The World This Week - 25th to 29th April, 2016

1. THE WORLD THIS WEEK
April 25 – April 29, 2016

2. EQUITY VIEW

3. EQUITY VIEW
• The previous week was a mixed one by nature. The markets after having an uptrend of almost 2 months, with a
15% gain in Large Caps and a 15-17% gain in Mid & Small Caps are showing signs of exhaustion. Overall the
results have been mixed in the Large Cap segment with selective outperformance in Automobiles, Private Banks,
Cement, Energy and FMCG. We can say that in this quarter, the Men are getting separated from the Boys by
virtue of the results.
• The current market can be seen as a stock pickers market, where a large amount of buying will happen in sectors
where some earnings visibility can be seen for the next 4 to 5 quarters. Some turnaround sectors like cement and
capital goods would witness further buying.

4. EQUITY VIEW
• On the global front, the US Fed did not tinker with any rates despite the economy still showing some signs of
growth and the jobless claims are at a 5 year low. The Fed noted that it will continue to closely monitor inflation
indicators and global economic and financial developments. In an unexpected move, the bank of Japan decided to
hold on to the monetary stimulus, impacting the sudden appreciation of the yen. Overall the global markets are
currently stable and will continue to be in tandem with the corporate results worldwide.

5. NEWS

6. DOMESTIC MACRO
• Manufacturing sector activity dropped to a four-month low in April as new orders stagnated during the
month following a robust increase in March, a survey showed today, putting pressure on the Reserve
Bank of India to keep interest rates low.
• Keen to step up engagement in hydrocarbon sector with Iran, India has conveyed to the Persian Gulf
nation that it was ready to clear nearly USD 6.5 billion of the dues for oil import from that country at the
earliest, provided there was clarity on payment channel.

7. GLOBAL MACRO
• Uncertainty about the outcome of Britain's European Union referendum
gnawed at consumers and businesses in April, two surveys showed, said its
main gauge of consumer confidence fell to its weakest reading since
December 2014 at -3, down from zero in March and below a median
forecast for -1 in a Reuters poll of economists
• Euro zone factories did slightly better in April, with output not losing as much
momentum as initially thought but growth in activity remaining weak despite
the second-deepest price-cutting since early 2010. Manufacturing growth
was strong in Italy and Spain last month and Germany showed signs of
reviving, but activity in France contracted at the steepest rate in a year
EURO

8. GLOBAL MACRO
• U.S. economic growth braked sharply in the first quarter to its slowest pace
in two years as consumer spending softened and a strong dollar continued
to undercut exports, but a pick-up in activity is anticipated given a buoyant
labor market. Gross domestic product increased at a 0.5 percent annual
rate, the weakest since the first quarter of 2014, the Labor Department said
in its advance estimate
• Weaker bank earnings in the first quarter were not a surprise given the
macroeconomic backdrop that included fears of a global slowdown, negative
interest rates in the US, energy-related concerns and a strong dollar,
according to Fitch Ratings. The first-quarter 2016 results for the largest 17
US banks were lower from a year ago for 12 of the 17 banks.
UNITED STATES

9. GLOBAL MACRO
• China has rolled out a value-added tax (VAT) system across all industries
that previously had a business tax, in the most ambitious overhaul of its tax
regime in three decades. The world’s second-largest economy is stumbling
through its slowest growth in a quarter century but is continuing with tough
reforms in its transition to a services-oriented economy from one powered by
manufacturing.
• China’s manufacturing sector expanded less than expected in April, raising
doubts about the sustainability of a recent pick-up in the world’s second-
largest economy. The official purchasing managers’ index (PMI) was 50.1 in
April, easing from March’s 50.2 and barely above the 50-point mark that
separates expansion in activity from contraction.
CHINA

10. INDICES
Date Sensex Midcap Auto Bankex CD CG FMCG HC IT Metals O&G Power Realty Teck
25/04/16 25,679 11,004 18,537 19,009 11,887 13,356 7,704 15,458 11,366 7,935 9,369 1,861 1,298 6,121
26/04/16 26,007 11,090 18,827 19,392 11,935 13,467 7,763 15,604 11,495 8,092 9,412 1,876 1,324 6,192
27/04/16 26,064 11,105 18,883 19,222 11,969 13,434 7,842 15,583 11,545 8,093 9,527 1,867 1,319 6,237
28/04/16 25,603 11,018 18,508 19,051 11,902 13,234 7,689 15,465 11,381 7,918 9,320 1,829 1,341 6,160
29/04/16 25,607 11,043 18,469 19,115 11,787 13,203 7,697 15,582 11,330 7,959 9,356 1,846 1,357 6,122
-0.28% 0.36% -0.37% 0.56% -0.84% -1.15% -0.09% 0.80% -0.32% 0.30% -0.14% -0.79% 4.49% 0.02%

11. COMMODITIES AND CURRENCY
Date USD GBP EURO YEN Crude (Rs. per BBL) Gold (Rs. Per 10gms)
25/04/2016 66.68 96.32 74.95 59.99 2,908 29,164
26/04/2016 66.73 96.77 75.18 60.22 2,843 29,118
27/04/2016 66.55 96.92 75.18 59.85 2,939 29,345
28/04/2016 66.40 96.83 75.42 61.32 3,017 29,435
29/04/2016 66.52 97.40 75.73 61.96 3,057 29,898
0.25% -1.12% -1.04% -3.28% -5.12% -2.52%

12. DEBT
Tenor Gilt Yield in % (Friday) Change in bps (Week)
1-Year 7.05 1
2-Year 7.17 -5
5-Year 7.46 -6
10-Year 7.43 -3

13. KIASL TEAM
Jharna Agarwal
Head- Products
Jharna.agrawal@Karvy.com
Nupur Gupta
Product Manager
Nupur.gupta@Karvy.com

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