2. Equity View:
The US data on employment numbers this month showed muted results against expectations. The
unemployment rate has gone down to 6.6% which is the lowest since 2008 but, is essentially because a
lot of people have moved out of the employment space completely rather than a recovery. The number
following this month would lead to concerns on whether the US recovery is actually as strong as expected
previously. This would also be a key input for the monetary policy and the tapering of QE in the months
to come.
Domestically, the FY14 GDP data estimates a recovery in the H2 of this year at 5.2% which is higher than
expectations. This would take the full year GDP growth to 4.8% vs. 4.5% in FY13, which is a mild recovery.
This increase in GDP growth is essentially on the back of higher agricultural production and higher
exports as compared to FY13. We believe that the Manufacturing sector will show some signs of growth
going forward. In terms of Capex and infrastructure activity, some kind of activation for large projects
could be seen with more and more government projects getting cleared. This would help the
infrastructure sector grow in future. The RBI estimates the GDP growth to be 5.5% For FY15 which we
believe is a very conservative number looking at the current state of affairs.
News:
DOMESTIC MACRO:
The HSBC Services Purchasing Managers' Index (PMI), compiled by Markit, rose to 48.3 in January from
46.7 in December.
India last week, cut its estimate of annual growth for the fiscal year to 4.9 percent from 5 percent because
of a contraction in the manufacturing and mining sectors.
Finance minister of India, Mr. Chidambaram has asked regulators to introduce a common demat account
for financial assets.
Consumption, which contributes about 70 percent to the near $1.8-trillion economy, is expected to grow
4.4 percent in fiscal 2013/14, down from 5.2 percent the previous year.
3. GLOBAL MACRO
EURO
The European Central Bank will attain significant powers over the euro zone's commercial banks once it
becomes their supervisor later this year, including withdrawing bank licenses and assessing acquisitions.
The ECB has a euro zone inflation target of just fewer than 2 percent.
Non-performing loans at Italian banks, the ones least likely to ever be repaid, have reached 150 billion
Euros and are expected to keep rising through 2016.
United States
U.S. manufacturing activity slowed sharply in January on the back of the biggest drop in new orders in 33
years. The Institute for Supply Management (ISM) said its index of national factory activity fell to 51.3 last
month, its lowest level since May 2013, from 56.5 in December.
The unemployment rate hit a new five-year low of 6.6 percent in January.
China
The Markit/HSBC manufacturing PMI fell to a six-month low of 49.5 in January, suggesting the overall
factory sector contracted from December.
Indices:
Date Sensex Midcap Auto Bankex CD CG FMCG HC IT Metals O&G Power Realty Teck
3/2/2014 20,209 6,257 11,351 11,554 5,518 9,405 6,457 10,221 9,321 8,872 8,351 1,505 1,186 5,080
4/2/2014 20,212 6,282 11,416 11,659 5,544 9,419 6,508 10,158 9,155 8,828 8,341 1,515 1,193 5,030
5/2/2014 20,261 6,311 11,602 11,695 5,542 9,439 6,449 10,173 9,242 8,969 8,318 1,529 1,212 5,061
6/2/2014 20,311 6,300 11,701 11,668 5,598 9,352 6,537 10,165 9,227 9,052 8,321 1,536 1,193 5,061
7/2/2014 20,377 6,337 11,791 11,743 5,593 9,402 6,505 10,337 9,169 9,293 8,328 1,548 1,205 5,032
0.83% 1.27% 3.88% 1.63% 1.35% -0.03% 0.73% 1.13% -1.63% 4.74% -0.28% 2.89% 1.61% -0.94%
4. Commodities and Currency:
Date USD GBP EURO YEN
Crude
(Rs. per BBL)
Gold
(Rs. Per
10gms)
3/2/2014 62.69 102.97 84.58 61.41 6648 29676
4/2/2014 62.68 101.98 84.78 62.12 6648 29774
5/2/2014 62.45 102.01 84.35 61.58 6630 29823
6/2/2014 62.50 101.92 84.50 61.59 6636 29797
7/2/2014 62.32 101.78 84.68 61.01 6700 29801
0.60%
Rupee
Appreciated
1.17%
Rupee
Appreciated
-0.12%
Rupee
Depreciated
0.66%
Rupee
Appreciated
-0.78% -0.42%
Debt:
Tenor Gilt Yield in % (Friday) Change in bps (Week)
1-Year 8.76 -6
2-Year 8.66 -2
5-Year 8.83 -9
10-Year 8.69 -10
5. Satadru Mitra Varun Goel Jharna Agarwal
Nupur Gupta Kinjal Doshi
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