Indian equity market view.

1. The World This Week
Sept 24 – Sept 28, 2012

2. Equity View:
Last week, Indian equity markets touched 5700 levels for the first time since 26th July 2011. We have seen a big
inflow of foreign money in the month of September with more than 20,000 Crores coming in. From the
beginning of the year in January we have almost seen 76000 Crores of FII money being directed towards Indian
markets. This is turning so far has turned out to be a great year in terms of total foreign investment in the
Indian equity markets. Indian equity markets continue to be one of the best performing markets in Asia and
also in the emerging markets and as such we continue to be positive on the markets.
We believe that going forward, as the monetary easing starts; we will see a rebound in growth which would
take care of some of these pressures and a lot of negative momentum that we were seeing in various
infrastructure indicators at this point of time. We believe that going forward there is a chance that the IIP
might have bottomed out and we would see some rebound in infrastructure growth numbers. We have seen
the core sector growth for the last month coming at 2.1% which is largely being flattish as it has been in the
last 4 -5 months and probably we will see a small off-take going forward.
The Rupee seems to be moving on the appreciating trend. We have seen rupee moving from around 55 levels
to almost 52.5 - 53 against the Dollar now. The kind of foreign inflows which is coming in is causing the rupee
to appreciate. Also the fact is that Interest rates in various parts of the world continue to come down whereas
in India they have been constant for a long time. So the interest rate differential between India and other
countries specially the US has become even more because of which we see some kind of a depreciating trend
in US because of QE3 and rupee has been holding forth for quite some time.
The current account deficit which has come in for the June quarter ($16.55 Bn) has also come in lower than the
March quarter ($21.76 Bn) which also eases off some pressure from the rupee. We believe that if this kind of
positive momentum in Indian equity markets continues, we might see some more appreciation in the Indian
rupee because of which we would have a very cautious way on the IT space as of now.
News:
DOMESTIC MACRO:
 India's consumer price index (CPI) for industrial workers at 10.31 percent in August from a year earlier,
higher than an annual rise of 9.84 percent in July
 The Reserve Bank of India data released on Friday showed India ran a balance of payments surplus of
$0.5 billion in the April-June quarter, versus a deficit of $5.7 billion in the previous three months. In the
June quarter last year, India had posted a $5.4 billion surplus.
 The current account deficit fell to $16.55 billion in the June quarter, down from an all-time high of $21.76
billion in the March quarter, and also below the $17.54 billion deficit posted in the June quarter last year.

3. GLOBAL MACRO
EURO
 Germany is the last country in the 17-member euro zone to complete ratification of the European
Stability Mechanism (ESM), an important tool to stem the three-year debt crisis that has forced bailouts
of Greece, Ireland and Portugal and now threatens big countries like Spain and Italy.
 European Central Bank President Mario Draghi offered a vigorous defence of the bank's bond-buying
plans to a sceptical German audience on Tuesday and said it was now up to governments to follow with
decisive policy steps of their own.
US
 The euro zone has stepped back from the brink of disaster for now, but the global economy could soon
be staring into another abyss if U.S. politicians fail to head off $600 billion in automatic austerity that all
but guarantees a new recession.
China
 China's central bank said on Tuesday that it will "fine tune" policy to cushion the economy against global
risks while closely watching the possible impact from recent policy loosening in the United States and
Europe.
 China's economy is expected to grow at a much slower pace of about seven percent over the next
decade, but its stock market still has the most attractive upside among "BRIC" countries, according to Jim
O'Neill, Chairman of Goldman Sachs Asset Management.

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