The document provides a weekly summary of economic and financial news from February 15-19, 2016. Key points include: - The railway and union budgets in India are expected to focus on rural growth and curbing fiscal deficit. - Global and domestic stock markets were flat or saw small declines over the week. - The OECD raised India's growth forecast to 7.4% for 2016-2017, citing strong capital expenditures. - Several major economies including the US and eurozone saw growth forecasts downgraded. - China reiterated commitments to economic stability amid restructuring.

1. The World This Week
February 15 – February 19, 2016

2. Equity View:
Before the union budget come on Monday the railway budget is going to be presented on Thursday if we
see the last time budget railway minister Mr. Suresh Prabhu had given lots of commitment but sadly
nothing much happened on the ground level. Almost 6 trillion rupees were allocated but because the
spending was so slow the finance minister had to cut down his spending by another 12 thousand crore.
The issues was not enough money had been spent that led to the slow down.
In regards to union budget we can simply say if Indian economy is balance sheet union budget presents
as the profit and loss a/c. in this budget government focus would be on how to push up the rural growth
what sort of structured reforms can be done, how spending can be done while curtailing the revenue
expenditure, make in India theme. In this budget key thing which domestic and global investor will be
watching out for is that whether government will be able to curtail the fiscal deficit to 3.5%. Fiscal deficit
3.5% for FY17 could have been achieved easily but the two new thing come in picture one is 7th
pay
commission where they have increased the wages by 22%-23% and second thing is OROP, this two things
adds approximately 0.6 - 0.7 of GDP. Because this government needs to raise revenue from the fronts so
it can increase its additional 7% of GDP so as to maintain 3.5% in FY17.
Apart from the budget normal things which one should be looking out for is how corporate earnings are
shaping up after 2008-2009 this is the first time when sensex earnings will end up on flat or slightly
negative note. The major reasons apart from the oil companies, PSU banks because of RBI guidelines they
have taken the direct hit that is why they have great fall in the earnings. We are hoping that FY 17
onwards market start showing double digit growth this can happen because we are seeing the early signs
or indicators of industrial growth and economic activity picking up. So that being the case we are
expecting FY 17, 10% to 12% higher. From here one or two quarters market looks range bound or 5% -
10% up or downside but over 2 to 3 year market again start looking good.
On the global factor one can watch out for is US tightening their monetary rates irrespective of how it is
going to impact other economies for them they need recovery and inflation path, they need their
spending to go up and whatever are arbitrage opportunities that has been their till now because of the
quantitative easing that is going to evaporate. Japan is now in to negative interest rates whether it is
going to be successful or not. If the strategy goes successful don’t be surprised if US stops monetary
tightening and once again go back to the opposite direction in few quarter down the line which is going
to be a positive thing once again it’s never ending story.

3. News:
DOMESTIC MACRO:
Indian economy will continue to see robust growth at 7.4% in the next financial year even as only modest
recovery is expected in advanced economies, Paris-based think tank OECD said on Thursday. The
Organisation for Economic Cooperation and Development (OECD) has raised India's growth forecast
compared to 7.3% expansion projected in November 2015.India will continue to grow robustly, by 7.4% in
2016 and 7.3% in 2017," the think tank said in its latest Interim Economic Outlook report.
“In the current fiscal, our capital expenditure, which goes into asset creation, has seen a significant growth
as against revenue expenditure, which goes into salary payment and rent and is resulting in high growth,”
The improvement was more significant with regard to plan expenses on capital account. It was 85.3 per
cent of Budget Estimates at the end of December as again 57.9 per cent a year ago.
GLOBAL MACRO
EURO
Greece's stock market has fallen to its lowest level since 1989 while the country's borrowing rates in the
bond markets have spiked up to levels last seen during the more acute phases of its crisis. With the
government struggling to agree on a pension’s reform package with creditors and the unions angry at the
latest batch of austerity measures, there are renewed fears over the bailed-out country's economic
outlook. That’s reflected in the markets.
Draghi gave a speech to the EU parliament, in which he reiterated the now familiar statement that
emerging markets and commodity price weakness are the primary reasons for recent market fluctuations.
He then noted that actions taken since the recession should allay investors' concern about the overall
condition of the financial sector.
United States
U.S. official doubts success of deal to freeze oil output A senior U.S. energy official said he doubted the
success of a proposal by OPEC and non-OPEC producers to freeze crude oil output in an oversupplied
market and boost prices.Oil prices have crashed 70 percent in the past 20 months, driven by near-record
production by the Organization of the Petroleum Exporting Countries (OPEC) and other producers, mainly
Russia.
The world’s largest economy the United States suffered one of the biggest downgrades among major
developed economies. Its growth forecast for this year was cut to 2.0 percent, down 0.5 percent from last
November’s prediction by the OECD.It was the same for Germany, Europe’s largest economy, while euro
zone growth is also expected to slow to 1.4 percent. Among the largest emerging economies,
China
China’s leaders moved to dispel perceptions of disarray in the management of the world’s second-largest
economy, firing a top regulator and setting out specifics on how they intend to restructure the economy
without having growth fall off a cliff. The departure of Xiao Gang as head of the China Securities Regulatory
Commission, announced by the official Xinhua News Agency on Saturday morning. In a brief, Xinhua said
the decision was made by the State Council, China’s cabinet.
China promises economic stability as G20, parliament loom. Chinese policymakers emerged from the Lunar
New Year hiatus with one collective message for nervous investors at home and abroad - Beijing will put a
floor under the slowing economy, keep its currency steady and ensure employment remains stable even as
bloated industries undergo restructuring

4. Indices:
Date Sensex Midcap Auto Bankex CD CG FMCG HC IT Metals O&G Power Realty Teck
15/02/16 23,554 9,949 16,539 16,428 11,916 12,008 7,175 15,312 10,455 6,889 8,502 1,665 1,099 5,639
16/02/16 23,192 9,707 16,238 16,082 11,731 11,641 7,031 14,965 10,363 6,769 8,304 1,647 1,066 5,565
17/02/16 23,382 9,753 16,406 16,044 11,456 11,753 7,090 15,200 10,454 6,791 8,420 1,659 1,072 5,613
18/02/16 23,649 9,814 16,498 16,221 11,561 11,940 7,197 15,471 10,656 6,867 8,523 1,664 1,076 5,720
19/02/16 23,709 9,803 16,641 16,274 11,567 11,921 7,206 15,469 10,699 6,872 8,437 1,671 1,077 5,752
0.66% -1.47% 0.62% -0.93% -2.93% -0.73% 0.44% 1.02% 2.34% -0.24% -0.76% 0.31% -2.02% 2.02%
Commodities and Currency:
Date USD GBP EURO YEN
Crude (Rs.
per BBL)
Gold (Rs.
Per 10gms)
15/02/2016 68.13 99.01 76.51 59.84 2015 28597
16/02/2016 68.34 98.43 76.24 59.68 2015 28411
17/02/2016 68.59 98.02 76.61 60.32 1984 28582
18/02/2016 68.49 97.86 76.33 60.15 2103 28535
2108 28903
-0.52% 1.17% 0.23% -0.52% 4.62% 1.07%
Debt:
Tenor Gilt Yield in % (Friday) Change in bps (Week)
1-Year 7.29 4
2-Year 7.41 4
5-Year 7.77 10
10-Year 7.73 1

5. Kaushik Dani Jharna Agarwal
Nupur Gupta Rishi Ahirkar
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