2. Equity View:
Last week had optimism that Greece referendum will throw positive results. Today the results show that 60%
of the voting public in Greece does not want austerity measures. This has a plain reading that Greece should
be out of the Eurozone however the way it has been presented by both the Greek administration and the
commentators is slightly nuanced and a bit perplexing. The statements by the Greece government indicate
that the results of the current referendum should be seen as a ‘NO’ to the austerity measures being proposed
by the creditors of Greece. In simple terms the people of Greece do not want austerity measures but they
have not expressed their opinion on whether they should be a part of the Eurozone. This is very interesting
and convenient.
Assuming such an odd request is accommodated by the Eurozone the other troubled countries like Portugal
which took some difficult decisions 3 year back, Italy and Spain will all go into referendum by the end of July.
The people will come out with even more thumping numbers – may be 90-10 or 100-0 that they are not
happy with the austerity measures being imposed on them but they would like to remain in the Eurozone.
Remaining in the Eurozone has its own advantages of being able to fall back on the European Central Bank to
draw more money for your banks, to keep getting bailout packages.
So we believe that Greece would be out and if for some reason it continues to be in the Euro Zone, then the
Euro itself will be finished in less than one year. As long as we are not punting on Greece we should be okay to
investments. However analysing the impact on Indian markets is in a way a little challenging for the simple
reason that, there is a structural impact and a market impact. From a structural point of view there is no
Impact on economic linkages. Greece itself just contributes 2% of Euro output. From the market point of view
there can be an impact because the kind of positions any of these hedge funds or sovereign funds would have
taken may not just be in the Greece market but in some emerging markets and some European markets. It can
be any kind of position because these days with sophisticated financial instruments available people usually
bet on markets and asset classes that show a better correlation with greater liquidity. So any outsized position
might go bad anytime. There is no way to predict that because nobody knows these
positions. One has to be to be ready to be able to face these knee jerk reactions. But from a structural point of
view, there is no concern.
News:
DOMESTIC MACRO:
India’s fiscal deficit during April-May touched Rs. 2,086.24 billion or 37.5% of the target for
the fiscal 2015-16. The deficit stood at 45.3% during the same period last year.
The RBI Governor said that the direct exposure of the country towards Greece is limited. He further
added that foreign exchange buffers are fairly reasonable.
The Government has allocated Rs. 200 crore for three years to set up an online national
agriculture market by integrating 585 wholesale markets across India. The objective behind the
move is to help farmers realize better prices.
The Services sector in India contracted for the second consecutive month in June as new
orders declined for the first time in 14 months. The Nikkei Purchasing Managers' Index (PMI) for the
service sector fell to 47.7 in June from 49.6 in May.
3. GLOBAL MACRO
EURO
Eurozone services PMI was 54.4 in June compared to 53.8 in May; the composite PMI was 54.2 in
June compared to 53.6 in May.
Eurozone retail sales climbed 0.2% month-on-month in May following a 0.7% rise in April.
Moody's cuts Greece’s rating from Caa2 to Caa3 saying that the country likely to default on its
remaining privately held debt due to its impasse with lenders
United States
A report released by payroll processor ADP showed that employment in the U.S. private sector
jumped by 237,000 jobs in June following an upwardly revised increase of 203,000 jobs in May.
The yield on the 10-year U.S. Treasury bond fell by 9 bps during the week to close at 2.39%
compared to the previous week’s close of 2.48%.
China
China’s HSBC composite PMI came in at 50.6 in June, down from 51.2 in May.
Indices:
Date Sensex
Midca
p
Auto
Banke
x
CD CG FMCG HC IT Metals O&G Power Realty Teck
29/06/15 27,645 10,540 18,607 20,915 10,545 17,477 7,635 16,222 10,537 9,177 9,839 2,016 1,408 5,940
30/06/15 27,781 10,680 18,712 20,982 10,746 17,518 7,789 16,564 10,449 9,335 9,859 2,022 1,413 5,925
01/07/15 28,021 10,819 18,961 21,324 10,822 17,815 7,761 16,663 10,604 9,437 9,948 2,055 1,434 6,000
02/07/15 27,946 10,872 19,045 21,342 10,821 17,792 7,783 16,597 10,560 9,378 10,033 2,057 1,432 6,018
03/07/15 28,093 10,870 18,970 21,505 10,856 17,893 7,819 16,665 10,590 9,240 10,006 2,059 1,424 6,026
1.62% 3.13% 1.95% 2.82% 2.95% 2.38% 2.42% 2.73% 0.50% 0.69% 1.70% 2.15% 1.12% 1.44%
Commodities and Currency:
Date USD GBP EURO YEN
Crude
(Rs. per BBL)
Gold
(Rs. Per 10gms)
29/06/2015 63.92 100.40 70.41 52.17 4024 26544
30/06/2015 63.75 100.12 71.20 52.07 3963 26356
01/07/2015 63.62 99.89 70.77 51.85 4054 26263
02/07/2015 63.57 99.20 70.35 51.52 3945 26042
03/07/2015 63.40 98.94 70.33 51.49 3946 26148
0.82%
Rupee
Appreciated
1.47%
Rupee
Appreciated
0.11%
Rupee
Appreciated
1.32%
Rupee
Appreciated
-1.94% -1.49%
4. Debt:
Tenor Gilt Yield in % (Friday) Change in bps (Week)
1-Year 7.65 -3
2-Year 7.77 -7
5-Year 7.98 -4
10-Year 7.78 -4
5. Phani Sekhar Ponangi Jharna Agarwal
Nupur Gupta Ridhdhi Chheda
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