After the uncertainty of the Brexit verdict got over, the market rallied in the last week. The market got off on the wrong foot on the day of the Referendum results and corrected by almost 1000 points. But the market soon realized that the renewal in trade agreement between UK and Euro is not going to happen anytime soon and it will take around 1-2 years. India being an emerging nation, the impact of this event is quite limited. After this the market resumed its upt uptrend. Since budget, the nifty is up by 1000 points, and in percentage terms it has gained 22%. We should remember that it is still 10% off of the it’s all time high, which was achieved in March 2015. • Despite the fact that the PE multiple of the Indian Markets is 17 – 18 times, the FIIs continue to invest in India on account of better growth prospects, better earning visibility. India is the only trillion dollar economy which is growing on 7.5%, which makes it a lucrative long term story.

1. THE WORLD THIS WEEKTHE WORLD THIS WEEK
June 27– July 1, 2016

2. EQUITY VIEW

3. EQUITY VIEW
• After the uncertainty of the Brexit verdict got over, the market rallied in the last week. The market got off on the
wrong foot on the day of the Referendum results and corrected by almost 1000 points. But the market soon
realized that the renewal in trade agreement between UK and Euro is not going to happen anytime soon and it will
take around 1-2 years. India being an emerging nation, the impact of this event is quite limited. After this the
market resumed its uptrend. Since budget, the nifty is up by 1000 points, and in percentage terms it has gainedmarket resumed its uptrend. Since budget, the nifty is up by 1000 points, and in percentage terms it has gained
22%. We should remember that it is still 10% off of the it’s all time high, which was achieved in March 2015.
• Despite the fact that the PE multiple of the Indian Markets is 17 – 18 times, the FIIs continue to invest in India on
account of better growth prospects, better earning visibility. India is the only trillion dollar economy which is
growing on 7.5%, which makes it a lucrative long term story.

4. EQUITY VIEW
• India is currently at a sweet spot, as U.S. initially showed the signs of growth, but now once again it is showing the
signs of tapering which will bring down the global growth rate. Europe is struggling with slowdown and the impacts
of Brexit, Japan is struggling with negative rates and many of the emerging nations have not given a clear growth
visibility. So India in this particular sweet spot where global growth will slow down and at the same time going
forward our domestic macros will help us to move forward.forward our domestic macros will help us to move forward.
• After the gap of almost 2 years, we are seeing signs of a normal monsoon. The June month stared with the deficit
of 20% but now if one see the statistics, the deficit is narrowed down to almost 6%, which only means that in June
and August, the rainfall would be very good and this will help the farm production. The food prices would come
down this should help to lower the inflation which has currently spiked only because of the pulses.

5. EQUITY VIEW
• Typically above average normal monsoon will help us having Agri growth, during bad monsoon years our agri GDP
was hardly 1% to 1.5% but this time it can be as high as 3% to 4% if things remain good. If it happens this will
have twin benefits, lower interest rates and also it will be push the overall GDP above 7.5% to 7.8% where it has
been stuck for almost 3 years now.
• Apart from this, on the reforms front, the bankruptcy bill has got cleared, and if the GST bill gets cleared in the• Apart from this, on the reforms front, the bankruptcy bill has got cleared, and if the GST bill gets cleared in the
monsoon session, it would be a bigger and a welcome positive. So typically our economy will get a push from 3
different sides, one from the agriculture side, second from the reform side and the third from the seventh pay
commission which will definitely increase disposable income of the middle income class, as two thirds of our
economy is run by private consumption. So in the longer term of 2 to 3 years, we will probably in relative, as well
as absolute terms outperform all other markets.

6. NEWS

7. DOMESTIC MACRO
• Indian manufacturing activity edged up to a three-month high in June, driven by stronger demand, but
firms barely raised prices, a private survey showed, leaving the door open for another rate cut by the
central bank this year.
• India's infrastructure output grew an annual 2.8 percent in May, its slowest pace in five months, primarily• India's infrastructure output grew an annual 2.8 percent in May, its slowest pace in five months, primarily
dragged down by a slowdown in output of electricity, steel and refinery products, government data
showed. The output expanded 5.5 percent from a year ago between April and May.

