What an eventful month first it was Chinese President #Xi #Jinping's India visit followed by the Prime Minister Mr. #Narendra Modi’s Visit to the USA. The Chinese President’s Visit resulted in a commitment of $20 billion dollars in a fast train corridor and a new strategic road.

1. 1
Eastern Financiers Ltd.
While it’s Hindi Chini Bhai Bhai in India……US Chants Namo Namo.
16 October 2014
What an eventful month first it was Chinese President Xi Jinping's India visit followed by the Prime Minister Mr.
Narendra Modi’s Visit to the USA.
The Chinese President’s Visit resulted in a commitment of $20 billion dollars in a fast train corridor and a new
strategic road. The investments announced were much below the heavily hyped expectations of $100 billion. The meet
had a sense of Déjà vu though; in the 1960s, Nehru and Zhou En Lai met and announced "Hindi-Chini Bhai Bhai" while
the Chinese military were intruding into Tibet Arunachal and Ladakh. In 2014 when the Xi Jinping –Modi, were meeting
in Ahmedabad, Indian and Chinese armed forces were locked into a border stand-off.
"Kem Cho" -- this is how US President Barack Obama welcomed Prime Minister Narendra Modi in Gujarati at the
doorstep of the White House, ahead of the rare private dinner hosted in his honour. Mr. Modi’s visit have been one of the
most remarkable visits abroad, it witnessed a surprising response from the people, with at least seven speeches,
numerous interactions with smaller groups, and almost two dozen bilateral meetings with US officials, CEOs, and
political and civic leaders. Some of the major outcome of the US visits are lower barriers for travel (including visas on
arrival for US tourists beginning in 2015), joint cooperation on smart cities focused on Ajmer, Vishakhapatnam, and
Allahabad, and $1 billion for financing India’s transition into a low carbon and climate resilient economy. The US also
agreed to back India’s membership of the Missile Technology Control Regime and Nuclear Suppliers Group, which would
mark India’s further integration into the global nuclear mainstream.
But, it was at Madison Square where history was created, “Namo! Namo! Namo!” the audience chanted. He reciprocated
by promising to promote Indian economic growth and clean up the polluted Ganges River. He further promised to make
it easier for those of Indian descent to obtain visas, so that members of the Indian Diaspora might bring their talents
back to the homeland.
In his speech, Modi promised to fight corruption and champion India's poor people. He also highlighted the country's
rising status as a technology giant, joking that it was no longer known a place of "snake charmers." "Our country used
to play with a snake, now we play with the mouse," he said, to laughter.
India scripted history with the success of its Mars mission. Mangalyaan entered the Mars orbit, making India the first
country in the world to make it to the Planet in the first attempt. $74 million were spent on the project, making it by far
the cheapest of recent missions to Mars. The U.S. spent $671 million getting its Maven satellite to Mars orbit. Earlier PM
Mr. Modi has said that India had spent less than Hollywood had on producing the film “Gravity” to reach the red planet
"Make in India" - Promising effective and easy governance along with a stable regime, Prime Minister Mr. Modi made a
strong pitch before domestic and foreign companies to make India a manufacturing hub. He, however, indicated that
instead of providing sops the government would provide an enabling environment to the industry to invest and grow in
India. Government has identified 25 sectors including pharma, automobiles, textiles, aviation, mining, chemicals and
others which have potential to make India a leader in these fields.
"We want to chart out new path wherein business entities are extended proverbial red carpet welcome... We are
fully committed to delicensing, deregulation and radical changes as we go along. We have an open mind,"...................
Commerce and Industry Minister, Mrs. Nirmala Sitharaman said at the launch of the 'Make In India' campaign

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Eastern Financiers Ltd.
While it’s Hindi Chini Bhai Bhai in India……US Chants Namo Namo.
16 October 2014
On the macro Front, India's fiscal deficit was 3.98 trillion rupees ($64.4 billion) during April-August, or about 74.9
percent of the full-year target, the fiscal deficit for the first five months of 2014-15 is 75 per cent of the Government’s
Budget estimate. Finance ministry is increasingly optimistic that it can meet a tough fiscal deficit target, helped by a 12%
decline in global crude oil prices since May.
Trade deficit widened to $14.25 billion in September as gold imports surged about 450 per cent to $3.75 billion.
Merchandise imports surged nearly 26 per cent last month year-on-year to $43.2 billion and exports grew a meagre 2.73
per cent to $28.9 billion. The deficit stood at $10.84 billion in August.
Wholesale inflation rate plunged to 2.38% in September, the lowest in five years, aided by a sharp drop in vegetable
and petrol prices, rejuvenating hopes that the Reserve Bank of India will cut interest rates soon. However, the sharp fall
in inflation can be attributed to a favorable base effect, moderation in food prices, and a drop in crude prices.
Retail Inflation eased to 6.46 per cent, the lowest in 33 months in September. The overall food inflation as measured by
CPI fell to 7.67 per cent as against 9.35 per cent in the previous month and 11.75 per cent in September 2013. Retail
inflation, has been on decline since July and is below the RBI target of 8 per cent by January 2015. However, with the 12
percent deficiency in monsoon, the RBI will probably wait for a few more quarters to see its impact on food prices
and it is unlikely that the RBI would cut rates too soon.
August IIP grew 0.4% YoY in August 2014, however remained unchanged from the previous month. Manufacturing
growth recorded contraction (-1.4%) for the second consecutive month. Consumer goods index falling 6.9% from a year
ago is another area which causes concern. although a part of the slowdown has been attributed to one-off factors, such
as the closure of Nokia’s Chennai factory.
Globally, The Federal Reserve renewed its pledge to keep interest rates near zero for a "considerable time," but also
indicated it could raise borrowing costs faster than expected when it starts moving. In a statement after a two-day
meeting of its policy-setting, it announced a further $10 billion reduction in its monthly purchases, leaving the program
on course to be shuttered next month.
Alibaba's initial public offering now ranks as the worlds biggest at $25 billion. Overwhelming demand saw the IPO
initially raise $21.8 billion, and then sent Alibaba Group Holding Ltd's stock surging 38 percent on its debut. That
prompted underwriters to exercise an option to sell an additional 48 million shares.
Back home, World Steel Association (WSA) said that India's steel demand is likely to grow at 3.4 per cent in the current
year; it has pegged growth for the next year even higher at six per cent as against 1.8 per cent in 2013. Moody’s Investor
Service had in August said steel consumption in India would pick up once the government's infrastructure spending
policies are put in place.
Sectorally, the mining and metals space is likely to witness headwinds in the near future with the Supreme Court
cancelling all but four of the 218 coal block allocations it had declared illegal and arbitrary in its August 25, 2014 verdict.
On the Centre's request to save 40 functional coal blocks and six ready-to-function ones, the court said 42 of them would
continue to function for the next 6 months, till March 31, 2015, The court order exempted four blocks. These include two
ultra mega power projects -- Moher and Moher Amroli Extension -- allocated to Sasan Power Ltd, Tasra allotted to Steel
Authority of India Ltd. and Pakri Barwadih coal block of the National Thermal Power Corporation.

