2. Equity View:
Last week in the European Union summit, it was agreed to have a € 109 billion bailout package for recapitalisation funds
for European banks which was a positive. Steps were taken to ensure orderly restructuring of Greek debt. Although no
consensus have been arrived yet; but efforts are being taken to arrive at amicable solutions. One major issue remains
seeking approval of every member of the Euro area for bail out packages which leads to delays. There are considerable
differences between the French & the German Government over use of ECB in the bailout package. The Germans are not
agreeing to print Euros to solve this crisis in the short term. We continue to be hopeful that some kind of announcement
th rd th
would be made on 26 Oct 2011. The summit will continue on 3 and 4 Nov 2011 when a major road map to solve the
Euro area crisis is expected to be announced.
RBI policy will be released on 25th October 2011. The consensus expectations are 25 basis points hike in repo rate. Also
the GDP growth forecast is expected to be downgraded from 8% to 7.5-7.75%. The 25 bps hike expected is already
factored in the market valuations. What remains to be seen is the RBI commentary which will be an indicator of further
rate hikes.
On the results front, Axis Bank declared Q2 results last week. Company delivered a 25% growth in PAT YoY; Net Interest
Income moved up by 24%. Axis Bank has been able to pass on the repo rate hike by the RBI & continues to maintain a
healthy net interest margin and good asset quality.
A disappointing set of numbers was declared by Asian Paints. Company showed de-growth in profits of around 20% with
marginal de-growth in sales. Major reasons for this decline are high input cost & rupee depreciation.
L&T declared its Q2 results last week. PAT increased by 15% & sales were up by 20%. Company seems to face margin
pressures and has also scaled backed its next years order inflows guidance growth from 15% to 5% which is a concern for
the whole capital goods industry in the short to medium term.
News:
DOMESTIC MACRO:
India's food price index rose 10.60% from last week’s 9.32% and the fuel price index climbed 15.17% from
15.10% in the year to Oct. 8.
Banks' credit grew at a 19.5 percent to 41.486 trillion rupees from 34.731 trillion rupees last year, while deposits
grew a slower 17.4 percent to 56.249 trillion rupees from 47.929 trillion rupees a year ago.
The oil ministry has sought cash subsidy of 140 billion rupees ($2.84 billion) from the finance ministry to partially
compensate state-run oil marketing firms for selling fuels at state-set cheaper rates, Oil Secretary G.C.
Chaturvedi said on Wednesday
GLOBAL MACRO
Euro:
Euro zone finance ministers threw Greece a lifeline on Friday by agreeing to approve an 8 billion euro loan
tranche that Athens needs next month to pay its bills.
Private holders of Greek debt may need to accept losses of up to 60 percent on their investments if Greece's
debt mountain is to be made more sustainable in the long-term, a downbeat analysis by the EU and IMF showed
on Friday.
3. US:
U.S. Federal Reserve Chairman Ben Bernanke said on Tuesday that central banks may need to resort to
monetary policy to combat asset bubbles, although regulation should be a first line of defense.
China:
China’s gross domestic product expanded 9.1 per cent in the third quarter from a year earlier, the slowest pace
for the world’s second-largest economy since early 2009 and down from a 9.5 per cent increase in the second
quarter.
4. Swapnil Pawar Varun Goel Jharna Agarwal
Palak Nanjani Neha Arora Kanika Khorana
Disclaimer
The information and views presented here are prepared by Karvy Private Wealth or other Karvy Group
companies. The information contained herein is based on our analysis and upon sources that we consider
reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal
information and we are not responsible for any loss incurred based upon it.
The investments discussed or recommended here may not be suitable for all investors. Investors must make
their own investment decisions based on their specific investment objectives and financial position and using
such independent advice, as they believe necessary. While acting upon any information or analysis mentioned
here, investors may please note that neither Karvy nor any person connected with any associated companies of
Karvy accepts any liability arising from the use of this information and views mentioned here.
The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the
above-mentioned companies from time to time. Every employee of Karvy and its associated companies are
required to disclose their individual stock holdings and details of trades, if any, that they undertake. The team
rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or
other securities till such a time this recommendation has either been displayed or has been forwarded to clients
of Karvy. All employees are further restricted to place orders only through Karvy Stock Broking Ltd.
The information given in this document on tax are for guidance only, and should not be construed as tax advice.
Investors are advised to consult their respective tax advisers to understand the specific tax incidence applicable
to them. We also expect significant changes in the tax laws once the new Direct Tax Code is in force – this could
change the applicability and incidence of tax on investments
Karvy Private Wealth (A division of Karvy Stock Broking Limited): Operates from within India and is subject to
Indian regulations. Mumbai office Address: 702, Hallmark Business plaza, Sant Dnyaneshwar Marg, Bandra
(East), off Bandra Kurla Complex, Mumbai 400 051 (Registered office Address: Karvy Stock Broking Limited,
“KARVY HOUSE”, 46, Avenue 4, Street No.1, Banjara Hills, Hyderabad 500 034) SEBI registration
No’s:”NSE(CM):INB230770138, NSE(F&O): INF230770138, BSE: INB010770130, BSE(F&O):
INF010770131,NCDEX(00236, NSE(CDS):INE230770138, NSDL – SEBI Registration No: IN-DP-NSDL-247-2005,
CSDL-SEBI Registration No:IN-DP-CSDL-305-2005, PMS Registration No.: INP000001512”