- Global investor sentiment declined due to weak economic data from major economies and falling commodity prices, with the MSCI AC World Index closing down 2.17%. - The IMF maintained its global growth projections of 3.2% in 2013 and 4% in 2014, but noted ongoing downside risks from issues in advanced economies like high government debt. - Major commodity prices rebounded slightly from sharp declines, but the Reuters Jefferies CRB Index still closed down 1.40%. Gains in select emerging markets helped offset global declines.

1. International
Global investor sentiment was impacted by relatively weak economic data from key economies.The sharp
declines in commodity prices exacerbated selling pressure and the MSCI AC World Index closed down
2.17%. Equity markets in select Emerging economies notched gains, on hopes that the recent fall in
commodity prices will ease inflation and current account pressures. As per IMF, recent policy efforts have
helped contain short-term risks, however medium to long term downside growth risks remain elevated.
IMF’s global economic growth projections were largely unchanged - 3.2% in 2013 (from 3.5%) and 4% in
2014, and has indicated that the macro environment has improved over the last 6 months. It has highlighted
the issues facing advanced economies (with the exception of the US). Whilst short term risks have been
contained by policy measures, structural issues such as soaring government debt and eventual deficit
reduction efforts impacting growth, continue to pose downside risks. Major Treasury bond markets reversed
gains at end of week on speculation stimulus measures will continue.Towards the close of week, commodity
prices rebounded from the sharp sell-off seen earlier, but the Reuters Jefferies CRB Index still closed down
1.40%. G20’s acceptance of Japan’s monetary policy stance led the Japanese yen lower.
• Asia-Pacific: Gains in India, China and Indonesian equity markets helped regional equities outperform
global counterparts. China’s economy grew by 7.7% in Q1-2013 compared to 7.9% reported in the
sequentially previous quarter. Both local demand and external factors contributed to the slowdown.
Japanese exports continued to gain in March helped primarily by increased exports to the U.S. Japanese
industrial production data also reinforced signs of improvement – February’s revised industrial data
showed an increase of 0.6% mom (sa) compared to a 0.1% mom fall reported earlier. South Korea unveiled
a $15.3 bln stimulus package focused on small businesses, creating jobs and lifting property markets.
• Europe: Global growth concerns weighed on European equity markets this week. French government
relaxed austerity targets while Portugal announced new spending cuts to plug the gap stemming from
the Constitutional court ruling earlier this month. Fitch cut UK’s credit rating one level to AA+ citing
weaker economic and fiscal outlook. German manufacturing orders rose 2.3%mom in February. In
Turkey, the monetary policy committee (MPC) cut all key interest rates by 50 bps. Riksbank left policy
rates unchanged and indicated the accommodative stance will be maintained for longer period of time.
On the corporate front, DISH Network offered $25.5 bln for Sprint Nexel.
• Americas: The mood in US equity markets was dampened by weak economic and earnings data.Reports
of higher initial jobless claims renewed concerns about labour market. Bank of Canada remained on hold,
while Brazil raised the benchmark Selic rate by 25 bps to 7.5%, citing rising inflationary pressures.
Colombia’s $2.7 bln stimulus package contained a host of measures to curb currency appreciation
(including higher provision for private pension fund investments overseas) and boost local industries &
infrastructure.Venezuela elected Nicolás Maduro as president. Blackstone ended its pursuit for Dell, citing
amongst other reasons the recent sharp fall in PC sales.
Market Review
WEEK ENDED APRIL 19, 2013

2. Weekly Weekly
change (%) change (%)
MSCI AC World Index -2.17 Xetra DAX -3.68
FTSE Eurotop 100 -2.14 CAC 40 -2.07
MSCI AC Asia Pacific -1.36 FTSE 100 -1.53
Dow Jones -2.14 Hang Seng -0.34
Nasdaq -2.70 Nikkei -1.25
S&P 500 -2.11 KOSPI -0.91
India - Equity
Indian equity markets were buoyed by the steep correction in global commodity prices this week. Given
India’s large dependence on imports for crude oil, high gold consumption and subsidy regime, the fall in
global prices assuaged investor concerns on twin deficits (current account and fiscal) & inflation.
Improved corporate earnings newsflow also had a positive impact. Gains in large cap stocks outpaced those
in mid and small cap segment. Except technology, all sectoral indices notched up gains. FIIs bought
equities to the tune of $101 mln in the first three trading days of the week.
• Macro: Growth in India’s exports accelerated to 7%yoy in March from 4.2%yoy in February helped by a
low base effect and seasonality.At the same time,led by fall in oil prices,imports fell by 2.9%yoy.These trends
helped the trade deficit narrow to $10.3 bln from $14.9 bln in February ($191 bln for FY13).This means
that the current account deficit (CAD) could ease from record highs touched last quarter.
Monthly Trade Balance (USD bln)
Source: CLSA Asia-Pacific Markets
The recent sharp correction in international commodity prices along with fall in gold prices augurs well for
India’s trade balance. This along with signs of improving external demand amidst large stimulus and
continued FII inflows can help contain pressures on India’s Balance of Payments in the near term.The trade
policy unveiled this week contained some measures to boost exports,but more concerted efforts are required
for sustainable reduction in CAD.

3. Weekly change (%)
S&P BSE Sensex 4.24
CNX Nifty 4.60
CNX 500 4.00
CNX Midcap 2.76
S&P BSE Smallcap 1.76
India - Debt
Indian treasury bond markets rallied as the fall in global crude oil and gold prices, along with positive WPI
data stoked expectations of policy rate cuts.
• Yield movements: Yields eased across the yield curve - benchmark 10-year gilt yield decreased 12 bps,
while yields on the 1 year paper moved down 10 bps.Yields on the 5 and 30-year paper eased 12 and
14 bps respectively.
• Liquidity/borrowings: Overnight call money rates hovered around 7.5% levels and demand for liquidity
under the RBI’s LAF window was lower compared to previous week. Scheduled auctions of four GOI
securities worth Rs. 15,000 crores were oversubscribed close to 4x.
• Forex: Helped by positive trade data and commodity markets news flow,the Indian rupee extended last week’s
gains and closed up 1%.As of Apr 12, Indian forex reserves stood at around $295.2 bln, about $1.4 bln higher
than previous week levels.
Headline inflation trends
Source: Citigroup
• Macro: March headline inflation reading surprised positively.Wholesale price inflation eased to 5.96% from
6.84% last month and core inflation came in below 4%.A negative however was the sharp upward revision to
January inflation numbers to 7.2% from 6.6%. Given that tradables account for 57% of the WPI basket, the
ongoing decline in commodity prices could aid faster deceleration in headline inflation.

4. 19.04.2013 12.04.2013
Exchange rate (Rs./$) 53.96 54.52
Average repos (Rs. Cr) 74,346 97,321
1-yr gilt yield (%) 7.68 7.78
5-yr gilt yield (%) 7.66 7.78
10-yr gilt yield (%) 7.75 7.87
Source: Reuters, CCIL.
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