1. IndiaStrategy
Harendra Kumar
harendra.kumar@elaracapital.com
+91 22 3032 8571
Ashish Kumar
ashish.kumar@elaracapital.com
+91 22 3032 8536
Henry Burrows
henry.burrows@elaracapital.com
+91 22 3032 8554
Caught on the wrong side
Indian policymaking is struggling in the maze of
impossible trinity. The choice between pegged
exchange rate and an independent monetary
policy becomes important since the Indian
business cycles may not be fully aligned with that
of the US. Now that US yields have firmed up,
either INR can remain a float or pegged to the
USD, the later involving monetary tightening and a
loss of monetary independence. Central banking in
India is inclined towards the later for now while
keeping doors for former wide open. Clearly, the
choice to pursue the middle path may be
distortionary and would inherently include very
short-term patchwork policymaking.
CAD funding: the 21bn dollar question
Looming BoP crisis for India stems from the fact
that capital account, for all optimistic assumptions
may fail to fund the deficit of USDbn88.9 in FY14E.
Assuming more-than-expected long term flows in
(FDI+ Loans + NRI deposits); our estimates show
that there is excessive reliance on "hot money"
flows of around USDbn21 over FY14E. As the US
yields rise and narrow the gap between India and
US paper, the possibility of outflows in debt (early
indication seen in last three months) may be a
prolonged reality. Equity inflows, meanwhile could
suffer a vicious cycle of weakening INR and a
worsening outlook on overall business cycle.
Flows
ETF flow direction has seen an increased
concentration towards US, Japan and European
markets as investors look to avoid the volatility of
Emerging Markets and commodities in the short
term. Recent FII net outflows have significantly
countered the strong YTD start and is now
pushing Indian bourses into a delayed sell off as
hiding places become exposed.
Investment Strategy
The Model Portfolio has seen an outperformance
of 200 bps in the last 3 months. Our contrarian
picks have been working well for us. The structural
construct has remained unchanged and our
preferred investment categories are Oil & Gas,
Automobiles, Power and Consumption. Our
underweights in banks continue and we expect
the benchmark index to see another 10-15%
correction. We would like to highlight that under
recovery theme might reverse with the INR looking
to hold its levels in the current quarter. Notably, as
is the market we have only OWs and UWs and no
Neutral positions.
14 August 2013
India Confronts the Impossible Trinity

2. Elara Securities (India) Private Limited 2
Index
Executive Summary …………………………………………………………………………… 3
Economy ……………………………………………………………………….……………………. 5
Global Fund Flows ……………………………………………………………..…………..... 18
Global Markets ………………………………………………………………………………….. 29
Rating Watch …………………………………………………………………………………….. 35
Relative Returns …………………………………………………………………………………. 42
Model Portfolio ………………………………………………………………………………….. 44

3. Elara Securities (India) Private Limited 3
Tough times warrant realistic outlook
ExecutiveSummary
 India's problems are first order: Policymaking would better address the structural bottlenecks within primary agents of economic activity
viz. land, labor, capital, and business sentiments. In absence of this, restoration of pre-crisis growth will remain purely aspirational. There is
a need to understand the difference between cyclical and structural revival and that a lower rate regime led cyclical revival is passé for
India.
 Fed decides course of Indian policy: The liquidity tightening stance of CB in India has resulted in prioritization of “volatility management
in INR” over other mandates in its multiple indicator approach. CB’s successive moves is ample indication that policy has moved in a
direction from where quick reversal is not a natural option. In due course, CB has also removed the confusion about "short-term" nature
of these moves. We see a clear message that the current stance is here to stay, atleast till mid-Sep i.e. when US Fed clarifies on quantum
and direction of QE withdrawal, if any.
 India not ready for another devaluation: Fundamental devaluation as an option to overcome the current crisis is largely ruled out as
interplays between various factors in the external and domestic economy cast a shadow on the success out of such a move. Income
effect led price-inelasticity on imports together with negative real rates and dieselization of the economy has meant that currency
weakening may not yield otherwise standard results. Fact remains that government policies and finances are in such shape that any ill-
thought move may probably boomerang with a sovereign downgrade to junk.
 Global Flows Go Further West: Although there has been some change in the complexion in the top ETFs, we still note the top ETFs (in
flow terms) are US centric and the trend shows no clear sign of turning. The major SPDR S&P ETF garnered more flows in July (USD 12
bn) than it had done in the last 6 months (USD 10.4 bn) whilst US ETFs accounted for 83.4% of the top 15 flows for July as the
concentration narrowed further.
 Delayed Sell Off Exposes India’s Hiding Places: Money moves have continued to flow away from Emerging Markets and commodity ETFs,
with over USD 40.5 bn of selling in the last six months. The withdrawals are now having a knock on effect in India as FIIs move to net
sellers and the Index supports give way. Increasingly, turnover and OI share are being concentrated in a handful of blue-chips, a trend
which is showing few signs of a slowdown, leaving the rest of the market to the mercy of increasingly volatile moves.
 Beyond the payment crisis: We see the ensuing 3-months as very critical for the markets, which will largely decide the course over the
medium term i.e. two years. If India weathers the payment crisis, Indian equities might well see a big ‘sentiment’ rally which exposes the
current weak INR trade to risks. Though the purge is not fully complete, ‘Value’ has seemingly become more broad-based even as the
market seems to be ignoring the benefic effects of a good monsoon.

4. India Macro Outlook
Elara Securities (India) Private Limited 4
Units FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14E
Real economy
Nominal GDP INR bn 36,934 42,947 49,871 56,301 64,778 77,953 89,749 100,206 113,324
YoY (%) 13.9 16.3 16.1 12.9 15.1 20.3 15.1 11.7 13.1
USD bn 834 948 1,239 1,226 1,366 1,710 1,872 1,840 1,964
GDP per capita INR 30,656 35,234 40,264 45,958 52,235 61,263 69,497 77,740 84,966
USD 692 778 1,001 1,001 1,102 1,344 1,449 1,428 1,473
Real GDP YoY (%) 9.5 9.6 9.3 6.7 8.6 9.3 6.2 5.0 5.6
Demand side
Private consumption YoY (%) 8.6 8.5 9.4 7.2 7.4 8.6 8.0 4.0 5.6
Public consumption YoY (%) 8.9 3.8 9.6 10.4 13.9 5.9 8.6 3.9 7.2
Gross capital formation YoY (%) 16.3 15.3 17.2 (1.6) 12.7 16.2 1.5 5.1 7.0
Gross fixed capital formation YoY (%) 16.2 13.8 16.2 3.5 7.7 14.0 4.4 1.7 6.3
Supply side
Agriculture YoY (%) 5.1 4.2 5.8 0.1 0.8 7.9 3.6 1.9 3.2
Industry YoY (%) 9.7 12.2 9.7 4.4 9.2 9.2 3.5 2.1 4.1
Services YoY (%) 10.9 10.1 10.3 10.0 10.5 9.8 8.2 7.1 6.8
Demographics
Population million 1,106 1,122 1,138 1,154 1,170 1,186 1,202 1,217 1,233
YoY (%) 1.6 1.4 1.4 1.4 1.3 1.4 1.3 1.2 1.3
Prices
WPI (annual average) YoY (%) 4.5 6.5 4.8 8.1 3.8 9.6 8.9 7.4 6.1
CPI (annual average) YoY (%) 4.4 6.7 6.2 9.1 12.4 10.4 8.4 10.5 9.5
INR-USD (EOP) 44.6 43.6 40.0 50.9 45.1 44.7 51.2 54.4 58.9
INR-USD (annual average) 44.3 45.3 40.2 45.9 47.4 45.6 47.9 54.5 57.7
Depreciation (%) (1.5) 2.3 (11.1) 14.1 3.3 (3.9) 5.2 13.6 6.0
Money markets
Credit growth YoY (%) 39.6 28.5 23.0 17.8 17.1 21.3 16.8 14.1 15.5
Deposit growth YoY (%) 23.4 23.8 22.4 19.9 17.2 15.9 13.5 14.3 13.5
Money Supply (M3) YoY (%) 21.2 21.3 21.4 19.3 16.9 16.1 13.2 13.4 13.2
Policy rates
Repo rate (EOP) 6.50 7.75 7.75 5.00 5.00 6.75 8.50 7.50 6.50
Reverse repo rate (EOP) 5.50 6.00 6.00 3.50 3.50 5.75 7.50 6.50 5.50
CRR (EOP) 5.00 6.00 7.50 5.00 5.75 6.00 4.75 4.00 3.50
External interactions
Exports USD bn 105.2 128.9 166.2 189.0 182.4 250.5 309.8 306.6 324.2
YoY (%) 23.4 22.6 28.9 13.7 (3.5) 37.3 23.7 (1.0) 5.7
Imports USD bn 157.1 190.7 257.6 308.5 300.6 381.1 499.5 502.2 523.4
YoY (%) 32.1 21.4 35.1 19.8 (2.6) 26.7 31.1 0.5 4.2
Trade deficit USD bn (51.9) (61.8) (91.5) (119.5) (118.2) (130.6) (189.8) (195.6) (199.2)
Invisibles USD bn 42.0 52.2 75.7 90.9 80.0 79.3 111.5 107.8 110.3
Current account balance USD bn (9.9) (9.6) (15.7) (28.6) (38.2) (51.3) (78.3) (87.8) (88.9)
% to GDP (1.2) (1.0) (1.3) (2.3) (2.8) (3.0) (4.2) (4.8) (4.5)
Capital Account USD bn 25.5 45.2 106.5 9.5 51.6 66.3 68.0 90.2 94.9
% to GDP 3.1 4.8 8.6 0.8 3.8 3.9 3.6 4.9 4.8
Fiscal deficits
Centre % to GDP 4.0 3.3 2.5 6.0 6.5 4.8 5.7 5.2 4.8
State % to GDP 2.3 1.7 1.7 2.5 3.0 2.1 2.4 2.2 2.5
Combined % to GDP 6.3 5.0 4.3 8.5 9.5 6.9 8.1 7.4 7.3
Savings Investments
Savings % to GDP 33.4 34.6 36.8 32.0 33.7 34.0 30.8 30.4 31.0
Capital formation % to GDP 34.3 35.9 38.0 35.5 36.3 37.0 35.4 35.0 35.4

