2. Equity View:
We saw a mild correction in the markets towards the second half of last week. The week also saw
announcements of some key data points – IIP data for the month of November contracted by 0.1%, a
flattish level as on a y-o-y basis. During first 8 months of this fiscal, IIP growth was is in the range of
around 2.5% - 3%, which highlights the softness in industrial activity in the country. We believe that the
IIP growth has bottomed out in the last 3 months and we expect some off-take in those numbers in the
next few months.
Inflation as measured by WPI will be released on 14th January 2012 for the month of December 2012. We
are expecting the number to be at around 7% which should give RBI the necessary cushion to cut the rate
cut in the 29th January 2013 review. There is an expectation of a 50 bps cut in repo rate and we also
believe that there is a chance of CRR cut too as the liquidity remains tight in the system.
The Q3 results season has started; we have seen the first few set of numbers. Indus Ind bank came up
with a very strong set of numbers and a very strong and a high growth. We expect private sector banks to
lead this results season again on the back of very robust asset quality and a very strong NIM growth.
We also saw Infosys coming up with its results on Friday and the stock reacted very positively with almost
a 17% gain. The company announced very good set of numbers after it having disappointed in the last 4
quarters with big corrections in the prices after every quarterly result announcement. However, this
quarter the company has actually exceeded its own guidance and come up with a very strong set of
earnings. But from an industry perspective the earnings are still not as per industry leader standards and
TCS continues to be the industry leader. In terms of price target, we are looking at Rs. 2950 as a target for
Infosys and look at exiting it the moment the stock comes closer to it.
News:
DOMESTIC MACRO:
The index of industrial production fell 0.1 percent annually in November, data released by the Central
Statistics Office showed on Friday, compared with revised growth of 8.3 percent in October. Output has
grown in just three of the last eight months.
India's trade deficit narrowed to $17.7 billion in December from $19.3 billion in November, even after
exports fell for the eighth straight month, a trade ministry official said on Friday
Fitch Ratings reiterated on Tuesday its "negative" outlook on India's sovereign credit rating, citing
concerns about slowing economic growth, persistent inflationary pressures and an uncertain fiscal
outlook.
3. GLOBAL MACRO
EURO
The European Central Bank held interest rates at a record low of 0.75 percent on Thursday, refraining
from a cut following fledgling signs of life in the euro zone economy and with inflation still above target.
US
Top Democratic senators urged President Barack Obama on Friday to be ready to raise the debt ceiling
without congressional approval in order to avert a damaging debt default.
China
China's annual consumer inflation rate quickened to a seven-month high of 2.5 percent in December on
rising food prices, ahead of expectations and narrowing the scope for the central bank to boost the
economy by easing monetary policy.
4. Satadru Mitra Varun Goel Jharna Agarwal
Abbas Naheed Kinjal Mehta
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