3. 3
Eastern Financiers Ltd.
While it’s Hindi Chini Bhai Bhai in India……US Chants Namo Namo.
16 October 2014
There seems to be no end to the woes of the Aviation sector, as per media reports, Jet Airways has sought a month's
time to clear about Rs 100 crore worth of salary arrears of its pilots, who have been expressing their ire against the delay
in making the payment. Jet Airways, in which the Gulf carrier Etihad is a strategic partner with 24 percent stake, has
1,100 pilots on its rolls. Its pilots had struck work for several weeks in 2009 against sacking of two of their colleagues for
forming a union.
Realty was another sector which was in limelight with Sebi cracking down on DLF by barring six top executives,
including promoter-chairman KP Singh, from accessing the securities market for three years, thereby obstructing its
options to raise funds. The order has been in connection to disclosure lapses in the company's IPO in 2007.
Retail has become the centre of attraction with major Online Players offering hefty discounts and offline players going
up in arms against them. Flipkart one of the major players in the online retail segment was in the news for its discount
Sale. Proclaimed as a ‘Big Billion Day’ by Flipkart, the big sale has proved to be a nightmare for many customers. Huge
discount offers, publicity campaigns, and a one-day time limit for the offer resulted in a mad rush, leading to the website
to crash within minutes of the sale kicking off, the lucky few who managed to get to have access found the products
offered had run out of stock. "Even Rajnikanth is not able to buy on Flipkart today" went a joke. The ED is
investigating whether any norms were violated during the sale day or not. A separate probe on Flipkart is underway
since 2012 for alleged violation of the Foreign Exchange Management Act (FEMA). Industry insiders say that Flipkart
could be served with a notice of about Rs 1,000 crore soon.
Global ratings agency Standard & Poor’s raised India’s sovereign outlook from “negative” to “stable.” The stable
outlook means lower borrowing costs for companies seeking to raise funds
Domestic Equity Markets have been on a roll, with almost 30% return in Nifty and many midcaps turning multi
baggers since last Diwali, equity investors have been on a winning spree. The markets have though seen a bad patch in
the last few trading sessions with Foreign Institutional Investors (FII) who have been constant buyers resorting to
selling in the last one month. Stocks worth Rs. 3800 crores have been sold by FII’s in the period. Readers would
appreciate that we have mentioned in our September issue that “investors would be better off being cautious as the
near term upside looks a little difficult”.
Going forward, the markets might witness pressure in the short term on fears about the strength of global growth,
conflict in the Middle East, slowing growth in China and Germany as well as the spread of the Ebola virus from West
Africa. The medium to long term view though remains bullish. With number of positives in its favour – falling oil prices,
commodity prices touching five-year lows, sliding gold and stable rupee, fall in CPI and WPI, it seems to be the best of
time for the country. The icing on the cake could be a rate cut from the RBI in coming days, all these taken together
would lead the economy towards a growth path and achieving 7% growth in FY16 would not be a distant dream. We
believe that despite the run up there is enough room for growth and any fall should be taken as an opportunity to
accumulate. One should be cautious though on quality of the stock and focus should be on companies with strong
fundamentals, sound management, proper growth outlook and good corporate governance.
"Chalein Saath Saath", forward together we go”, is how the India-US joint vision statement, released after Prime
Minister Narendra Modi’s meeting with President Barack Obama, begins. “As leaders of two great democratic nations
with diverse traditions and faiths, we share a vision for a partnership in which the United States and India work
together, not just for the benefit of both our nations, but for the benefit of the world,” the statement said. When two great
nations join hands there seems to be little doubt on the long term aspects of this togetherness. This would go a long way
in the country achieving new horizons.

4. 4
Eastern Financiers Ltd.
While it’s Hindi Chini Bhai Bhai in India……US Chants Namo Namo.
16 October 2014
EASTERN FINANCIERS RESEARCH DESK
Rajesh Agarwal – Head of Research 033 – 4006 8823 rajesh.agarwal@easternfin.com
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