5. Economy

6. Elara Securities (India) Private Limited
CB in India says it is caught in the maze of impossible trinity. In view of the open capital account, the trinity suggests that there is a choice to
be made between pegged exchange rate and an independent monetary policy. This choice becomes important since the Indian business
cycles may not be fully aligned with that of the US. Now that US yields have firmed up, either INR can remain a float or pegged to the USD,
the later involves monetary tightening and a loss of monetary independence.
For now, CB in India is inclined towards the forfeiting monetary independence but the domestic conditions might warrant a shift towards the
monetary independence to revive the sagging economy. As the CB commentary keeps the doors on possible shift of stance wide open, there
is a visible attempt to tread the middle path. We believe that such a stance will indeed be distortionary and inherently include very short-term
patchwork policymaking.
6
On the wrong side of trilemma
CB and Government fighting a lone battle
Economy
Fully flexible ERR - Japan, Canada
Exchange rate stability
Pre-1980 China Small Euro zone members like Greece,
Hong Kong
India is currently caught in a classic
‘impossible trinity’ trilemma whereby
we are having to forfeit some
monetary policy discretion to address
external sector concerns.
- RBI Q1 Monetary policy statement
“
”

7. INR on a 2-sigma breakout
EME FX performance
Elara Securities (India) Private Limited 7
Source: CMIE, RBI, Bloomberg, MoF, Elara Securities Research
Global Contagion or Internal Conflict
FX prioritized in multiple objectives of monetary policy
…will test its level of float
Economy
35
40
45
50
55
60
65
Jul-07
Dec-07
May-08
Oct-08
Mar-09
Aug-09
Jan-10
Jul-10
Dec-10
May-11
Oct-11
Mar-12
Aug-12
Jan-13
Jul-13
-2 SD
-1 SD
Decadal average
+1 SD
+2 SD
35
40
45
50
55
60
65
Apr-03
Feb-04
Dec-04
Oct-05
Aug-06
Jul-07
May-08
Mar-09
Jan-10
Dec-10
Oct-11
Aug-12
Jul-13
16 Mar 2007 25 Dec 200916 Mar 2004
(20)
(15)
(10)
(5)
0
5
CNY SGD PHP RUB TRY INR BRL JPY ZAR
(%)
Jun-13 Jan-13

8. INR moves in-sync with net BoP balance
Elara Securities (India) Private Limited 8
Source: CMIE, RBI, Bloomberg, MoF, Elara Securities Research
Fundamentals behind INR free-fall
(1.5)
(1.0)
(0.5)
0.0
0.5
1.0
1.5
2.035
40
45
50
55
60
Jun-07
Nov-07
Apr-08
Sep-08
Feb-09
Jul-09
Dec-09
May-10
Oct-10
Mar-11
Aug-11
Jan-12
Jun-12
Nov-12
Apr-13
(USDbn)
(USD-INRER)
USD-INR ER Net BoP balance
(100)
(75)
(50)
(25)
0
25
50
75
100
FY91
FY92
FY93
FY94
FY95
FY96
FY97
FY98
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
(USDbn)
CAD Short-term debt
Rapid rise in short-term debt
Real yields (adj. CPI) still negative in India
(15)
(10)
(5)
0
5
Apr-05
Nov-05
Jun-06
Jan-07
Aug-07
Mar-08
Oct-08
May-09
Dec-09
Jul-10
Feb-11
Sep-11
Apr-12
Nov-12
Jun-13
(%)
91-day t-bill 10 year yield
REER suggests small undervaluation
98.8
90
95
100
105
110
115
120
125
Oct-00
Jul-01
Apr-02
Jan-03
Oct-03
Jul-04
Apr-05
Jan-06
Oct-06
Jul-07
Apr-08
Jan-09
Oct-09
Jul-10
Apr-11
Jan-12
Oct-12
(2004-05=100)
Economy

9. Borrowing on Repo window turns flat
MSF borrowing spike up to INR400bn lately
Elara Securities (India) Private Limited
Recent Measures to curb speculation in the FX market
Jul 9, 2013
RBI: Directs banks to not carry out any proprietary trading in the
currency futures / exchange traded currency options markets.
SEBI: Curtail position limits and increase margin requirements for
Currency Derivatives.
Jul 15, 2013
1. MSF rate adjusted by 300bps above the policy repo rate under
the LAF to 10.25%.
2. LAF window gets limited to 1% of NDTL of the banking system
at INR750bn
3. OMO worth INR120bn to sell bonds on 18 July 2013
Jul 23, 2013
1. Minimum daily CRR balance raised to 99% versus 70% earlier.
2. Overall limit for access to LAF by each individual bank set at
0.5% of its own NDTL outstanding. Earlier move cancelled.
Aug 8, 2013
1. Notifies auction of cash management bills worth INR220bn
once every week to further soak the liquidity out of money
markets.
9
Source: CMIE, RBI, Bloomberg, MoF, Elara Securities Research
Aftereffects of monetary tightening
Short-term rates in unchartered territory
0
500
1,000
1,500
2,000
2,500
14-Jun-13
21-Jun-13
28-Jun-13
5-Jul-13
12-Jul-13
19-Jul-13
26-Jul-13
2-Aug-13
9-Aug-13
(INRbn)
Repo Reverse Repo
0
50
100
150
200
250
300
350
400
450
15-Jul-13
17-Jul-13
19-Jul-13
21-Jul-13
23-Jul-13
25-Jul-13
27-Jul-13
29-Jul-13
31-Jul-13
2-Aug-13
4-Aug-13
6-Aug-13
8-Aug-13
(INRbn)
Economy

10. Short-term rates on CMBs spike up
Devolved auctions YTD approach historical highs
Elara Securities (India) Private Limited
Yield curve bends on tight liquidity
10
Source: CMIE, RBI, Bloomberg, MoF, Elara Securities Research
Short-term rates in unchartered territory
 Cash management bills peak out at 11.7%, cool enough for
banks to borrow from the MSF window at 10.25% and get
paid 11.70% in the short-term treasury. Of course, it works
only till 1% of NDTL. The latest move, thus will take time to
squeeze out systemic liquidity.
 If INR250bn becomes the norm for borrowing in the MSF
window, system would see stress after 2-3 such auctions post
which around INR660bn would have been out of the system.
Prima facie, this is the time when the banking system might
face a tough time finding liquidity, resulting in systemic rise in
all rate at the short end, and could spill over to the long end
too in some cases.
11.7 11.2 11.2 9.9 8.9
0
2
4
6
8
10
12
14
12-Aug-13 25-Jul-13 25-Jul-13 13-Aug-13 1-Aug-13
35
56 28
7
7
Maturity (in days)
0
20
40
60
80
100
120
FY96
FY97
FY98
FY99
FY00
FY01
FY02
FY03
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
(INRbn)
8.0
8.5
9.0
9.5
10.0
10.5
11.0
0.0
0.9
1.7
2.6
3.4
4.2
5.1
5.9
6.8
7.6
8.5
9.3
10.1
11.0
11.8
12.7
13.5
14.4
15.2
16.1
16.9
17.7
18.6
19.4
Yieldcurve(%)
18-Jun 12-Aug
Economy

11. Formal hike in CRR more probable in future
 With the recent moves, CB has altered the way short-term
rates move, otherwise within the reverse repo and repo rates
on LAF window. Successive moves on liquidity squeeze would
mean that this band now shifts in a wide range of 300bps
between repo rate and the MSF rate.
 With MSF as the new policy rate, for all practical purposes, CB
in India may not have to officially hike the repo rates, as they
are redundant anyways. The reversal on CRR however cannot
be ruled out and remains very much on the cards.
 We believe that monetary policy will now largely work in out-
of-policy framework, depending upon movements in INR.
Elara Securities (India) Private Limited
One-year OIS already pricing a rate hike
11
Source: CMIE, RBI, Bloomberg, MoF, Elara Securities Research
Envisioning next moves
Further liquidity tightening means hike in CRR
3
4
5
6
7
8
9
10
Jan-08
May-08
Sep-08
Jan-09
May-09
Sep-09
Jan-10
May-10
Sep-10
Jan-11
May-11
Sep-11
Jan-12
May-12
Sep-12
Jan-13
May-13
(%)
2
4
6
8
10
12
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
(%)
Repo Reverse repo MSF
New short term
rate zone
Short term rates in a new band
Economy
6
7
8
9
10
5-Jul
12-Jul
19-Jul
26-Jul
2-Aug
9-Aug
(%)
1-yr OIS 5-yr OIS

12. Sharp outflow in FII debt holding
 Capital account, for all optimistic assumptions may fail to fund
the CAD of USDbn88.9 in FY14E. Even assuming more-than-
expected inflows in long term flows in (FDI+ Loans + NRI
deposits); our estimates show that there is excessive reliance
on "hot money“ flows to the extent of USDbn21.3 over FY14E.
And this assumes a significant improvement in FDI inflows,
from USDbn19.8bn to USDbn23.8, assuming incremental
money does flow through post the best of efforts by the Indian
policymakers.
 The primary concern is, as US yields rise and the gap between
Indian paper and US paper contracts, the possibility of
outflows in debt (early indication seen in last three months)
may be a prolonged reality. Equity flows, meanwhile could
suffer a vicious cycle of weakening INR and a worsening
outlook on overall business cycle.
Elara Securities (India) Private Limited 12
CAD: 21bn dollar funding risk
External concerns multiply by the day
4.5
5.0
5.5
6.0
6.5
7.0
Aug-11
Oct-11
Dec-11
Feb-12
Apr-12
Jun-12
Aug-12
Oct-12
Dec-12
Feb-13
Apr-13
Jun-13
(%)
Margins narrow b/w India and US paper
Source: CMIE, RBI, Bloomberg, MoF, Elara Securities Research
Economy
(1.5)
(1.0)
(0.5)
0.0
0.5
1.0
1.5
Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13
(USDbn)
FII Equity Inv FII Debt Inv Net FII inflow

13. Elara Securities (India) Private Limited 13
Regime change at CB
Can the new incumbent wield a “magic wand”?
0
2
4
6
8
10
12
14
Jun-08
Sep-08
Dec-08
Mar-09
Jun-09
Sep-09
Dec-09
Mar-10
Jun-10
Sep-10
Dec-10
Mar-11
Jun-11
Sep-11
Dec-11
Mar-12
Jun-12
Sep-12
Dec-12
Mar-13
(%)
12 month change 2qma SAAR
5
7
9
11
13
15
17
Jan-09
May-09
Sep-09
Jan-10
May-10
Sep-10
Jan-11
May-11
Sep-11
Jan-12
May-12
Sep-12
Jan-13
May-13
(%)
CPI-IW CPI-all India
Post crisis average CPI
Inflation
Structural CPI inflation is a key macro-stability risk
Indian growth cycle exposed to sustained slowdown
Post the CB adventures in domestic money market, there is a
visible wedge between the onshore and offshore (NDF) markets of
INR. New governor comes at helm when the domestic liquidity has
sharply dried, thus leading to revision of base rates by some
private sector banks. As such, the policymaking has to tread
cautiously because any lapse could probably boomerang with a
sovereign downgrade to junk.
Challenges before the new incumbent of Mint Street
Short run (immediate)
 Clarity on CB's FX policy
 Clear articulation of implications for the money market, and
the exit strategy.
 Mitigate funding risks on CAD
Medium-to-long run
 Restore the credibility of central bank, in clear communication
for a start,
 FSLRC recommendations, specifically on institution of a
monetary policy committee,
 Separation of debt management office out of CB,
 Shift from multiple indicator approach to a inflation target
regime, on CPI,
 Innovations in financial sector inclusion, including new
licenses in banking sector.
Economy
Source: CMIE, RBI, Bloomberg, MoF, Elara Securities Research

