- The macroeconomic situation in Europe continues to deteriorate, with GDP growth slowing or declining in major economies like Germany, France, and Italy. The ECB announced further interest rate cuts to stimulate the economy. - In contrast, the US economy remains strong with ongoing job growth and bull market conditions. Interest rate hikes are not expected until mid-2015. - In India, quarterly earnings reports starting in October will be the next influence on the stock market until then.

1. The World This Week
September 01 – September 06, 2014

2. Equity View:
The macro economic situation in Europe continues to deteriorate. The GDP growth is almost down to zero and the talks are indicating a triple-dip recession. The crisis was aggravated by the Export ban imposed by EU countries on Russia which was reciprocated in turn by Russia. This has led to a further de- growth in some of the major economies. France, Italy and Germany have seen a fresh hit to the macro economic growth. The last quarter GDP growth for UK also took a dip. Considering this, an economic stimulus was announced by the European Central Bank of providing further cut in the interest rates. We believe this kind of stimulus to continue for some more time.
US, on the other hand, continue to show aggressive economic growth. The US markets continue to make life-time highs. The S&P crossed 2000-mark in the last week and still trades above that level. There is a big bull market rally playing out which is backed by the improving macro-economic conditions there. We believe this situation in US to improve and maintain our stance that the first interest rate hike in the region would happen only in the middle of 2015.
In India, Q2 earnings starting from the first week of October would be the next trigger for the market. Until then global news would be driving the markets.

3. News:
DOMESTIC MACRO: RBI amends Basel III guidelines for banks - Indian banks can now issue Tier 2 capital with a minimum original maturity of 5 years as against 10 years previously, the Reserve Bank of India (RBI) said in a notification on Monday, amending some guidelines on Basel III implementation in India. India's rating seen limited by fiscal deficit, inflation - Moody's Modi could do more to curb inflation - opinion poll.
GLOBAL MACRO
EURO Central European PMIs point to slowdown as sanctions hit sentiment. ECB cuts rates to ward off euro zone deflation threat - The ECB cut its main refinancing rate to 0.05 percent from 0.15 percent.
United States U.S. job growth brakes to eight-month low, labor force shrinks - Nonfarm payrolls increased 142,000 last month after expanding by 212,000 in July, the Labor Department said on Friday. Most Wall Street firms see U.S. rate hike in second quarter 2015: Reuters poll. U.S. trade deficit smallest in six months on rising exports.
Japan Japan GDP seen revised down, raises concern about tax hike plan.
China China economy fears deepen as August HSBC flash PMI at three-month low.
Indices:
Date
Sensex
Midcap
Auto
Bankex
CD
CG
FMCG
HC
IT
Metals
O&G
Power
Realty
Teck
1/9/2014
26,868
9,445
17,522
18,326
9,331
15,323
7,352
13,380
10,124
12,595
11,365
2,095
1,774
5,635
2/9/2014
27,019
9,524
17,552
18,453
9,589
15,321
7,407
13,626
10,142
12,494
11,483
2,094
1,788
5,678
3/9/2014
27,140
9,605
17,670
18,430
9,631
15,444
7,363
13,667
10,395
12,639
11,485
2,093
1,826
5,803
4/9/2014
27,086
9,615
17,689
18,354
9,644
15,289
7,382
13,733
10,352
12,449
11,424
2,083
1,745
5,779
5/9/2014
27,027
9,669
17,573
18,298
9,660
15,421
7,359
13,760
10,405
12,534
11,456
2,084
1,765
5,792
0.59%
2.37%
0.29%
-0.16%
3.53%
0.64%
0.09%
2.84%
2.78%
-0.48%
0.80%
-0.53%
-0.51%
2.79%

4. Commodities and Currency:
Date USD GBP EURO YEN Crude (Rs. per BBL) Gold (Rs. Per 10gms) 01/09/14 60.47 100.43 79.40 58.06 6240 27761 02/09/14 60.61 100.49 79.56 57.81 6216 27537 03/09/14 60.54 99.73 79.54 57.71 6082 27346 04/09/14 60.45 99.46 79.42 57.60 6222 27428 05/09/14 60.44 98.64 78.20 57.36 6156 27292 0.28% Rupee Appreciated 1.87% Rupee Appreciated 1.75% Rupee Appreciated 0.78% Rupee Appreciated -1.35% -1.69%
Debt:
Tenor Gilt Yield in % (Friday) Change in bps (Week) 1-Year 8.67 0 2-Year 8.61 15 5-Year 8.59 2 10-Year 8.52 1

5. Varun Goel
Jharna Agarwal
Nupur Gupta
Mahesh Gaddamedi
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