The weekly market report provided the following information: - Equity markets were up 2.7% last week but key upcoming economic data will determine short-term market direction. - Earnings growth is expected to slow to around 10% while specific companies like Infosys and HDFC are forecasted to report earnings growth of over 15% and 20% respectively. - India's food inflation declined to a 6-year low and other economic indicators like IIP and trade deficit figures are expected to be released this week.

1. The World This Week
Jan 02 – Jan 06, 2011

2. Equity View:
CY 12 started on a positive note as the markets were up by 2.7% last week. Key data coming this week will determine the
short term direction of the market.
The earning season will start shortly; we expect a slowdown in earnings growth by around 10%. Infosys will come up with
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its results on 12 Jan. We are expecting Q-O-Q growth in volumes of about 3.5% on back of 8% depreciation in rupee in
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this quarter; profit growth expected to be in excess of 15%. HDFC will announce its result on 12 Jan, 20% profit growth
is expected for bank. The net-interest margins are expected to remain flattish and the lending growth is expected to be in
excess of 28%.
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IIP date will be released for the month of November on 12 January. IIP for the month of October had moved in to
negative territory at around -5%. We expect November to be positive with IIP figure of around 2.3%. Food inflation has
dipped significantly in the past 3 to 4 weeks. We now have the food inflation figures coming in at -3.36% which is a 6 year
low largely, because of very high base effect last year.
Globally, the earnings season is starting in the US. We are expecting around 8% earnings growth in S&P 500 Companies.
Last week, we saw a quick development of crude prices on the back of the renewed tension between US and Iran amid
threat to block one of the key routes of oil Shipments by Iran. The situation seems to have stabilized now, however we
are cautious on this front.
News:
DOMESTIC MACRO:
 India's food inflation eased to -3.36% in the year to December 24, from an annual 0.42% rise in the previous
week.
 India's foreign exchange reserves stood at $296.688 billion as of December 30, down from $300.863 billion in
the previous week.
 India's November exports rose an annual 3.87% to $22.3 billion, while imports for the month rose 24.55% to
$35.9 billion. India's trade deficit in November was at $13.6 billion.
GLOBAL MACRO
EURO
 Yields on French long-term OAT bonds rose on Thursday at its first auction of the year as the threat of a cut to
the country's AAA credit rating prompted investors to demand higher returns for buying the bonds.
 Euro zone inflation eased to 2.8% from last year's 3% in December, the first sign of a fall in price growth this
year that analysts expect will create room for more interest rate cuts to help the weakening economy.
 A 50 percent write-down on Greek debt holdings, part of Greece's debt swap deal, is not enough to put the
country's huge debt on a viable footing, an adviser to Germany's finance minister Wolfgang Schaeuble told a
Greek newspaper.
US
 U.S. employment growth accelerated last month and the jobless rate dropped to a near three-year low of 8.5
percent, the strongest evidence yet the economic recovery is gaining steam.
 Three top Federal Reserve officials aggressively pushed on Friday for more stimulus for the U.S. housing
market, saying the government should be looking at ways to help the sector in order to speed the economic
recovery.

3. Swapnil Pawar Varun Goel Jharna Agarwal
Palak Nanjani Abbas Naheed Kanika Khorana
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