14. Investment cycle has seen a bottom but recovery uncertain
Elara Securities (India) Private Limited
Growth
 We stick to our forecast of 5.6% real growth over FY14E, and
observe that potential downside risk of 30-40bps could be
capped owing to a possible surprise in farm sector.
 Our estimates seemed conservative a few weeks back but are
now placed on a level field with most of the street paring their
growth estimates post the liquidity tightening moves since
mid-July.
 It helps us that our forecast had already built up on our
assumption of no case for monetary easing in India over CY14,
a consensus view now.
Investments
 The interplay of structural and cyclical component will ensure
that while investments will not fall further, a sharp rise may
not materialize.
 Though investment does have a small election multiplier, the
fundamentals on ground suggest a need to address primary
concerns of investment accretion in the economy.
 Land acquisition bill and mining bills are two major policy
levers to watch out for in future. But, for that to happen and
reflect on ground, it will take a new government in India by
late H1CY14.
Inflation
 Headline WPI suffers fresh ERPT pangs as estimates show that
every 10% depreciation adds 92bps (RBI estimates even higher
at 120bps) on the headline.
 The lead and lag of primary to manufacturing inflation may
result in trajectory reversal of the later owing to ERPT
pressures.
14
Source: CMIE, RBI, Bloomberg, MoF, Elara Securities Research
India business cycle
In search of fresh trough amidst a very weak capex momentum
5.6
5.7
6.4
5.6
5.6
5.8
FY14Geowthest.(%)
Elaraest
RBI
PMEAC
Consensus
IMF
ADB
Growth consensus heads southwards
YoYgrowth(%)
2000 2002 2004 2006 2008 2010 2012
(10)
(5)
0
5
10
15
20
Economy

15. Elara Securities (India) Private Limited
India FDI reforms July 2013
15
Source: CMIE, RBI, Bloomberg, MoF, Elara Securities Research
India reforms process
Crisis-led reforms not a lever in short-run business cycle
Sector
Current
limit
Proposed
limit
Automatic
route
FIPB route
Telecommunications 74% 100% Up to 49% 49%-100%
Insurance 26% 49% Full -
Oil refining 49% 49% Full
Asset reconstruction 74% 100% Full 49%-100%
Single-brand retail 100% 100% Full 49%-100%
Courier services 100% 100% Full -
Defence production* 26% 26% Full -
Credit information com 49% 74% Full -
Tea plantations** - 100% Up to 49% 49%-100%
Power exchanges 49% 49% Full -
Public-owned oil refineries 49% 49% Full -
Stock exchanges 49% 49% Full -
Commodity bourses 49% 49% Full -
Clearing corporations 49% 49% Full -
To create a sustainable avenue for funding CAD, government
came up with a slew of announcements in accordance with
Mayaram Committee recommendations to open up/ease FDI
restriction in 13.
Positive symbolically
The game changer moves, in our view would be shifting various
FDIs from approval to automatic route framework as these would
not have to pass through the corridors of power in New Delhi or
provincial assemblies.
But no trickle down soon
 FDI investments are long term money and require a long-term
call on the domestic economy. And at this time, it may not be
fully material given the distressed state of the economy.
 Considering the stressed balance sheet of telecom player in
India and the high spectrum costs that have ruined the
telecom industry per se, expectations of entry of new players
to substantially shore up FDI nos. may be a tough ask, after all.
 Defense FDI, being a sensitive subject is more of a posturing
exercise and may not effectively materialize after all. But, small
pockets could surprise, may not be in next 1-2 quarters but
certainly when INR attains somewhat stability.
Economy

16. Elara Securities (India) Private Limited 16
Source: RBI, Elara Securities Research
India BoP Forecast
(USDbn,%)
FY08 FY09 FY10 FY11 FY12 FY13 FY14E
Current Account
a.Exports, RBI 166.2 189.0 182.4 250.5 309.8 306.6 324.2
Y/Y% 28.9 13.7 (3.5) 37.3 23.7 (1.0) 5.7
% of GDP 13.4 15.4 13.4 14.6 16.6 16.7 15.8
b.Imports, RBI 257.6 308.5 300.6 381.1 499.5 502.2 523.4
Y/Y% 35.1 19.8 (2.6) 26.8 31.1 0.5 4.2
%to GDP 20.8 25.2 22.0 22.3 26.7 27.3 25.4
c.Exports, Customs 162.9 183.1 178.3 250.8 305.7 300.2 319.2
d.Imports, Customs 249.8 299.3 287.6 369.4 489.1 490.3 520.3
Of which Oil 79.6 91.5 86.8 105.8 155.0 169.0 172.4
Of which Gold 16.7 20.7 28.6 40.5 56.3 53.6 46.3
Non-Oil Non-Gold 153.5 187.1 172.2 223.1 277.8 267.7 301.6
e. Trade balance, RBI (a-b) (91.4) (119.5) (118.2) (130.6) (189.7) (195.6) (199.2)
% of GDP (7.4) (9.7) (8.7) (7.6) (10.1) (10.6) (9.7)
f.Trade Balance, Customs (c-d) (86.9) (116.2) (109.3) (118.6) (183.4) (190.1) (201.1)
Difference b/w RBI and Customs Data (4.5) (3.3) (8.9) (12.0) (6.3) (5.5) 1.9
g. Invisibles 75.8 90.9 80.0 79.3 111.5 107.8 110.3
Services 39.1 53.4 36.2 44.1 64.1 64.9 69.2
Software Services 36.9 43.7 48.2 50.9 60.9 63.5 67.8
Investment income flows (5.1) (7.1) (8.0) (18.0) (16.0) (21.4) (19.4)
Remittances 41.7 44.6 51.8 53.1 63.5 64.3 68.2
Official transfers 0.2 0.2 0.3 0.0 0.0 (0.3) 0.4
I.Current account balance (15.6) (28.6) (38.2) (51.3) (78.2) (87.8) (88.9)
% of GDP (1.3) (2.3) (2.8) (3.0) (4.2) (4.8) (4.3)
Capital Account
h. FDI (i-ii) 15.9 22.4 18.0 11.8 22.1 19.8 23.8
i.FDI-To India 34.7 41.7 33.1 29.0 33.0 27.0 34.0
ii.FDI-Abroad (18.8) (19.4) (15.1) (17.2) (10.9) (7.1) 10.2
i. Portfolio Investment (FII+ADRs+GDRs) 27.3 (13.9) 32.4 31.5 17.4 27.8 24.1
j. Loans 40.7 8.3 12.4 29.1 19.3 31.1 28.6
External assistance 2.1 2.4 2.9 4.9 2.3 1.0 2.0
Commercial borrowings 22.6 7.9 2.0 12.2 10.3 8.5 11.2
Short-term credit 15.9 (2.0) 7.6 12.0 6.7 21.7 15.4
k. Banking Capital 11.8 (3.2) 2.1 5.0 16.2 16.6 16.1
Of which NRI deposits 0.2 4.3 2.9 3.2 11.9 14.8 15.2
l. Rupee debt service (0.1) (0.1) (0.1) (0.1) (0.1) (0.1) (0.2)
m. Other capital 11.0 (4.0) (13.2) (11.0) (6.9) (5.0) 2.5
II.Capital account (h+i+j+k+l+m) 106.5 9.5 51.6 66.3 68.0 90.2 94.9
% of GDP 8.6 0.8 3.8 3.9 3.6 4.9 4.6
III.Errors & Omissions 1.3 1.1 0.0 (3.0) (2.4) 2.7 0.0
Overall balance (I+II+III) 92.2 (18.0) 13.4 12.0 (12.6) 5.1 6.0
Exchange rate
INR/USD-ann. avg. 40.2 45.9 47.4 45.6 47.9 54.5 57.7
Economy

17. Elara Securities (India) Private Limited 17
India government finance
Non-tax revenue
growth at ~33% in a
slowing economy is a
strong assumption
(INR bn) % to GDP 12-month change
FY12Act FY13BE FY13RE FY14BE FY13RE FY14BE 13RE/12Act 14BE/13RE
1 Revenue Receipts 7,514 9,357 8,718 10,564 8.7 9.3 16.0 21.2
2 Tax Revenue (net to centre) 6,298 7,711 7,421 8,841 7.4 7.8 17.8 19.1
3 Non-Tax Revenue 1,217 1,646 1,297 1,723 1.3 1.5 6.6 32.8
4 Capital Receipts (5+6+7) 5,529 5,552 5,590 6,090 5.6 5.4 1.1 8.9
5 Recoveries of Loans 189 117 141 107 0.1 0.1 (25.2) (24.1)
6 Other Receipts (disinvestment) 181 300 240 558 0.2 0.5 32.7 132.5
7 Borrowings and other liabilities 5,160 5,136 5,209 5,425 5.2 4.8 1.0 4.1
8 Total Receipts (1+4) 13,044 14,909 14,308 16,654 14.3 14.6 9.7 16.4
9 Non-Plan Expenditure 8,920 9,699 10,016 11,101 10.0 9.8 12.3 10.8
10 Revenue Account 8,121 8,656 9,197 9,930 9.2 8.7 13.2 8.0
11 Interest Payments 2,732 3,198 3,167 3,707 3.2 3.3 15.9 17.1
13 Subsidies of which 2,179 1,900 2,577 2,311 2.6 2.0 18.3 (10.3)
14 Food 728 750 850 900 0.8 0.8 16.8 5.9
15 Fertilizer 700 609 660 660 0.7 0.6 (5.7) 0.0
16 Fuel 685 436 969 650 1.0 0.6 41.5 (32.9)
17 Others Subsidies 66 105 98 101 0.1 0.1 48.5 3.1
12 Others 3,210 3,558 3,453 3,912 3.4 3.4 7.6 13.3
18 Capital Account 799 1,043 819 1,171 0.8 1.0 2.5 43.0
19 Plan Expenditure 4,124 5,210 4,292 5,553 4.3 4.9 4.1 29.4
20 On Revenue Account 3,337 4,205 3,434 4,433 3.4 3.9 2.9 29.1
21 On Capital Account 787 1,005 858 1,120 0.9 1.0 9.0 30.5
22 Total Expenditure (9+19) 13,044 14,909 14,308 16,654 14.3 14.6 9.7 16.4
23 Revenue Expenditure (10+20) 11,458 12,861 12,631 14,363 12.6 12.6 10.2 13.7
24 Capital Expenditure (18+21) 1,586 2,048 1,677 2,291 1.7 2.0 5.7 36.6
25 Revenue Deficit (23-1) 3,944 3,504 3,913 3,799 3.9 3.3
26 Fiscal Deficit (22-1-5-6) 5,160 5,136 5,209 5,425 5.2 4.8
27 Primary Deficit (26-11) 2,428 1,938 2,042 1,718 2.0 1.5
Humungous target of
disinvestment,
unrealistic in an
election year
Non-plan to grow at
~11% despite all
attempts at juggleries
Subsidies: understated
on food, large deferrals
on fuel will materialise
Plan exp. growth at
29% is substantial
Fiscal deficit has upside
risks of ~20bps in FY13
actuals, FY14BE at
4.9% is for now, only a
number
Source: indiabudget.nic.in
Economy

