3. EQUITY VIEW
• The results season has been along the expected lines so far. The data on the global front, especially the US has
been mixed with a downward bias. The nonfarm payroll data has disappointed the markets. We might face some
temporary hiccups around the current market levels in the short run. But this continues to be a “Buy on Declines”
market.
• On a positive note, we have seen some improvement in the earnings after a long wait of 7 quarters. This can be
seen as the beginning of a turnaround which has been expected. The earnings growth in the Indian markets was
at around 25% CAGR between 2003 and 2008. This growth came down to around 6% between 2008 and 2016. As
we stand currently at a point where the earnings have started picking up, there is a good chance that going
forward, the earnings growth might be solid. One of the major reasons for this muted growth was due to the NPA
related issues which the RBI and Government have been working aggressively to resolve. Once this happens, the
results can be spectacular on the sensex of which 29% weightage is in banks.
4. EQUITY VIEW
• The oil & gas sector has also been under tremendous pressure since the prices were at multi decade lows in the
last 2 years. If the crude oil prices bottom out at the current levels, the energy related companies such as ONGC
will start performing. Oil & Gas and Energy sector has over 11% weightage in the sensex.
• Cumulatively the 29% weightage in banks and 11% weightage in Energy, Oil & Gas, will have impact on 40 to 45%
of the sense EPS which is currently around Rs. 1350
6. DOMESTIC MACRO
• Steel consumption in India fell to 5.75 million tones (MT) in April, the lowest since the same month in
2015, dealing a fresh blow to domestic manufacturers already battling cheap imports. The steel
consumption in the country, which is the third largest steel producer in the world, was at 7.31 MT in
March this year.
• The government said it has taken a number of initiatives for job creation and to boost growth. These
include reducing the corporate tax rate to 25 per cent for new manufacturing companies, extending tax
benefits for housing sector to promote construction industry, reducing the tax rate on royalty and fees for
technical services to 10 per cent and tax incentives for start-ups
7. GLOBAL MACRO
• The European Commission has once again downgraded its forecasts for
euro zone inflation for 2016 and 2017 — despite some of the most
aggressive monetary policies in the euro zone's history — blaming low oil
prices and global economic weakness. Brussels also trimmed its growth
projections for the euro zone this year in its forecasts
• Research firm Markit said its Purchasing Managers' Index (PMI) surveys for
April pointed to growth of just 0.1% in the month. The latest PMI survey
indicated the UK's services sector grew at its slowest pace in three years in
April. The services PMI reading fell to 52.3 from 53.7 in March. A reading
above 50 indicates growth.
EURO
8. GLOBAL MACRO
• U.S. employers pulled back on hiring in April, adding 160,000 jobs, the
fewest in seven months, after a streak of robust monthly gains. The
unemployment rate remained at a low 5 per cent, roughly where it has been
since fall. Last month's hiring gain marked a drop from the average increase
of 200,000 over the past three months.
• The U.S. economy is on track to expand at an annualized rate of 0.8 percent
in the second quarter, unchanged from its estimate a week earlier, following
this week's spate of domestic economic data, according to New York Federal
Reserve.
UNITED STATES
9. GLOBAL MACRO
• New fears about the health of China's economy have been sparked by
figures showing that both exports and imports fell more than expected last
month. Exports fell 1.8% compared with April last year, according to official
figures, reversing a recovery in March. Imports sank by 10.9% compared
with the same month in 2015.
• Chinese commodities dived on Monday, led by 6 percent falls in steel and
iron ore futures, as deepening worries about China's demand extended a
fortnight of sharp drops and false rebounds in the country's market for
industrial metals.
CHINA
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