- The monetary policy committee unanimously agreed to cut interest rates by 0.25 basis points, though some banks have passed on lower rates between 0.10-0.15%. Rate cuts are hoped to boost consumption. - Early indicators show strong consumer durable and auto sales during the Ganpati and upcoming festivals, suggesting good consumption for the next few months. - Earnings growth of 17-18% is expected this fiscal year, with most growth occurring in the third and fourth quarters. - Upcoming global events like the US elections and potential interest rate hikes could increase volatility.

1. THE WORLD THIS WEEK
October 3 – October 7, 2016

2. EQUITY VIEW

3. EQUITY VIEW
• First meeting of the monetary policy and committee unanimously agreed on rate cut by .25 basis points,
but question is how much is passed on to the customers. Couple of private and public sector banks have
passed on by anywhere between 0.10% to .15%. What we need to see is how this rate cut impact on
improving consumption in economy, because traditionally we are on very strong consumption period.
• If one looks at the sales of consumer durables and Auto sector two wheeler and four wheeler both in
since the start of Ganpati festival have been very strong and we expect that in Dassera , Diwali and all
the way till February would be strong session for the consumption.
.

4. EQUITY VIEW
• It will not be possible to assess the impact of this rate cut considering the fact that the monsoon has been good so
far and & 7th pay commission arrear has hit the bank account of government servants. So overall next 3 to 4
months look good for consumption oriented sectors.
• The Market is working on the assumption of 17% to 18% of the earnings growth this financial year, first quarter has
been half of that second quarter does not seem to be materially any good if at all any growth happens it will
happen in Q3 and Q4.

5. EQUITY VIEW
• On a global front, the much awaited U.S. presidential elections coming up, another prospect of increase of FED
rate that is also widely anticipated. We saw that pound flat crash of 6% it was not completely attributed an any
algorithm or rough trader because of the tough talk by British government that how they would like to bargain hard
and the response from the president of France that is the significant concern building out there. Exit negotiation
will begin in sometime in January.
• Deutsche continues to haunt the markets globally not only in Europe. So we have very interesting and volatile set
of event coming in globally which cannot be ignored. One should keep eye on domestic earnings and as and when
market gives an opportunity you can piggyback on the right stocks.

6. NEWS

7. DOMESTIC MACRO
• Revenues of companies in key sectors such as automobiles, IT services, power, steel products, telecom
services, pharmaceuticals and FMCG are expected to grow 7 per cent in the July-September 2016
quarter, compared with a marginal 2 per cent in the year ago period, according to credit rating agency
Crisil.
• The Centre is moving ahead to implement an effective insolvency and bankruptcy regime, which is
expected to help improve India’s ease of doing business ranking. The three draft regulations related to
registration of insolvency professionals; registration of insolvency professional agencies (IPAs) and also
the model bye-laws for IPAs

8. GLOBAL MACRO
• Britain's economy appears to be losing steam, with major business surveys showing a
marked slowdown in the services sector and boardrooms beset by doubt about the future
following the country's vote to leave the European Union. Key measures of business
investment and turnover confidence hit four-year lows in the third quarter, according to the
British Chambers of Commerce (BCC).
• Britain's financial industry could lose up to 38 billion pounds ($48.34 billion) in revenue in
a so-called 'hard Brexit' that would leave it with restricted access to the European Union's
single market, according to a report commissioned by an industry group.
EURO

9. GLOBAL MACRO
• U.S. services sector activity rebounded to an 11-month high in September,
an encouraging sign for economic growth that may increase the prospect of
a Federal Reserve interest rate hike this year according to The Institute of
Supply Management (ISM) its non-manufacturing activity index surged to a
reading of 57.1, the highest level since October 2015. Last month's reading
followed a disappointing drop in August.
• U.S. employment growth eased for the third straight month in September
and the jobless rate rose, but the slowdown was not expected to prevent the
Federal Reserve from raising interest rates later this year. The Labor
Department's report suggested the economy was on firm ground, but not
growing so swiftly as to knock the U.S. central bank off its game plan of
raising borrowing costs only gradually.
UNITED STATES

10. GLOBAL MACRO
• China will continue to use monetary, fiscal and structural reform policies to
boost infrastructure investment and transform the country's economy into a
consumption-driven one, according to the Deputy Governor Yi Gang of
People's Bank of China.
• China's central bank lent 275 billion yuan ($41.24 billion) via its medium-
term lending facility (MLF) to financial institutions in September. The
outstanding amount of MLF was 1.91 trillion yuan at the end of last month,
according to the People's Bank of China.
CHINA

11. INDICES
Date Sensex Midcap Auto Bankex CD CG FMCG HC IT Metals O&G Power Realty Teck
03/10/2016 28,243 13,483 22,775 22,397 12,881 14,936 8,540 16,476 10,243 10,002 11,616 2,036 1,558 5,664
04/10/2016 28,335 13,550 22,787 22,491 12,897 14,869 8,548 16,503 10,312 10,081 11,887 2,041 1,573 5,696
05/10/2016 28,221 13,617 22,866 22,316 12,869 14,897 8,573 16,446 10,255 10,150 11,847 2,046 1,599 5,674
06/10/2016 28,106 13,541 22,709 22,159 12,825 14,870 8,543 16,284 10,166 10,157 12,160 2,022 1,576 5,630
07/10/2016 28,061 13,543 22,849 22,153 12,792 14,840 8,537 16,240 10,082 10,258 12,081 2,018 1,573 5,598
-0.64% 0.44% 0.33% -1.09% -0.69% -0.65% -0.04% -1.43% -1.57% 2.56% 4.01% -0.86% 1.01% -1.17%

12. COMMODITIES AND CURRENCY
Date USD GBP EURO YEN Crude (Rs. per BBL) Gold (Rs. Per 10gms)
03/10/2016 66.53 85.87 74.72 65.7 3216.00 30940.00
04/10/2016 66.56 85.32 74.44 65.08 3247.00 30725.00
05/10/2016 66.57 84.48 74.65 64.7 3241.00 30033.00
06/10/2016 66.63 84.67 74.58 64.34 3317.00 29959.00
07/10/2016 66.79 83.24 74.27 64.3 3361.00 29783.00
-0.38% 3.06% 0.59% 2.13% -4.51% 3.74%

13. DEBT
Tenor Gilt Yield in % (Friday) Change in bps (Week)
1-Year 6.60 -3
2-Year 6.58 -14
5-Year 6.70 -18
10-Year 6.84 -12

14. KIASL TEAM
Shantanu Awasthi
Head- Advisory
Shantanu.awasthi@Karvy.com
Nupur Gupta
Lead Advisor
Nupur.gupta@Karvy.com

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