The World This Week - 16th to 20th May, 2016

1. THE WORLD THIS WEEK
May 16 – May 20, 2016

2. EQUITY VIEW

3. EQUITY VIEW
• We are expecting good monsoon this year. Whole sale price index (WPI) turned positive after almost 17 months
negative trend. There are two ways one can look at this, positive way is that pricing power is coming back in to
the industry, because whole sale price index measures inflation primarily on industry side, so we can say that
pricing power coming in to the manufacturing sector which is good sign, it means that there is good demand in the
market. Another way to look at it is that WPI refers inflation in manufacturing side it has element of Consumer
Price Index (CPI) also which means turning WPI positive there is large part of this was upsurge in CPI. We have
had very bad experience with CPI in almost 6 years, because of that some kind of monetary policy framework
Reserve bank has given. RBI has given tolerance of 2 % - 6% CPI is closure to upper end of the bank and if CPI
continues to rise it will put upward pressure on the WPI so we might see interest cut by RBI .

4. EQUITY VIEW
• From global market we have news coming from US that Fed might increase interest rates, if that happens you
might see effects on yield side in developed as well as emerging market. We are very positive on IT sector
because if the interest rate goes up in US. But considering that the growth outlook for the rest of the world in US is
positive. Most of the investor might go back to US debt.
• International sugar prices are surged specially in New York that explains the large part of the reason, and on the
domestic front there has not been any significant change in the policy from government, having said that supply
demand is favorably poised in term of lower supply and demand continuing as it is, lower supply primarily because
this year crushing expected to be below average production

5. NEWS

6. DOMESTIC MACRO
• Domestic production of crude oil and natural gas fell for the second successive month in April by 2.27 per
cent and 6.83 per cent, respectively, as per the data released by the Ministry of Petroleum and Natural
Gas. Crude oil production stood at 2.956 million tonnes against 3.025 million tonnes in the same month
last year.
• Continuing weakness in oil prices may impact remittances from Gulf countries into India, a report by
domestic ratings agency Crisil said. However, it added that low oil prices have reduced the country’s
trade deficit with Gulf Cooperation Council (GCC) countries. “The Gulf lost some charm for India last
fiscal, both as a destination for exports and a source of remittances.

7. GLOBAL MACRO
• Euro zone business growth held broadly steady in May, a survey published
on Monday showed, the latest evidence to suggest a strong acceleration in
growth in the first three months of the year was only temporary. Markit's
flash Composite Purchasing Managers' Index, one of the first growth
indicators in a month, edged down to 52.9 from April's 53.0, essentially
stable but still the lowest since the start of 2015.
• Growth in Germany's private sector accelerated in May to hit the highest
level so far this year, a survey showed on Monday, suggesting Europe's
largest economy will extend its surprisingly strong start to the year into the
second quarter. Manufacturing and services activity that accounts for more
than two-thirds of the German economy, rose to 54.7 in May from 53.6 in
April.
EURO

8. GLOBAL MACRO
• The U.S. dollar hit its highest level against the yen in more than three weeks
on Friday on expectations of a potential summer Federal Reserve interest
rate hike, while the dollar edged lower against the euro after profit-taking.
The dollar hit 110.58 yen, its highest level against the Japanese currency
since April 28.
• Gold fell more than one percent on Wednesday as the dollar hit a new three-
week high following minutes of the U.S. Federal Reserve's last policy
meeting that bolstered expectations that the central bank could soon raise
interest rates. The U.S. central bank will likely raise interest rates next month
if economic data points to stronger second-quarter growth as well as firming
inflation and employment.
UNITED STATES

9. GLOBAL MACRO
• China will intensify its reform efforts concerning business registration
procedures and lower requirements for business registration procedures to
reduce administrative costs and enhance economic restructuring from the
supply side. A series of measures was adopted at the State Council's
executive meeting, the reform aims to simplify administrative.
• China said it would persist with controversial tax rebates to steel exporters to
support the sector's painful restructuring, defying a United States move to
impose punitive import duties on Chinese steel products. A worldwide steel
glut has become a major trade irritant, with China under fire from global
rivals who say it is dumping cheap exports after a slowdown in demand at
home.
CHINA

10. INDICES
Date Sensex Midcap Auto Bankex CD CG FMCG HC IT Metals O&G Power Realty Teck
16/05/16 25,653 11,189 18,325 19,032 11,810 13,319 7,852 15,507 11,285 7,561 9,132 1,831 1,358 6,104
17/05/16 25,774 11,204 18,431 19,078 11,868 13,392 7,840 15,540 11,313 7,560 9,241 1,824 1,369 6,116
18/05/16 25,705 11,203 18,195 19,059 11,835 13,477 7,845 15,563 11,297 7,607 9,229 1,818 1,398 6,097
19/05/16 25,400 11,077 18,123 18,829 11,712 13,157 7,708 15,491 11,262 7,484 9,116 1,800 1,387 6,066
20/05/16 25,302 11,023 18,070 18,740 11,673 13,059 7,722 15,275 11,203 7,461 9,066 1,799 1,367 6,039
-1.37% -1.48% -1.39% -1.54% -1.16% -1.95% -1.65% -1.50% -0.73% -1.32% -0.73% -1.73% 0.65% -1.07%

11. COMMODITIES AND CURRENCY
Date USD GBP EURO YEN Crude (Rs. per BBL) Gold (Rs. Per 10gms)
16/5/2016 66.82 95.96 75.60 61.45 2,974 30,002
17/5/2016 66.72 96.60 75.49 61.07 2,886 30,097
18/5/2016 66.91 96.61 75.48 61.25 2,980 29,970
19/5/2016 67.23 98.05 75.45 61.01 3,083 29,694
20/5/2016 67.41 98.46 75.54 61.17 3,110 29,728
-0.88% -2.60% 0.07% 0.46% -4.57% 0.91%

12. DEBT
Tenor Gilt Yield in % (Friday) Change in bps (Week)
1-Year 7.05 1
2-Year 7.11 0
5-Year 7.45 4
10-Year 7.47 2

13. KIASL TEAM
Jharna Agarwal
Head- Advisory
Jharna.agrawal@Karvy.com
Nupur Gupta
Lead Advisor
Nupur.gupta@Karvy.com

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