1. The World This Week
Apr 30 – May 04, 2012

2. Equity View:
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Indian Equity Markets witnessed a sharp downfall on 4 May 2012. Nifty closed at 5086.9, a correction of about 2% during the
week. Last week, many mid-tier public sector banks (PSU) declared results in line with expectations. On the positive side, we
think that NPA cycle has peaked-out and asset quality has bottomed-out which would lead to a definite improvement in the
asset quality of banks going forward. The credit growth is also expected to be around 15-20%. Some of the mid-tier PSU banks
are trading at 0.5X to 0.6X FY14 earnings which makes them extremely attractive from valuation perspective. We are positive
selectively on some of the mid-tier PSU banks.
Financial markets around the globe were jittery on the back of French presidential election results. Mr. Francois Hollande
defeated Mr. Nicolas Sarkozy in a tightly fought election which led to a huge uncertainty about the fate of deals that were
already signed in the last eighteen months regarding the fiscal stability of Eurozone. Markets of course are very concerned as
to what will happen to the earlier deals as Mr. Hollande came to power on back of his opposition to austerity measures and
carries very strong anti-euro views. However, till the time there is no clarity on how his government is going to shape up and
what Mr. Hollande thinks about the Euro shaping up over the course of next few months there is going to be some sort of
uncertainty in the markets.
In parallel elections held in Greece, we witnessed political parties with the anti-austerity beliefs get more votes than those
parties which favored austerity measures. Hence we would continue to witness some amount of turbulence in global assets
like Equity, Commodities and Crude oil.
Brent crude has fallen $7 in the last week down to $111-112 per barrel. This is a big positive for India and if Brent crude
continues to fall and witnesses levels of $100 per barrel with rupee not deprecating further against dollar, then it would
address many concerns like fiscal deficit and the current account deficit.
This week the Government will start the discussion on the tax changes introduced in the budget session of the parliament in
March this year. The discussion would start on May 7, 2012 and is expect to last over a month. There is a lot of speculation
regarding the General Anti-Avoidance Rule (GAAR) which could be relaxed and its implementations could be postponed by 1-2
years. There are concerns regarding the India –Mauritius treaty and apparently it is also under review. All of this is leading to
uncertainty regarding the taxation proposals that the Government of India would come up with.
News:
DOMESTIC MACRO:
India is considering a review of the Double Taxation Avoidance Treaty with Mauritius to raise revenues, Minister of
State for Finance S.S. Palanimanickam told lawmakers on Friday.
HSBC's Business Activity Index, compiled by Markit, rose to 52.8 in April from 52.3 in March. India's services sector
growth accelerated a touch in April thanks to a rise in new business, and optimism hit its highest level since June
2011.
India's consumer price index (CPI) for industrial workers rose 8.65 percent in March from a year earlier, faster than
February's annual rise of 7.57 percent, government data showed on Monday.
GLOBAL MACRO
Euro:
The European Central Bank held interest rates at 1 percent on Thursday and will resist calls to do more to fight the
euro zone crisis, putting the onus on governments to foster growth and head off anger over austerity policies.
Unemployment in the euro zone rose to a 15-year high of 10.9 percent in March, driven by lay-offs in Italy and Spain,
and economists said worse was to come as the impact of the debt crisis extracts an ever greater toll.

3. Standard & Poor's raised Greece's credit rating out of default territory to CCC on Wednesday, as expected after
Athens slashed its debt by about a third by completing the biggest sovereign debt restructuring in financial history.
US:
U.S. employers decreased hiring for the second straight month in April but the unemployment rate still fell to 8.1
percent, giving mixed messages about the economy's strength ahead of President Barack Obama's November re-
election bid.
China:
The HSBC China Purchasing Managers' Index, geared to smaller firms, improved to 49.3 in April from 48.3 in March,
but remained below the threshold of 50 that divides expansion from contraction.

4. Satadru Mitra Varun Goel Jharna Agarwal
Palak Nanjani Abbas Naheed Kanika Khorana
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