18. Global Fund Flows

19. Global ETFs; best performers 1 Month
Developed Market Flow Preference
The Capital Flow Game Concentrates Further West
Global ETFs; best performers 6 Months
Elara Securities (India) Private Limited 19
 US ETFs accounted for 77% of the flows for the top 15 ETFs
over the last six months. In July they accounted for 83.4% as
the concentration narrowed.
 Although there has been some change in complexion in the
top ETFs, we still note half of the top 15 ETFs (in flow terms)
were US centric in July and the trend shows no clear sign of
turning.
 The SPDR S&P ETF garnered more flows in July (USD 12 bn)
than it had done in the last 6 months (USD 10.4 bn).
GlobalFundFlows
Source: Bloomberg, Elara Securities Research
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000 SPDRS&P500
iSharesRussell2000
FinancialSelect
iSharesHighYield
PowersharesQQQ
TechnologySelect
Indust.SelectSector
iPATHS&P500VIX
iSharesMSCIEM
GoldMinersETF
iSharesSilverTrust
EnergySectorSPDR
BarclaysHighYield
ProSharesUltraVIX
MSCIJapanETF
(inmn)
0
2,000
4,000
6,000
8,000
10,000
12,000
SPDRS&P500
MSCIJapanETF
FinancialSelect
iSharesRussell2000
GoldMinersETF
TechnologySelect
Indust.SelectSector
iPATHS&P500VIX
iShares20yrTreasury
UltraShortS&P500
SPDRDowJones
DirexionSmallCap
ProSharesUltraVIX
PimcoTotalReturn
Cons.StaplesSelect
(inmn)
80
90
100
110
120
130
140
150
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
US Japan UK Euro Stocks
Global Indices: Performance (YTD)
Source: Bloomberg, Elara Securities Research Source: Bloomberg, Elara Securities Research

20. SPDR S&P ETF; performance & fund flows (1 Year)
US ETFs – Key Sectors Continued Strength
Broad Based Investor Confidence
Financial Sector ETF: Performance & Fund Flows (1 Year)
Elara Securities (India) Private Limited
Industrial Sector ETF: performance & fund flows (6 months)
20
GlobalFundFlows
Source: Bloomberg, Elara Securities Research
(10,000)
(5,000)
0
5,000
10,000
15,000
20,000
25,000
30,000 Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
(inmn)
Fund Flows Performance
Russell Small Cap 2000 ETF: Performance & Fund Flows (1 Year)
(3,000)
(2,000)
(1,000)
0
1,000
2,000
3,000
4,000
5,000
6,000
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
(inmn)
Fund Flows Performance
(800)
(600)
(400)
(200)
0
200
400
600
800
1,000
Feb-13
Feb-13
Mar-13
Mar-13
Apr-13
Apr-13
Apr-13
May-13
May-13
Jun-13
Jun-13
Jul-13
Jul-13
(inmn)
Fund Flows Performance
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
(inmn)
Fund Flows Performance
Source: Bloomberg, Elara Securities Research
Source: Bloomberg, Elara Securities Research Source: Bloomberg, Elara Securities Research

21. MSCI Europe ETF: Performance & Fund Flows (1 Year)
Other Western Markets Steady
Europe & Japan; Robust Performance YTD
MSCI Japan ETF: Performance & Fund Flows (1 Year)
Elara Securities (India) Private Limited 21
European Indices: Healthy Performance (1 Year - Rebased)
GlobalFundFlows
Source: Bloomberg, Elara Securities Research
(2,000)
0
2,000
4,000
6,000
8,000
10,000 Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
(inmn)
Fund Flows Performance
(2,000)
(1,000)
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
(inmn)
Fund Flows Performance
80
85
90
95
100
105
110
115
120
125
130
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
UK Euro Stocks
Germany France
60
80
100
120
140
160
180
04-Jan-13
18-Jan-13
01-Feb-13
15-Feb-13
01-Mar-13
15-Mar-13
29-Mar-13
12-Apr-13
26-Apr-13
10-May-13
Emerging Mkt Volatility Europe Volatility US VIX
Global Volatility Profiles: 3-Month (Rebased)
Source: Bloomberg, Elara Securities Research Source: Bloomberg, Elara Securities Research
Source: Bloomberg, Elara Securities Research

22. Worst Global ETFs: Fund Outflows (6 Months)
Commodities & Emerging Markets
Leading The Way In Short Term Outflows
Worst Global ETFs: Fund Outflows (3 Months)
Elara Securities (India) Private Limited 22
Commodities Performance (3 Months)
GlobalFundFlows
Source: Bloomberg, Elara Securities Research
(16,000)
(14,000)
(12,000)
(10,000)
(8,000)
(6,000)
(4,000)
(2,000)
0 SPDRGoldShares
VanguardFTSEEM
iSharesMSCIEM
iSharesSilverTrust
MarketGoldMiners
FTSEA50ChinaIndex
MSCIBrazilCapped
MarketJuniorGoldMin
iSharesChinaLarge-Cap
iSharesInvestmentGrade
UltraShortS&P500
iShares20+YearBond
iSharesUSPreferred
DailySmallCapBear
iSharesJPMUSDEM
(inmn)
(7,000)
(6,000)
(5,000)
(4,000)
(3,000)
(2,000)
(1,000)
0
VanguardFTSEEM
SPDRGoldShares
iSharesMSCIEM
iSharesSilverTrust
iSharesMSCIBrazil
iSharesInvestmentGra
iSharesFTSEA50China
iSharesUSPreferred
iSharesHighYieldCor
iShares20+YrBond
iSharesChina
iSharesJPMorganEM
BarclaysHighYield
iSharesUSRealEstate
VectorsGoldMiners
(inmn)
60
70
80
90
100
110
120
03-May-13
10-May-13
17-May-13
24-May-13
31-May-13
07-Jun-13
14-Jun-13
21-Jun-13
28-Jun-13
05-Jul-13
12-Jul-13
19-Jul-13
26-Jul-13
Gold Silver Aluminium WTI Crude Brent
 The two major sources of outflows have undoubtedly been
commodities & Emerging Markets. Over the last 6 months they
have cumulatively accounted for USD 41.3 bn of ETF outflows.
 Brazil & China seeing persistent selling along with Gold and
Silver ETFs, accounting for over 40% of the outflows in the last
three months.
 Much of these flows have been re-directed into developed
market ETFs (US, Japan, Europe), as shown by slide 2.
Source: Bloomberg, Elara Securities Research Source: Bloomberg, Elara Securities Research

23. Nifty performance vs BRIC peers YTD (re-based to 100)
India - FII Buying On The Decline
Markets Seeing Delayed Sell Off
Elara Securities (India) Private Limited
Net FII & DII inflows (MoM)
23
GlobalFundFlows
Source: Bloomberg, Elara Securities Research
70
80
90
100
110
120
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
China Brazil Emerging Markets Russia India
4,800
5,000
5,200
5,400
5,600
5,800
6,000
6,200
(4,000)
(2,000)
0
2,000
4,000
6,000
8,000
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Total Flows (FII &DII) FII Flows nifty index
90
100
110
120
130
140
150
160
170
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
India US Japan UK Euro Stocks
4,500
4,700
4,900
5,100
5,300
5,500
5,700
5,900
6,100
6,300
(150)
(100)
(50)
0
50
100
150
200
250
300
350
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
FII Flows (20 DMA) FII Support NIFTY INDEX
FII flows (20 DMA) vs Nifty performance (1 Year)
Nifty performance vs Developed Mkts YTD (re-based to 100)
Source: Bloomberg, Elara Securities Research Source: Bloomberg, Elara Securities Research
Source: Bloomberg, Elara Securities Research

24. India
Foreign Equity Investments Flows
Asian Emerging Markets (inc. Japan)
Elara Securities (India) Private Limited 24
GlobalFundFlows
Source: Bloomberg, Elara Securities Research
Japan Indonesia
Philippines Taiwan Thailand
Sri Lanka Vietnam Dubai
(3,000)
(2,000)
(1,000)
0
1,000
2,000
3,000
4,000
5,000
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
(2,500)
(2,000)
(1,500)
(1,000)
(500)
0
500
1,000
1,500
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
(5,000)
0
5,000
10,000
15,000
20,000
25,000
30,000
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
(400)
(200)
0
200
400
600
800
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
(5,000)
(4,000)
(3,000)
(2,000)
(1,000)
0
1,000
2,000
3,000
4,000
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
(2,000)
(1,500)
(1,000)
(500)
0
500
1,000
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
(400)
(300)
(200)
(100)
0
100
200
300
400
500
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
(100)
(50)
0
50
100
150
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
(20)
(10)
0
10
20
30
40
50
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13

25. The argument for India preference
India Losing Short Term Flow Share
Elara Securities (India) Private Limited 25
Foreign equity investment flows (ex. Japan) – 1 month
GlobalFundFlows
Source: Bloomberg, Elara Securities Research
(5,000)
0
5,000
10,000
15,000
20,000
25,000
30,000
India
Indonesia
Philippines
Taiwan
Thailand
Vietnam
SriLanka
(4,000)
(2,000)
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
India
Indonesia
Philippines
Taiwan
Thailand
Vietnam
SriLanka
(2,500)
(2,000)
(1,500)
(1,000)
(500)
0
500
1,000
1,500
India
Indonesia
Philippines
Taiwan
Thailand
Vietnam
SriLanka
(1,500)
(1,000)
(500)
0
500
1,000
1,500
2,000
2,500
3,000
India
Indonesia
Philippines
Taiwan
Thailand
Vietnam
SriLanka
Foreign equity investment flows (ex. Japan) – YTD
Foreign equity investment flows (ex. Japan) – 3 Months
Foreign equity investment flows (ex. Japan) – 1 Year
Source: Bloomberg, Elara Securities Research Source: Bloomberg, Elara Securities Research
Source: Bloomberg, Elara Securities Research

