receipts last month totaled $225.5 billion, a
5 % increase from July 2014, while outlays stood at
$374.7 billion, up 21 % from the same period last year.
#Source: Financial Times, Jqpan Times, Bloomberg
Ratings Country
10 Yr G-Sec
Yield
1 month
change
AAA
Germany 0.72% 6bps
Hong Kong 1.72% (20bps)
Sweden 0.64% (12bps)
Switzerland -0.15% (10bps)
AA+ USA 2.14% (12bps)
AA-
China 3.48% 1bp
Japan 0.39% (2bps)

16. Commodities
Gold has been sideways with a mild positive bias as it remains
the primary toll of speculation against the prospects of US dollar
in the backdrop of a global currency upheaval.
.
As on 25th Aug, 2015 : `26700 per 10gm
1 month change : 8.54%
1 year change : 3.35%
Industrial commodities' price fell sharply in the last three months.
This fall has mirrored the 40-60% rout in underlying global
commodity prices such as crude, iron ore, and steel. Demand, on
the other hand, is falling accentuated by the serious ongoing
slowdown in China. Crude oil, too, has suffered from weak global
demand
As on 24th Aug, 2015 : $41.69per bbl
1 month change : (23.40%)
1 year change : (58.60%)
*RICI: Rogers International Commodity Index – Tracks 38 commodity futures from 13 international exchanges.
24000
25000
26000
27000
28000
29000
Gold
2,000
2,500
3,000
3,500
4,000
RICI
0.00
50.00
100.00
150.00
Crude

17. Foreign Exchange
• The Indian rupee has depreciated against all the major currencies. It has depreciated by 9.06% against the EURO,
7.94% against YEN, 5.71% against GBP and 4.22% against USD.
• Initially, the rupee plunged against the dollar on concerns over global economic slowdown. However, the Indian
rupee extended gains, rebounding further from a two-year low against the dollar, after China's central bank cut
interest rates and simultaneously relaxed reserve requirements.
• It had earlier hit as low as 66.76 to the dollar, its weakest since Sept. 4, 2013.
• India's foreign exchange reserves rose by $920.6 million to $355.353 billion towards the end of August, on account of
higher foreign currency assets.
Currency
As on 25th
Aug 2015
1 month
change
1 year
change
USD/INR 66.71 -4.22% -9.42%
GBP/INR 105.10 -5.71% -4.74%
Euro/INR 77.12 -9.06% 3.42%
Yen/INR 56.01 -7.94% 3.57%
USD/Euro 0.87 -4.61% 15.22%
-4.22%
-5.71%
-9.06%
-7.94%
-10.00%
-9.00%
-8.00%
-7.00%
-6.00%
-5.00%
-4.00%
-3.00%
-2.00%
-1.00%
0.00%
USD GBP EURO YEN

18. Real Estate Outlook
Tier I
A rate cut of another 25 bps from Reserve bank of India is
anticipated in coming months. The home loan rates are among
the lowest in recent times and Developers are going all out to
stoke demand. New launches have reduced and focus has been on
completing projects on hand. Innovative financing schemes are
being offered to lure investors/end users.
Tier II
Absorption volumes have been surpassing new completions
consistently since H1 2014, as a result of which, the vacancy levels
in India have been dwindling. Larger demand is being seen in
Bangalore, Hyderabad and Pune by E commerce and consulting.
Rentals are expected to largely remain stable in 2015–16 as
supply pipeline is still strong.
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. Devaluation
• What is it?
Devaluation is a planned or market forced reduction in the value of a country’s currency, relative to
another currency. It may improve a country’s Balance of Payments by making their exports more
competitive. However it affects inflation for imported goods.
• How does it affect the country who carries out a devaluation of their currency?
It sends signal to the world that the economy is sputtering. It indicates that the economy is trying ways to
get going during a slowdown. It creates a stir among investors, which might accelerate capital outflows if
investors expect further devaluation.
• How does it affect the market and other economies?
Any countries trading with that economy puts their own companies at a disadvantage. It puts pressure on
other central banks to push down their currencies to help their own exports.
What’s Trending?

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