- The Nifty index rose 2.9% last week as tensions eased between Russia and Ukraine. Global markets rebounded and oil prices cooled off. - In India, industrial production grew 3.7% in June, below expectations. Inflation was 7.96% in July, mainly due to higher food prices. Growth is expected to be between 5-6% in the coming quarter. - Corporate earnings this quarter were in-line with expectations and higher than previous quarters, indicating an economic recovery is underway in India and globally.

1. The World This Week
August 11 – August 16, 2014

2. Equity View:
Nifty moved up by 2.9% last week largely on the back of global relief rally. This happened after military
exercises being done by Russian forces at the Ukrainian border were called off. After the news, global
markets led by US bounced back and global commodity prices also cooled off especially crude oil. The
Brent crude is now trading at $103/Bbl.
In India, IIP among other important data points was released at 3.7% for the month of June slightly below
expectations. The revised estimates for the month of May are 5% therefore the growth of industrial
production came down from the last month however since the beginning of this fiscal, these statistics
have been much better as compared with last year and we expect this uptrend to continue in future. CPI
for the month of July was 7.96% vs. 7.46% in June. This small increase in CPI is largely due to increase in
food and vegetable prices. We believe CPI to remain below 8% in the coming months. IIP is expected to
showcase an uptrend with 5-6% growth in next quarter.
The quarter earnings season is coming to an end with results being largely in-line with expectations
though much better when compared with the previous quarters. The revenue growth for the last quarter
is 11-12% for S&P 500 companies which have published their results and a healthy 13-14% profit growth.
These results are the highest in the last nine quarters and we believe that economic recovery is under
way which would be visible in the Q1 GDP data by the end of this month. We believe that the Q1 GDP
growth rate would be 5.5-6% which is much better than last eight quarters and by September, some
definite signs of economic turnaround would be visible. The early signs which are available in the PMI
Manufacturing services space are very encouraging along with good Auto sales backed by healthy cement
dispatch numbers also. The prices of cement companies have also been quite firm which are the early
indicators of a revival in macro-economic demand.
In the next few months, global situation would continue to be extremely important. QE is expected to
come down to almost zero by the end of September post which there would be an extended pause for 6-
9 months after which the US interest rates are expected to start climbing up. The markets have been
nervous in the anticipation that interest rates might go up sooner however this remains a low probability
event at this point of time and we believe that there will be no interest rate hike in the US until the
middle of calendar year 2015.

3. News:
DOMESTIC MACRO:
 India’s trade deficit in July stood at $12.23 bn, higher than $11.76 bn in June; exports rose 7.3% to $27.7bn
in July, compared with $25.8bn in corresponding period of last year, while imports rose 4.3% to $40bn in
July, compared with $38.3bn in the corresponding period of last year.
 Government to borrow less in the first half of this fiscal by reducing the bond auction amount by Rs 2,000
cr every week till September.
 India’s Index of Industrial Production slowed to 3.4% year on year in June, a drop from the
upwardly revised 5% growth in May.
 Moody’s says India’s GDP will grow by 5% this year and accelerate further next year.
GLOBAL MACRO
EURO
 Euro zone’s GDP rose 0.7% annually in Q2 after expanding 0.9% in Q1.
 Euro zone’s annual inflation was 0.4% in July, down from 0.5% in June.
 Euro zone’s industrial production declined by a seasonally adjusted 0.3% in June, after dropping 1.1% in
May.
United States
 US industrial production rose 0.4% in July, unchanged from June.
 US retail sales increased 0.2% in July, in line with growth in June, weighed down by weak auto sales.
China
 China’s industrial production expanded 9% annually in July, slower than the 9.2% growth recorded in June.
 China’s retail sales rose 12.2% annually in July, compared to a 12.4% rise in June.
Indices:
Date Sensex Midcap Auto Bankex CD CG FMCG HC IT Metals O&G Power Realty Teck
11/08/14 25,519 9,012 15,957 16,997 8,542 14,284 7,083 12,131 9,796 12,579 10,509 2,050 1,857 5,492
12/08/14 25,881 9,056 16,243 17,238 8,627 14,465 7,091 12,287 9,808 12,694 10,684 2,077 1,876 5,490
13/08/14 25,919 8,901 16,256 17,067 8,592 14,082 7,249 12,380 9,882 12,533 10,703 2,032 1,778 5,498
14/08/14 26,103 9,008 16,348 17,251 8,516 14,333 7,265 12,524 9,875 12,776 10,855 2,062 1,809 5,495
2.29% -0.05% 2.45% 1.49% -0.30% 0.34% 2.58% 3.25% 0.80% 1.56% 3.29% 0.58% -2.58% 0.06%

4. Commodities and Currency:
Date USD GBP EURO YEN
Crude
(Rs. per BBL)
Gold
(Rs. Per
10gms)
11/8/2014 61.12 102.54 81.87 59.85 6456 28373
12/8/2014 61.18 102.56 81.78 59.81 6398 28469
13/08/2014 61.25 103.02 81.90 59.91 6303 28413
14/08/2014 61.06 101.84 81.56 59.55 6387 28324
0.10%
Rupee
Appreciated
0.68%
Rupee
Appreciated
0.39%
Rupee
Appreciated
0.50%
Rupee
Appreciated
-1.07% -0.17%
Debt:
Tenor Gilt Yield in % (Friday) Change in bps (Week)
1-Year 8.75 3
2-Year 8.76 0
5-Year 8.62 -11
10-Year 8.72 -14

5. Varun Goel Jharna Agarwal
Nupur Gupta Ridhdhi Chheda
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