8. GLOBAL MACRO
• Britain will face two key challenges, inflation and recession, after Britons voted to leave
the European Union, or Brexit. In the short term there is a difficult challenge for the British
economic and monetary policy between two contradictory challenges: there is the
challenge of inflation, with the effects on inflation of the fall of the pound, which is down 11
percent since Brexit according to European Central Bank Governing Council member
Francois Villeroy de Galhau.
EURO
Francois Villeroy de Galhau.
• Britain’s exit from the EU poses “a downside risk” to Germany’s economic outlook and it
may lower growth forecast for Europe's biggest economy in the coming weeks. Britain is
an important trade partner for Germany, and significant changes in the economic
relationship between the two countries will have repercussions for Germany, according to
the International Monetary fund.

9. GLOBAL MACRO
• The pace of U.S. auto sales slowed in June compared to a year ago, as
slumping sales of sedans offset strong demand for pickups and sport utility
vehicles. The seasonally adjusted annual sales pace for June was 16.66
million, according to Auto data Corp, down from 17 million vehicles a year
earlier. Sales fell for General Motors Co, Toyota Motor Corp and
Volkswagen.
UNITED STATES
Volkswagen.
• U.S. factory activity expanded at a healthy pace in June as new orders,
output and exports rose, new industry data showed, providing another sign
that U.S. economic growth was regaining its footing after weakness early
this year. Automakers reported higher June sales amid strong demand for
pickup trucks and sport utility vehicles, but on an annualized basis, the June
industry selling rate came in at 16.66 million units, well below May's sales
pace of 17.45 million.

10. GLOBAL MACRO
• Growth in China's manufacturing sector stalled in June, an official survey showed,
adding to expectations that Beijing will have to roll out more stimulus soon to boost
the sluggish economy. While output hit a 12-month high, nearly all other measures
showed signs of weakening, suggesting a spring bounce in activity is fizzling.
Export orders and inventories fell and factories shed workers at a faster rate.
CHINA
• China's pledged supplementary lending facility stood at 1.67 trillion Yuan ($251.02
billion) at the end of June, compared with 1.50 trillion Yuan at the end of May, in
June, the People's Bank of China made 171.9 billion Yuan ($25.81 billion) in loans
to three policy banks, The PSL programme, initiated in 2014, is designed to help
the central bank better target medium-term lending rates while boosting liquidity to
specific sectors by offering low-cost loans to selected banks according to the
Central bank.

11. INDICES
Date Sensex Midcap Auto Bankex CD CG FMCG HC IT Metals O&G Power Realty Teck
27/06/16 26,403 11,404 19,128 20,029 11,663 14,529 8,245 15,226 11,096 8,213 9,482 1,911 1,442 5,971
28/06/16 26,525 11,459 19,183 20,090 11,654 14,583 8,390 15,327 10,997 8,296 9,561 1,921 1,451 5,944
29/06/16 26,740 11,572 19,473 20,236 11,803 14,697 8,378 15,406 11,150 8,374 9,654 1,953 1,497 6,023
30/06/16 27,000 11,717 19,745 20,531 11,973 14,875 8,453 15,493 11,200 8,520 9,721 1,996 1,533 6,069
1/7/2016 27,145 11,858 19,782 20,619 12,017 15,187 8,609 15,654 11,158 8,571 9,990 2,008 1,542 6,059
2.81% 3.98% 3.42% 2.94% 3.03% 4.52% 4.41% 2.81% 0.56% 4.36% 5.36% 5.06% 6.98% 1.47%

12. COMMODITIES AND CURRENCY
Date USD GBP EURO YEN Crude (Rs. per BBL) Gold (Rs. Per 10gms)
27/06/2016 67.90 90.91 74.88 66.69 3,240 31,248
28/06/2016 67.89 90.17 75.06 66.69 3,146 30,698
29/06/2016 67.74 90.49 75.02 66.21 3,248 30,597
30/06/2016 67.62 90.52 75.01 65.91 3,379 30,539
1/7/2016 67.44 89.55 74.74 65.67 3,268 30,980
0.68% 1.50% 0.18% 1.53% -0.86% 0.86%

13. DEBT
Tenor Gilt Yield in % (Friday) Change in bps (Week)
1-Year 6.96 -2
2-Year 7.02 -2
5-Year 7.35 -8
10-Year 7.41 -6

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

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