26. India – The Domestic View Point
Large Cap Defensive Names Dominating
Elara Securities (India) Private Limited
Aggregate Open Interest Ratios
26
Turnover Ratios: Largecaps Still Dominating Trade
GlobalFundFlows
Source: Bloomberg, Elara Securities Research
52%
56%
60%
64%
68%
72%
0%
20%
40%
60%
80%
100%
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Midcap To Nifty 50 (LHS)
Midcap to all FNO Stocks (LHS)
:Nifty 50 Stocks To All FNO Stocks (RHS)
0%
10%
20%
30%
40%
50%
20%
30%
40%
50%
60%
70%
80%
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Nifty 50 Stocks To All Stocks (LHS) Midcap To Nifty 50 (RHS)
30%
35%
40%
45%
50%
55%
60%
65%
70%
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
PRIVATE PUBLIC
Bank OI: Private vs Public Share
0
1
2
3
4
5
6
7
Autos
PrivateBank
PSUBank
CapGoods
Financials
FMCG
IT
Metals
Oil&Gas
Power&Eng
RealEstate
Telecoms
3 Year Turnover 6 Month Turnover
"Where Is The Liquidity? Stocks with >1% of Total Traded Daily
Value"
Source: Bloomberg, Elara Securities Research
Source: Bloomberg, Elara Securities Research Source: Bloomberg, Elara Securities Research

27. India – The Domestic View Point
Rate Sensitives Continue To Feel The Heat
Elara Securities (India) Private Limited
OI Share – Defensives Vs Rate Sensitives
27
GlobalFundFlows
Source: Bloomberg, Elara Securities Research
0%
5%
10%
15%
20%
25%
40%
45%
50%
55%
60%
65%
70%
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Rate Sensitives (RHS) Defensives (LHS)
0%
4%
8%
12%
16%
20%
Jul-12
Aug-12
Sep-12
Oct-12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Real Estate Power/Eng Metals Oil and gas
OI Share – High Beta Sectors
0.0%
0.5%
1.0%
1.5%
2.0%
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
GAIL NMDC HNDL BHEL SESA
Key Nifty Rate Sensitives: Turnover Share Declining
0%
2%
4%
6%
8%
10%
12%
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
RIL HDFCB HDFC SUNP HUVR ITC
Key Nifty Defensives: Turnover Share Increasing
Source: Bloomberg, Elara Securities Research
Source: Bloomberg, Elara Securities ResearchSource: Bloomberg, Elara Securities Research

28. Open Interest Share: Sector-wise
High Beta Counters Losing Out
Elara Securities (India) Private Limited
Sector OI Share: 6 Months
28
Sector OI Share: Current
GlobalFundFlows
Source: Bloomberg, Elara Securities Research
Sector OI Share: 1 Year
Sector OI Share: 3 Months
Source: Bloomberg, Elara Securities Research
Source: Bloomberg, Elara Securities ResearchSource: Bloomberg, Elara Securities Research
Banks
24.33%
Auto
7.96%
Metals
8.13%
Power/Eng
9.37%
Oil and gas
6.22%
Pharma
4.89%
Telecom
3.13%
IT
12.30%
Cement
2.24%
FMCG
6.24%
Infra
1.80%
Real Estate
2.51%
Media
1.06%
Misc.
9.79%
Banks
23.83%
Auto
7.05%
Metals
10.89%
Power/Eng
13.74%
Oil and gas
7.81%
Pharma
3.76%
Telecom
2.72%
IT
7.88%
Cement
2.33%
FMCG
5.94%
Infra
2.49%
Real Estate
3.08%
Media
0.78%
Misc.
7.72%
Banks
22.69%
Auto
5.65%
Metals
12.00%
Power/Eng
15.16%
Oil and gas
8.46%
Pharma
4.95%
Telecom
2.70%
IT
5.99%
Cement
3.02%
FMCG
6.20%
Infra
2.64%
Real Estate
3.28%
Media
0.89%
Misc.
6.37%
Banks
29.40%
Auto
6.23%
Metals
15.12%
Power/Eng
14.42%
Oil and gas
6.00%
Pharma
2.06%
Telecom
2.82%
IT
8.33%
Cement
2.69%
FMCG
4.26%
Infra
1.61%
Real Estate
2.01%
Media
0.37%
Misc.
4.68%

29. Global Markets

30. Nifty weekly
Medium-term trends
BRICs Under Pressure
Brazil Bovespa weekly
Elara Securities (India) Private Limited
Shanghai composite weekly
Russia MICEX weekly
30
GlobalMarkets
Source: Bloomberg, Elara Securities Research

31. Medium-term trends
Developed Market Bullish Trends
Elara Securities (India) Private Limited 31
S&P 500 weekly Nikkei weekly
Eurostoxx Weekly
GlobalMarkets
Source: Bloomberg, Elara Securities Research
Dollar Index weekly
Source: Bloomberg, Elara Securities Research Source: Bloomberg, Elara Securities Research
Source: Bloomberg, Elara Securities Research

32. Medium-term trends
MSCI EM, India Volatility, Brent Crude
Elara Securities (India) Private Limited 32
MSCI Emerging Markets Weekly India Volatility weekly
Brent Crude Weekly
GlobalMarkets
Source: Bloomberg, Elara Securities Research
Index Returns
Source: Bloomberg, Elara Securities Research
Source: Bloomberg, Elara Securities Research Source: Bloomberg, Elara Securities Research
India China Brazil Russia
EURO
Stoxx
Japan US
1 Month
Return
(5.7) 2.1 4.9 1.3 7.0 (3.4) 4.0
YTD
Return
(6.3) (9.7) (22.2) (7.7) 8.3 33.0 19.0
1 Year
Return
3.6 (5.0) (17.8) (6.2) 16.9 57.0 21.1

33. FII & DII Shareholding Patterns
A Look At Defensives
Elara Securities (India) Private Limited 33
Hindustan Unilever Sun Pharmaceuticals
HCL Technologies
GlobalMarkets
Source: Bloomberg, Elara Securities Research
Ultratech Cement
Source: Bloomberg, Elara Securities Research
Source: Bloomberg, Elara Securities Research Source: Bloomberg, Elara Securities Research
0
100
200
300
400
500
600
Mar-08
Jul-08
Nov-08
Mar-09
Jul-09
Nov-09
Mar-10
Jul-10
Nov-10
Mar-11
Jul-11
Nov-11
Mar-12
Jul-12
Nov-12
Mar-13
(inmn)
Domestic Institutional Investors Foreign Institutional Investors
0
50
100
150
200
250
Mar-08
Jul-08
Nov-08
Mar-09
Jul-09
Nov-09
Mar-10
Jul-10
Nov-10
Mar-11
Jul-11
Nov-11
Mar-12
Jul-12
Nov-12
Mar-13
(inmn)
Domestic Institutional Investors Foreign Institutional Investors
0
20
40
60
80
100
120
140
160
180
Mar-08
Jul-08
Nov-08
Mar-09
Jul-09
Nov-09
Mar-10
Jul-10
Nov-10
Mar-11
Jul-11
Nov-11
Mar-12
Jul-12
Nov-12
Mar-13
(inmn)
Domestic Institutional Investors Foreign Institutional Investors
0
10
20
30
40
50
60
Mar-08
Jul-08
Nov-08
Mar-09
Jul-09
Nov-09
Mar-10
Jul-10
Nov-10
Mar-11
Jul-11
Nov-11
Mar-12
Jul-12
Nov-12
Mar-13
(inmn)
Domestic Institutional Investors Foreign Institutional Investors

34. FII & DII Shareholding Patterns
A Look At Defensives
Elara Securities (India) Private Limited 34
Idea Telecom Cipla Pharmaceuticals
Lupin Pharmaceuticals
GlobalMarkets
Source: Bloomberg, Elara Securities Research
Source: Bloomberg, Elara Securities Research Source: Bloomberg, Elara Securities Research
0
100
200
300
400
500
600
Mar-08
Jul-08
Nov-08
Mar-09
Jul-09
Nov-09
Mar-10
Jul-10
Nov-10
Mar-11
Jul-11
Nov-11
Mar-12
Jul-12
Nov-12
Mar-13
(inmn)
Domestic Institutional Investors Foreign Institutional Investors
0
50
100
150
200
250
Mar-08
Jul-08
Nov-08
Mar-09
Jul-09
Nov-09
Mar-10
Jul-10
Nov-10
Mar-11
Jul-11
Nov-11
Mar-12
Jul-12
Nov-12
Mar-13
(inmn)
Domestic Institutional Investors Foreign Institutional Investors
0
20
40
60
80
100
120
140
160
Mar-08
Jul-08
Nov-08
Mar-09
Jul-09
Nov-09
Mar-10
Jul-10
Nov-10
Mar-11
Jul-11
Nov-11
Mar-12
Jul-12
Nov-12
Mar-13
(inmn)
Domestic Institutional Investors Foreign Institutional Investors

35. Rating Watch - Post Q1FY14

36. Upgrade/Downgrade
RatingWatch
36Elara Securities (India) Private Limited
Preview Q1FY14 Review Q1FY14
Name of company
Bloomberg
Code
CMP
12 Aug 2013
Current Mkt
Cap (INR mn)
Target
Price
Recomm.
Target
Price
Recomm. Revision %
Upside/
Downside %
IndusInd Bank IIB IN Equity 373 195,399 475 Reduce 487 Buy 2 31
Godrej Consumer GCPL IN Equity 862 293,454 879 Accumulate 756 Sell (14) (12)
Marico MRCO IN Equity 203 130,771 196 Sell 222 Accumulate 13 9
JK Paper CPM IN Equity 25 3,436 39 Accumulate 30 Reduce (23) 19
Cadilla healthcare CDH IN Equity 691 141,430 812 Reduce 757 Accumulate (7) 10
Ranbaxy RBXY IN Equity 367 155,289 306 Sell 332 Accumulate 9 (9)
Bharti Airtel BHARTI IN Equity 342 1,366,311 303 Reduce 378 Accumulate 25 10
Idea Cellular IDEA IN Equity 163 542,027 105 Reduce 170 Accumulate 62 4
Source: Bloomberg, Elara Securities Research

