1. The World This Week
May 06 – May 10, 2013

2. Equity View:
Last week, equity markets across the world had risen with S&P in US, Nikkei in Japan and DAX in Europe
reaching their five year highs and both S&P 500 and DAX reached their lifetime highs. Broader stock
markets across the world have continued to move up alongwith the other emerging markets like Mexico,
Argentina, also reaching their life time highs. Globally we have witnessed a synchronized equity market
rally where most of the stock markets have risen on the back of expectations of a strong macro economic
recovery this year.
We’ve seen a strong macro economic data in US with the 2.5% GDP growth last quarter and the
expectation is that this kind of growth will continue during next few quarters. US unemployment
numbers continue to fall and are currently at a 5 year low. Hence, there is no data which points to any
meaningful slowdown in US economic activity despite all the concerns about the fiscal cliff and its impact
on the US recovery.
In Japan, we have seen a very aggressive monetary stance by the government which is leading to a very
strong performance in Japanese equity markets. Nikkei has delivered returns of more than 30% in the last
3 months and is also one of the top performing equity markets. So we are witnessing a strong global
synchronized rally and we believe that India would also participate in because of huge flow of money, we
have already seen more than a billion dollars money flow this month and more than a billion dollars
which came last month. Since the beginning of January, we have seen more than 12 billion dollars of FII
money and it continues to come in on the back of strong cyclical recovery that is expected in India also.
Our stance continues to be the same as earlier i.e. we are positive on the equity markets for the year
with a guidance of 25000 on Sensex for the end of the year.
The earning season continued last week and results announced so far were more or less been in line or
slightly better than the expectations. The private sector banking space, consumer space, pharma space
etc have all delivered very strong set of earnings. PSU banks would announce their quarterly earnings
starting this week and it would be critical for the market direction in short term.
IIP numbers for the month of March came in at 2.5% which shows some kind of a bounce back in
manufacturing and electricity numbers compared to the previous month, which reflects into a very small
revival in manufacturing activity, although the number still looks better from what it has been from the
whole of last year. This could be an early sign of a small uptick in the core industrial activity but it is still
early to make a conclusive remark and we would wait for next few months to see if cyclical recovery has
started.
This week, inflation for the month of April would be released. We are expecting that the core inflation i.e.
the non food manufacturing products inflation to stay below 4% and we expect WPI to stay below 6% on
the back of high base and cooling of commodity prices. We believe that lower inflation would give RBI the
necessary cushion to carry out further rate cuts in the next monetary policy. As we mentioned earlier
also, we are expecting another 25 basis points cut in repo rate cut.

3. News:
DOMESTIC MACRO:
 India's industrial production growth accelerated to 2.5% in March from a year earlier, government
data showed on Friday. The government revised the output growth for February to 0.5% from 0.6%
earlier. Manufacturing, which constitutes about 76% of industrial production, grew 3.2% from a
year earlier.
GLOBAL MACRO
EURO
 Portugal sold 3 billion eurosin its first 10-year bond in more than two years on Tuesday, with keen,
mostly foreign investors putting the country on course to exit its bailout on time and qualify for an
ECB debt support programme.
 Greece has made progress in reducing government debt and improving its competitiveness, but
needs to follow through on structural reforms to ensure its economy recovers, the IMF said on
Monday after a mission visit to the country.
US
 The number of Americans filing new claims for jobless aid fell last week to its lowest level in nearly
5-1/2 years, signaling labor market resilience in the face of fiscal austerity. Initial claims for state
unemployment benefits fell 4,000 to a seasonally adjusted 323,000, the lowest level since January
2008
China
 Consumer inflation quickened to 2.4% in April from March's 2.1% due to higher food costs. Food
prices rose 4.0% in April from a earlier, quickening from the 2.7% rise in March.
Indices:
Date Sensex Midcap Auto Bankex CD CG FMCG HC IT Metals O&G Power Realty Teck
06/05/2013 19674 6451 10982 14182 7534 9956 6527 8798 5992 8960 8798 1773 1907 3619
07/05/2013 19889 6505 11105 14437 7591 10045 6658 8875 6008 8967 8840 1786 1933 3638
08/05/2013 19990 6535 11054 14453 7586 9980 6753 8882 6007 8935 8850 1780 1933 3635
09/05/2013 19939 6507 11021 14406 7519 9986 6759 8738 6060 8805 8796 1781 1912 3653
10/05/2013 20083 6519 11263 14584 7672 9991 6855 8769 6073 8785 8817 1776 1919 3658
2.1% 1.1% 2.6% 2.8% 1.8% 0.4% 5.0% -0.3% 1.4% -2.0% 0.2% 0.2% 0.6% 1.1%

4. Commodities and Currency:
Debt:
Tenor Gilt Yield in % (Thursday) Change in bps (Week)
1-Year 7.44 -20
2-Year 7.40 -5
5-Year 7.43 -9
10-Year 7.59 -15
Date USD GBP EURO YEN
Crude
(Rs. per BBL)
Gold
(Rs. per 10 gms)
06/05/2013 53.95 84.03 70.72 54.36 5621 27290
07/05/2013 54.28 84.32 71.00 54.84 5690 27059
08/05/2013 54.16 83.88 71.00 54.77 5667 26956
09/05/2013 54.24 84.30 71.36 54.95 5651 27268
10/05/2013 54.54 84.19 71.11 53.97 5667 26940
11/05/2013 5667 27119
-1.1%
Rupee
Depreciated
-0.2%
Rupee
Depreciated
-0.5%
Rupee
Depreciated
0.7%
Rupee
Appreciated
0.8% -0.6%

5. Satadru Mitra Varun Goel Jharna Agarwal
Abbas Naheed Kinjal Mehta
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