Last week we saw correction of 2.7% in Nifty post the US rating downgrade. The situation is quite volatile in US & Europe. Fresh round of negotiation and deliberations are going on between the head of states of various Euro area nations to find a final solution to the problem of solvency which some European states are facing.

1. The World This Week
Aug 8 – Aug 12, 2011

2. Equity View:
Last week we saw correction of 2.7% in Nifty post the US rating downgrade. The situation is quite volatile in US & Europe. Fresh round of
negotiation and deliberations are going on between the head of states of various Euro area nations to find a final solution to the problem
of solvency which some European states are facing. We believe that sooner or later the solution could move towards some kind of fiscal
union between the member states. There is also a possibility of doubling or tripling the size of European financial stability funds (ESFS), that
fund could be used to buy debt from various PIIGS countries.
June IIP numbers came at 8.8% which was much higher than the consensus expectations of 5.6% & this was primarily led by huge increase
in capital goods number. Also in terms of government reform process, we have seen a new step been announced in terms of 10% hike in
urea after several years. Hence, we continue to see small reform measures being announced by the government. We remain hopeful that
some more reform measures might be tabled in the Parliament. Some of the key bills that are likely to be considered are the mining bill
and relaxation of FDI limit in multi-brand retail.
News:
Domestic Macro
 India's industrial output expanded to 8.8% in June helped by strong capital goods production, confirming resilience in Asia's third-
largest economy and supporting the case for the Reserve Bank to persist with its battle against high inflation.
 India's foreign exchange reserves fell to $317.226 billion as on August 5, from $319.090 billion in the previous week.
 Wholesale price index likely rose an annual 9.2 percent in July, slightly slower than June's 9.44 percent, as policy tightening by the
Reserve Bank of India (RBI) was partially offset by surging food prices
 India's food inflation accelerated to 9.9 percent in end-July, the highest since mid-March, suggesting the RBI would continue
monetary tightening despite uncertainty over the global slowdown.
Global Macro
China:
 China's annual inflation quickened to a higher-than-expected 6.5 percent in July, putting the central bank in a bind as it tries to
keep prices in check without dragging down an economy facing increasing threats from abroad.
 China will not raise interest rates soon amid global market turbulence, but the People's Bank of China could still take tightening
steps later.

3. Swapnil Pawar Varun Goel Jharna Agarwal
Palak Nanjani Neha Arora Kanika Khorana
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