37. Target price change
RatingWatch
37Elara Securities (India) Private Limited
Preview Review
Company
CMP
12 Aug
2013
Target
Price
Recomm.
Target
Price
Recomm.
Revision
%
Up/
Downside %
Automobiles
Hero Motocorp 1,907 2,300 Buy 2,250 Buy (2) 18
Bajaj Auto 1,808 1,869 Reduce 1,895 Reduce 1 5
TVS Motors 32 44 Accumulate 43 Buy (2) 33
Maruti Suzuki 1,380 2,023 Buy 1,840 Buy (9) 33
M & M 861 966 Reduce 903 Reduce (7) 5
Tata Motors 281 340 Accumulate 340 Accumulate 0 21
Banking
Axis Bank 1,070 1,672 Buy 1,520 Buy (9) 42
Bank of India 177 301 Buy 261 Buy (13) 48
Canara Bank 247 454 Buy 309 Buy (32) 25
HDBK 602 758 Accumulate 758 Buy 0 26
ICBN 867 1,469 Buy 1,387 Buy (6) 60
IndusInd Bank 373 475 Reduce 487 Buy 2 31
Karur Vysya 338 491 Accumulate 412 Buy (16) 22
OBC 142 289 Accumulate 160 Accumulate (45) 12
PNB 535 826 Buy 772 Buy (7) 44
SBI 1,605 1,950 Reduce 1,553 Reduce (20) (3)
Syndicate Bank 70 135 Buy 97 Buy (28) 39
UBI 119 257 Buy 200 Buy (22) 68
Allahabad Bank 72 110 Accumulate 75 Reduce (32) 4
Andhra Bank 59 100 Accumulate 60 Reduce (40) 1
City Union Bank 45 70 Buy 65 Buy (7) 44
DCB 44 60 Buy 60 Buy 0 37
Dena Bank 47 100 Buy 55 Accumulate (45) 17
J&K bank 1,065 1,800 Buy 1,800 Buy 0 69
Indian Bank 70 180 Buy 80 Accumulate (56) 14
Cement
JK Lakshmi 62 155 Buy 112 Buy (28) 79
JK Cement 174 340 Buy 290 Buy (15) 67
Shree Cement 3,922 5,000 Accumulate 5,065 Accumulate 1 29
India Cements 44 95 Buy 52 Accumulate (45) 17
ACC 1,168 1,365 Accumulate 1,270 Accumulate (7) 9
Ambuja 179 182 Reduce 163 Sell (10) (9)
UltraTech 1,689 2,175 Accumulate 2,175 Accumulate 0 29
Grasim Ind. 2,409 3,485 Accumulate 3,026 Accumulate (13) 26
FMCG
HUL 616 534 Sell 537 Sell 1 (13)
ITC 336 361 Accumulate 399 Accumulate 11 19
GSK consumer 3,969 3,948 Sell 4,333 Reduce 10 9
Colgate 1,328 1,301 Sell 1,371 Reduce 5 3
GCPL 862 879 Accumulate 756 Sell (14) (12)
Dabur 167 173 Accumulate 187 Accumulate 8 12
Marico 203 196 Sell 222 Accumulate 13 9
Zydus Wellnes 571 729 Accumulate 605 Accumulate (17) 6
Jyothy Labs 169 221 Accumulate 208 Buy (6) 23
Hospitality
EIH 48 65 Accumulate 57 Buy (12) 17
IHCL 43 56 Accumulate 55 Buy (2) 29
Preview Review
Company
CMP
12 Aug
2013
Target
Price
Recomm.
Target
Price
Recomm.
Revision
%
Up/
Downside %
Infrastructure
HCC 11 13 Accumulate 13 Buy 0 22
IRB 72 158 Buy 145 Buy (8) 103
ITNL 126 260 Buy 226 Buy (13) 79
NCC 20 42 Buy 42 Buy 0 108
Sadbhav 70 121 Accumulate 121 Accumulate 0 73
Larsen & Toubro 798 1,051 Accumulate 980 Accumulate (7) 23
MBL Infra 83 211 Buy 176 Buy (17) 112
Media
Dish TV 47 90 Buy 75 Buy (16) 61
Sun TV 405 525 Buy 525 Buy 0 30
Zee Ent. 243 290 Buy 305 Buy 5 26
Metals
Hindalco Ind. 94 80 Sell 74 Sell (8) (21)
Hindustan Zinc 104 148 Buy 148 Buy 0 42
Sterlite Ind 79 103 Accumulate 94 Accumulate (8) 20
JSW Steel 517 652 Sell 513 Sell (21) (1)
Tata Steel 237 405 Buy 405 Buy 0 71
Sesa Goa 135 171 Accumulate 147 Accumulate (14) 9
Coal India 274 378 Accumulate 331 Buy (13) 21
GMDC 93 214 Buy 131 Buy (39) 41
Midcap
Piramal Glass 98 108 Buy 90 Buy (16) (8)
TTK Prestige 3,658 3,340 Buy 3,050 Buy (9) (17)
ENIL 228 300 Buy 300 Buy 0 32
Navneet Pub 54 80 Buy 80 Buy (0) 48
Paper
TNPL 90 180 Buy 155 Buy (14) 72
JK Paper 25 39 Accumulate 30 Reduce (23) 19
Pharmaceuticals
Cadilla Healthcare 691 812 Reduce 757 Accumulate (7) 10
Cipla 416 457 Accumulate 478 Accumulate 4 15
Dr. Reddy's 2,181 2,545 Buy 2,685 Buy 5 23
Divi's Lab 1,008 1,293 Buy 1,208 Buy (7) 20
Lupin 820 936 Accumulate 935 Accumulate (0) 14
Ranbaxy 367 306 Sell 332 Accumulate 9 (9)
Sun Pharma 542 1,110 Accumulate 592 Accumulate (47) 9
Print Media
DB Corp 253 270 Accumulate 285 Accumulate 6 13
Hindustan Media 121 162 Buy 162 Buy 0 34
Jagran Prakashan 90 123 Buy 125 Buy 2 40
HT Media 97 140 Buy 140 Buy (0) 44
Telecom
Bharti Airtel 342 303 Reduce 378 Accumulate 25 10
Idea Cellular 163 105 Reduce 170 Accumulate 62 4
Tours & Travels
Mahindra Holidays 221 299 Accumulate 294 Accumulate (2) 33
Source: Elara Securities Research

38. Sales growth
RatingWatch
38Elara Securities (India) Private Limited
No. Name of company Bloomberg Code
CMP
12 August 2013
Current Mkt Cap
(INR mn)
Q1FY13 Q1FY14A Growth(%)
1 Sun TV Network SUNTV IN Equity 405 159,663 4,258 6,019 41.4
2 IndusInd Bank IIB IN Equity 373 195,399 4,841 6,795 40.4
3 City Union Bank CUBK IN Equity 45 24,126 1,379 1,874 35.8
4 Sadbhav SADE IN Equity 70 10,544 4,215 5,632 33.6
5 Axis Bank AXSB IN Equity 1,070 502,013 21,799 28,652 31.4
6 Sun pharma SUNP IN Equity 542 1,121,066 26,581 34,822 31.0
7 Karur Vysya Bank KVB IN Equity 338 36,275 2,539 3,319 30.7
8 Development Credit Bank DEVB IN Equity 44 10,931 639 831 30.0
9 HDFC Bank HDFCB IN Equity 602 1,438,872 34,841 44,187 26.8
10 Bank of India BOI IN Equity 177 105,207 20,436 25,370 24.1
Companies with High Sales growth
Companies with Low Sales growth
No. Name of company Bloomberg Code
CMP
12 August 2013
Current Mkt Cap
(INR mn)
Q1FY13 Q1FY14A Growth(%)
1 Sesa Goa SESA IN Equity 135 117,546 17,326 3,780 (78.2)
2 GMDC GMDC IN Equity 93 29,717 4,965 3,701 (25.5)
3 Sterlite Ind STLT IN Equity 79 264,316 106,484 82,491 (22.5)
4 Ranbaxy RBXY IN Equity 367 155,289 31,741 26,332 (17.0)
5 JK Lakshmi JKLC IN Equity 62 7,343 5,334 4,569 (14.3)
6 JK Cement JKCE IN Equity 174 12,168 7,356 6,574 (10.6)
7 Ambuja ACEM IN Equity 179 276,107 25,660 23,457 (8.6)
8 ITNL ILFT IN Equity 126 24,546 15,796 14,511 (8.1)
9 Andhra Bank ANDB IN Equity 59 33,239 9,385 8,739 (6.9)
10 NCC NJCC IN Equity 20 5,170 14,720 13,792 (6.3)
Source: Elara Securities Research

39. EBITDA growth
RatingWatch
39Elara Securities (India) Private Limited
No. Name of company Bloomberg Code
CMP
12 August 2013
Current Mkt Cap
(INR mn)
Q1FY13 Q1FY14A Growth(%)
1 HCC HCC IN Equity 11 6,460 690 2,012 191.6
2 DB Corp DBCL IN Equity 253 46,408 765 1,328 73.7
3 Hindustan Media Ventures HMVL IN Equity 121 8,881 260 397 52.8
4 ENIL ENIL IN Equity 228 10,883 201 299 48.5
5 Maruti Suzuki MSIL IN Equity 1,380 416,931 7,864 11,662 48.3
6 Sadbhav SADE IN Equity 70 10,544 391 578 47.8
7 Idea Cellular IDEA IN Equity 163 542,027 14,355 20,763 44.6
8 Lupin LPC IN Equity 820 367,227 4,576 5,895 28.8
9 Jagran Prakashan JAGP IN Equity 90 29,723 788 1,013 28.5
10 Cipla CIPLA IN Equity 416 333,614 5,500 6,923 25.9
Companies with High EBITDA growth
Companies with Low EBITDA growth
No. Name of company Bloomberg Code
CMP
12 August 2013
Current Mkt Cap
(INR mn)
Q1FY13 Q1FY14A Growth(%)
1 Sesa Goa SESA IN Equity 135 117,546 6,564 (428) (106.5)
2 Ranbaxy RBXY IN Equity 367 155,289 5,113 2,624 (48.7)
3 GSK Pharmaceuticals GLXO IN Equity 2,285 193,559 2,127 1,222 (42.6)
4 JK Lakshmi JKLC IN Equity 62 7,343 1,218 702 (42.3)
5 JK Cement JKCE IN Equity 174 12,168 1,565 914 (41.6)
6 GMDC GMDC IN Equity 93 29,717 2,685 1,714 (36.2)
7 ACC ACC IN Equity 1,168 219,362 6,508 4,335 (33.4)
8 Ambuja ACEM IN Equity 179 276,107 7,223 4,920 (31.9)
9 India Cements ICEM IN Equity 44 13,608 2,777 1,910 (31.2)
10 Dish TV DITV IN Equity 47 49,517 1,556 1,217 (21.8)
Source: Elara Securities Research

40. PAT growth
RatingWatch
40Elara Securities (India) Private Limited
No. Name of company Bloomberg Code
CMP
12 August 2013
Current Mkt Cap
(INR mn)
Q1FY13 Q1FY14A Growth(%)
1 Development Credit Bank DEVB IN Equity 44 10,931 189 428 126.5
2 Idea Cellular IDEA IN Equity 163 542,027 2,341 5,227 123.2
3 Tata Steel TATA IN Equity 237 229,741 5,979 11,213 87.5
4 DB Corp DBCL IN Equity 253 46,408 459 792 72.6
5 Glenmark Pharmaceuticals GNP IN Equity 552 149,531 783 1,287 64.4
6 Hindustan Media Ventures HMVL IN Equity 121 8,881 193 303 56.7
7 ENIL ENIL IN Equity 228 10,883 130 199 53.6
8 Maruti Suzuki MSIL IN Equity 1,380 416,931 4,238 6,316 49.0
9 Torrent Pharmaceuticals TRP IN Equity 418 70,655 1,019 1,490 46.3
10 Lupin LPC IN Equity 820 367,227 2,804 4,011 43.0
Companies with High PAT growth
Companies with Low PAT growth
No. Name of company Bloomberg Code
CMP
12 August 2013
Current Mkt Cap
(INR mn)
Q1FY13 Q1FY14A Growth(%)
1 Sun pharma SUNP IN Equity 542 1,121,066 7,956 (12,761) (260.4)
2 JK Paper CPM IN Equity 25 3,436 141 14 (90.2)
3 India Cements ICEM IN Equity 44 13,608 748 160 (78.7)
4 Sadbhav SADE IN Equity 70 10,544 524 161 (69.3)
5 JK Lakshmi JKLC IN Equity 62 7,343 503 157 (68.8)
6 Sesa Goa SESA IN Equity 135 117,546 11,499 4,937 (57.1)
7 JK Cement JKCE IN Equity 174 12,168 689 309 (55.2)
8 JSW Steel JSTL IN Equity 517 125,067 3,981 2,214 (44.4)
9 ACC ACC IN Equity 1,168 219,362 4,179 2,591 (38.0)
10 NCC NJCC IN Equity 20 5,170 166 105 (36.7)
Source: Elara Securities Research

41. EPS - Upgrade/Downgrade
RatingWatch
41Elara Securities (India) Private Limited
Name of company Bloomberg Code
CMP
12 August 2013
Current Mkt Cap
(INR mn)
FY14E FY14R Q1 Revision %
EPS Upgrade - FY14E
Hindustan Media Ventures HMVL IN Equity 121 8,881 12.2 14.9 22
Idea Cellular IDEA IN Equity 163 542,027 4.8 5.7 17
DB Corp DBCL IN Equity 253 46,408 14.4 16.4 14
IRB IRB IN Equity 72 23,797 11.2 12.7 13
Jyothy Labs JYL IN Equity 169 28,041 6.7 7.5 12
EPS Downgrade - FY14E
Piramal Glass PIRA IN Equity 98 7,950 9.5 5.2 (45)
Sun pharma SUNP IN Equity 542 1,121,066 37.5 20.8 (45)
Sesa Goa SESA IN Equity 135 117,546 37.5 22.2 (41)
India Cements ICEM IN Equity 44 13,608 9.2 6.1 (33)
Oriental Bank of Commerce OBC IN Equity 142 41,561 43.2 29.2 (32)
Name of company Bloomberg Code
CMP
12 August 2013
Current Mkt Cap
(INR mn)
FY15E FY15R Q1 Revision %
EPS Upgrade - FY15E
Idea Cellular IDEA IN Equity 163 542,027 5.9 9.7 64
Hindustan Media Ventures HMVL IN Equity 121 8,881 13.5 16.2 20
ENIL ENIL IN Equity 228 10,883 20.0 22.8 14
Bharti Airtel BHARTI IN Equity 342 1,366,311 17.2 19.0 11
Bajaj Auto BJAUT IN Equity 1,808 523,060 128.2 135.3 6
EPS Downgrade - FY15E
Sun pharma SUNP IN Equity 542 1,121,066 46.3 24.7 (47)
Piramal Glass PIRA IN Equity 98 7,950 13.8 7.9 (43)
Oriental Bank of Commerce OBC IN Equity 142 41,561 50.6 31.0 (39)
India Cements ICEM IN Equity 44 13,608 11.0 7.8 (29)
Syndicate Bank SNDB IN Equity 70 41,986 23.8 17.2 (28)
Source: Elara Securities Research

42. Relative Returns

43. Market leadership missing
RelativeReturns
43Elara Securities (India) Private Limited
CMP as on 14 August 2013
Last Price 1 month 3 month 6 month 1 year 2 year 3 year
SENSEX Index 19,380 (2.9) (1.7) (0.6) 9.3 15.1 6.7
BSE100 Index 5,727 (4.3) (4.7) (3.3) 6.7 11.2 1.6
BSE200 Index 2,279 (4.7) (5.7) (4.6) 4.9 8.4 (1.9)
BSE500 Index 7,012 (4.8) (6.2) (5.5) 3.4 5.8 (4.6)
NIFTY Index 5,743 (4.4) (4.2) (2.6) 6.7 13.2 5.3
NIFTYJR Index 11,322 (5.2) (8.1) (4.4) 10.6 9.5 (4.7)
CNX100 Index 5,637 (4.5) (4.8) (2.9) 7.3 12.5 3.6
CNX500 Index 4,393 (5.1) (6.6) (5.5) 3.7 6.6 (4.0)
BSEMDCAP Index 5,592 (7.6) (13.5) (15.4) (9.0) (14.2) (26.8)
BSESMCAP Index 5,388 (6.1) (11.9) (18.2) (18.3) (29.3) (44.5)
NIFTYM50 Index 1,852 (4.9) (12.0) (13.5) (12.6) (17.7) (34.7)
CNXMCAP Index 6,961 (6.7) (12.2) (11.8) (4.7) (8.2) (20.1)
BSEAUTO Index 10,870 2.8 (1.3) 0.7 15.4 27.4 23.9
BANKEX Index 11,423 (14.6) (20.6) (19.1) (5.3) (1.8) (6.3)
BSETCG Index 7,661 (19.6) (21.4) (21.6) (23.8) (37.0) (47.8)
BSETMCG Index 6,742 (3.0) 1.2 16.2 28.5 72.5 105.6
BSETHC Index 9,125 (2.8) 2.8 15.2 25.3 50.9 65.4
BSET Index 7,620 11.6 27.7 17.0 36.7 52.3 38.2
BSEMETL Index 7,354 (5.1) (14.6) (25.8) (30.9) (40.2) (52.1)
BSEOIL Index 8,586 (2.4) (1.5) (4.6) 1.4 2.0 (15.3)
BSEPOWR Index 1,462 (12.1) (16.7) (19.5) (25.7) (36.0) (53.2)
BSETPSU Index 5,433 (8.9) (20.1) (25.5) (24.4) (32.4) (43.9)
BSEREAL Index 1,344 (11.4) (28.5) (34.0) (19.1) (25.6) (63.4)
BSETECK Index 4,378 10.2 21.5 15.6 36.2 38.1 27.2
CNXBANK Index 10,036 (14.4) (20.2) (18.5) (4.6) (1.4) (6.5)
CNXIT Index 7,952 9.7 25.7 15.2 33.9 46.8 30.0
DOLL100 Index 964 (6.4) (14.9) (15.2) (3.3) (17.8) (22.7)
DOLLEX Curncy 618 (6.7) (15.8) (16.3) (4.8) (19.8) (25.4)
DEFTY Index 3,215 (7.5) (15.5) (15.2) (3.9) (17.0) (20.5)
Source: Bloomberg

44. Model Portfolio

45. Positive Comments Negative Comments
Automobiles Good monsoons, currency tailwinds,
trough valuations, margin expansion
Cement Two-quarter weakness on demand slowdown,
monsoon
Consumption Good monsoons, Macro, Demographics,
Regulation, PE multiple expansion
Financials NPA cycle prolonged, credit off take weak,
interest rate cycle pushed out
Oil & Gas INR depreciation peaking out, Diesel Price
Hikes, Crude, Re-pricing of Gas
Infrastructure Contraction phase, deleveraging, few options
Pharma India seeing cyclical slowdown,
Concentrated plays, Regulatory risk
Metals End prices soft, demand weak
Power Utilities Movement in tariff negotiations, Gas
resolution, Merchant rates uptick, Coal
prices
Capital Goods Weak investment cycle, order book visibility
weak
Technology Strong US recovery, Reasonable
valuations, margin levers
Telecom Non-remunerative business models, regulatory
overhang, Return of Reliance
Sector Framework
ModelPortfolio
45Elara Securities (India) Private Limited

46. Key sector weights
ModelPortfolio
46
Sector
Overweight/
Underweight
bps
Nifty
weights
Elara
weights
Auto Overweight 112 8.4 9.5
Consumers Overweight 299 14.0 17.0
IT Services Overweight 216 11.0 13.2
Oil & Gas Overweight 200 12.0 14.0
Pharma Overweight 189 5.6 7.5
Power & CG Overweight 46 4.3 4.8
Others Overweight 225 0.0 2.3
Cement Underweight (74) 3.2 2.5
Financials Underweight (465) 30.7 26.0
Infra Underweight (336) 4.4 1.0
Metals Underweight (184) 4.1 2.3
Real Estate Underweight (40) 0.4 0.0
Telecom Underweight (188) 1.9 0.0
Sector
Nifty
Stocks#
Elara Stocks# Elara Model
Stocks#Nifty Non Nifty
Auto 5 4 0 4
Cement 4 1 1 2
Consumers 3 2 2 4
Financials 10 6 1 7
Infra 2 0 1 1
IT Services 3 3 2 5
Metals 6 2 0 2
Oil & Gas 5 3 1 4
Pharma 5 4 0 4
Power & CG 5 2 1 3
Real Estate 1 0 0 0
Telecom 1 0 0 0
Others 0 0 1 1
Total 50 27 10 37
# No, of stocks
Elara Securities (India) Private Limited
Sector Overweight/Underweight
Elara weights
(18 Jun,2013)
Elara weights
(13Aug, 2013)
bps change
Weight Up/
Down
Auto Overweight 9.5 9.5 0 n
Consumers Overweight 16.5 17.0 50 h
IT Services Overweight 13.2 13.2 0 n
Oil & Gas Overweight 14.0 14.0 0 n
Pharma Overweight 7.0 7.5 50 h
Power & CG Overweight 4.8 4.8 0 n
Others Overweight 2.5 2.3 (25) i
Cement Underweight 3.5 2.5 (100) i
Financials Underweight 26.8 26.0 (75) i
Infra Underweight 1.0 1.0 0 n
Metals Underweight 1.3 2.3 100 h
Real Estate Underweight 0.0 0.0 0 n
Telecom Underweight 0.0 0.0 0 n
Source: Elara Securities Research

47. Model portfolio
ModelPortfolio
47Elara Securities (India) Private Limited
Company
Nifty Elara Price as on
weights Weights 13-Aug-13
NIFTY Index 5699
Bajaj Auto 1.3 1,859
Hero Motocop 0.9 2.5 1,943
Mahindra & Mahindra 2.3 1.0 874
Maruti Suzuki 1.1 2.0 1,397
Tata Motors 2.9 4.0 291
Auto Total Overweight 8.4 9.5
ACC 0.6 1,161
Ambuja 0.7 174
Grasim 0.9 0.9 2,442
Shree Cement - 1.6 3,947
UltraTech Cement 1.0 1,696
Cement Total Underweight 3.2 2.5
Hindustan Unilever 3.2 3.5 622
ITC 9.7 9.5 334
Dabur 1.5 172
Zee 2.5 249
Asian Paints 1.2 440
Consumers Total Overweight 14.0 17.0
Bank of Baroda 0.6 520
Axis Bank 2.3 2.0 1,143
HDFC 7.2 5.0 792
HDFC Bank 6.7 7.0 621
ICICI Bank 6.9 6.5 893
IDFC 0.9 112
IndusInd Bank 1.1 384
Kotak Mahindra Bank 1.5 2.0 659
PNB 0.6 539
State Bank of India 2.7 2.0 1,620
J&K Bank 1.5 1,050
Financials Total Underweight 30.7 26.0
JP Associates 0.4 33
L&T 3.9 804
ITNL 1.0 127
Company
Nifty Elara Price as on
weights Weights 13-Aug-13
Infra Total Underweight 4.4 1.0
HCL Technologies 1.0 2.0 941
Infosys 6.1 5.0 3,084
TCS 4.0 3.5 1,820
Tech Mahindra 1.5 1,331
Wipro 1.2 468
IT Services Total Overweight 11.0 13.2
Hindalco 0.7 91
Jindal Steel 0.6 226
Sesa Goa 0.3 136
Tata Steel 1.0 1.0 241
Coal India 1.1 1.3 269
NMDC 0.5 109
Metals Total Underweight 4.1 2.3
BPCL 0.5 1.5 286
Oil India 1.0 475
Cairn 0.9 298
GAIL 0.7 309
ONGC 3.0 3.0 275
Reliance Ind. 6.9 8.5 853
Oil & Gas Total Overweight 12.0 14.0
Cipla 1.0 2.0 425
Dr Reddys 1.4 2.0 2,238
Ranbaxy 0.3 398
Sun Pharma 2.0 2.0 547
Lupin 0.9 1.5 839
Pharma Total Overweight 5.6 7.5
BHEL 0.8 121
NTPC 1.7 1.5 144
Power Grid 0.8 1.3 96
Reliance Infra. 0.3 363
Reliance Power 2.0 75
Tata Power 0.7 76
Power & CG Total Overweight 4.3 4.8
DLF 0.4 0.0 150
Real Estate Total Underweight 0.4 0.0
Bharti Airtel 1.9 0.0 346
Telecom Total Underweight 1.9 0.0
Rallis India 0 2.3 145
Others Overweight 0 2.3
Total 100.0 100.0
Source: NSE, Elara Securities Research

48. Model portfolio performance
ModelPortfolio
48Elara Securities (India) Private Limited
(100)
(50)
0
50
100
150
200
250 18-Jun-13
23-Jun-13
28-Jun-13
3-Jul-13
8-Jul-13
13-Jul-13
18-Jul-13
23-Jul-13
28-Jul-13
2-Aug-13
7-Aug-13
12-Aug-13
bps
EMP Outperformance
Source: Elara Securities Research

49. The Note is based on our estimates and is being provided to you (herein referred to as the “Recipient”) only for information purposes. The sole purpose of this Note is to provide
preliminary information on the business activities of the company and the projected financial statements in order to assist the recipient in understanding / evaluating the
Proposal. Nothing in this document should be construed as an advice to buy or sell or solicitation to buy or sell the securities of companies referred to in this document. Each
recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred
to in this document (including the merits and risks involved) and should consult its own advisors to determine the merits and risks of such an investment. Nevertheless, Elara or
any of its affiliates is committed to provide independent and transparent recommendation to its client and would be happy to provide any information in response to specific
client queries. Elara or any of its affiliates have not independently verified all the information given in this Note and expressly disclaim all liability for any errors and/or omissions,
representations or warranties, expressed or implied as contained in this Note. The user assumes the entire risk of any use made of this information. Elara or any of its affiliates,
their directors and the employees may from time to time, effect or have effected an own account transaction in or deal as principal or agent in or for the securities mentioned in
this document. They may perform or seek to perform investment banking or other services for or solicit investment banking or other business from any company referred to in
this Note. Each of these entities functions as a separate, distinct and independent of each other. This Note is strictly confidential and is being furnished to you solely for your
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other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject Elara or any of its affiliates to any
registration or licensing requirements within such jurisdiction. The distribution of this document in certain jurisdictions may be restricted by law, and persons in whose possession
this document comes, should inform themselves about and observe, any such restrictions. Upon request, the Recipient will promptly return all material received from the
company and/or the Advisors without retaining any copies thereof. The Information given in this document is as of the date of this report and there can be no assurance that
future results or events will be consistent with this information. This Information is subject to change without any prior notice. Elara or any of its affiliates reserves the right to
make modifications and alterations to this statement as may be required from time to time. However, Elara is under no obligation to update or keep the information current.
Neither Elara nor any of its affiliates, group companies, directors, employees, agents or representatives shall be liable for any damages whether direct, indirect, special or
consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. This Note should not be deemed an indication of the
state of affairs of the company nor shall it constitute an indication that there has been no change in the business or state of affairs of the company since the date of publication
of this Note. The disclosures of interest statements incorporated in this document are provided solely to enhance the transparency and should not be treated as endorsement of
the views expressed in the report. Elara Securities (India) Private Limited generally prohibits its analysts, persons reporting to analysts and their family members from maintaining
a financial interest in the securities or derivatives of any companies that the analysts cover. The analyst for this report certifies that all of the views expressed in this report
accurately reflect his or her personal views about the subject company or companies and its or their securities, and no part of his or her compensation was, is or will be, directly
or indirectly related to specific recommendations or views expressed in this report.
Any clarifications / queries on the proposal as well as any future communication regarding the proposal should be addressed to Elara Securities (India) Private Limited / the
company.
Disclosures & Confidentiality for non U.S. Investors
Disclaimer for non U.S. Investors
The information contained in this note is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to
provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the
future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

50. This material is based upon information that we consider to be reliable, but Elara Capital Inc. does not warrant its completeness, accuracy or adequacy and it should not be relied
upon as such.
This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities, financial instruments or strategies
mentioned herein may not be suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of
the stated date of their issue. Prices, values or income from any securities or investments mentioned in this report may fall against the interests of the investor and the investor
may get back less than the amount invested. Where an investment is described as being likely to yield income, please note that the amount of income that the investor will
receive from such an investment may fluctuate. Where an investment or security is denominated in a different currency to the investor’s currency of reference, changes in rates
of exchange may have an adverse effect on the value, price or income of or from that investment to the investor. The information contained in this report does not constitute
advice on the tax consequences of making any particular investment decision. This material does not take into account your particular investment objectives, financial situations
or needs and is not intended as a recommendation of particular securities, financial instruments or strategies to you. Before acting on any recommendation in this material, you
should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice.
Certain statements in this report, including any financial projections, may constitute “forward-looking statements.” These “forward-looking statements” are not guarantees of
future performance and are based on numerous current assumptions that are subject to significant uncertainties and contingencies. Actual future performance could differ
materially from these “forward-looking statements” and financial information.
Disclaimer for U.S. Investors
India
Elara Securities (India) Pvt. Ltd.
Indiabulls Finance Centre, Tower 3, 21st Floor,
Senapati Bapat Marg, Elphinstone Road (West)
Mumbai – 400 013, India
Tel : +91 22 3032 8500
Europe
Elara Capital Plc.
29 Marylebone Road,
London NW1 5JX,
United Kingdom
Tel : +4420 7486 9733
USA
Elara Securities Inc.
477 Madison Avenue, 220,
New York,
NY 10022, USA
Tel :212-430-5870
Asia / Pacific
Elara Capital (Singapore) Pte.Ltd.
30 Raffles Place
#20-03, Chevron House
Singapore 048622
Tel : +65 6536 6267

51. Team Details
Harendra Kumar Managing Director harendra.kumar@elaracapital.com +91 22 3032 8571
Sales
Anuja Sarda London +44 77 3819 6256 anuja.sarda@elaracapital.com +44 20 7299 2577
Amit Mamgain India +91 98676 96661 amit.mamgain@elaracapital.com +91 22 3032 8543
Himani Singh India +91 99875 56244 himani.singh@elaracapital.com +91 22 3032 8501
Manan Thakkar India +91 98193 81181 manan.thakkar@elaracapital.com +91 22 3032 8542
Prashin Lalvani India +91 98334 77685 prashin.lalvani@elaracapital.com +91 22 3032 8544
Sales Trading & Dealing
Manan Joshi India +91 98704 72678 manan.joshi@elaracapital.com +91 22 3032 8555
Manoj Murarka India +91 99675 31422 manoj.murarka@elaracapital.com +91 22 3032 8551
Vishal Thakkar India +91 98694 07973 vishal.thakker@elaracapital.com +91 22 3032 8552
Research
Aarthisundari Jayakumar Analyst Pharmaceuticals aarthi.jayakumar@elaracapital.com +91 22 3032 8510
Abhinav Bhandari Analyst Construction, Infrastructure abhinav.bhandari@elaracapital.com +91 22 3032 8507
Aliasgar Shakir Analyst Mid caps & Telecom aliasgar.shakir@elaracapital.com +91 22 3032 8516
Ashish Kejriwal Analyst Metals & Mining ashish.kejriwal@elaracapital.com +91 22 3032 8505
Ashish Kumar Economist ashish.kumar@elaracapital.com +91 22 3032 8536
Aashish Upganlawar Analyst FMCG aashish.upganlawar@elaracapital.com +91 22 3032 8546
Deepak Agrawala Analyst Power and Capital Goods deepak.agrawala@elaracapital.com +91 22 3032 8523
Henry Burrows Analyst Derivative Strategist henry.burrows@elaracapital.com +91 22 3032 8554
Mohan Lal Analyst Media , Automobiles mohan.lal@elaracapital.com +91 22 3032 8502
Mona Khetan, FRM Analyst Banking & Financials, Strategy mona.khetan@elaracapital.com +91 22 3032 8514
Rakesh Kumar Analyst Banking & Financials rakesh.kumar@elaracapital.com +91 22 3032 8559
Ravi Sodah Analyst Cement ravi.sodah@elaracapital.com +91 22 3032 8517
Sumant Kumar Analyst Travel & Hospitality, Paper sumant.kumar@elaracapital.com +91 22 3032 8503
Pooja Sharma Associate Automobiles pooja.sharma@elaracapital.com +91 22 3032 8519
Stuart Murray Associate Oil & Gas stuart.murray@elaracapital.com +91 22 3032 8568