Karvy Wealth Media Report 2016

1
THE WORLD THIS WEEK
September 5 September 9, 2016
2
EQUITY VIEW
3
EQUITY VIEW
There was a global correction on Friday mainly
due to correction in bond prices which had been
slugging off for the past three months at least.

There is a major dislocation in the global
financial markets. However, this does not meant
that the correction of that dislocation has
started with Fridays move. But what it means is
that we have begun to see the symptoms of that
dislocation. Markets do not move linearly with a
cause and effect. How long it will take the
markets to correct is something that cannot be
predicted. Investors have to wait for symptoms to
play themselves out which will bring volatility
with itself.


4
EQUITY VIEW

• There might be a situation where there is
  correction for 3-4 trading sessions and then it
  is some sort of a scare monger for the Fed which
  is meeting on the 21st of this month. Since the
  Fed for some reason has the interest of Wall
  Street ahead of the interest of main street, the
  Fed might be coaxed to say that there are going
  to be no hikes in interest rates. This is highly
  plausible and is more likely to happen.

There might be business as usual for a few more
trading sessions. Generally, the global financial
ecosystem does not give comfort to a long term
investor. One has to be extremely careful. The
Indian markets have been a major beneficiary of
easy global liquidity. So while investing it is
better that we wait like we did in the last
quarter instead of rushing in. However, there is
need to be prepared to live in an age of
volatility and also sense opportunities whenever
there are corrections.


5
EQUITY VIEW
There is need to sensitize the lurking volatility
rather than paint an all is good picture for the
investor. However, investors also need to be
made aware of the fact that it is during this
volatility that they can get the best returns for
the long term.

6
NEWS
7
DOMESTIC MACRO

• India's consumer inflation is expected to have
  eased to a four-month low in August, helped by
  smaller rises in food prices, but it likely
  remains too high for a rate cut next month when
  the central bank's new governor presents his
  first policy review.
• Registering robust growth, the Centres tax
  receipts rose to 5.25 lakh crore by August end
  2016. Data released by the Finance Ministry
  revealed that direct tax collections grew 15.03
  per cent up to August 2016 to amount to 1.89
  lakh crore of net collection. However, while
  gross corporate tax collections rose by 11.55
  per cent, the net collections dipped by 1.89 per
  cent after refunds. Net growth in personal
  income tax collections was a buoyant 31.76 per
  cent.

8
GLOBAL MACRO
German exports fell unexpectedly in July, posting
their steepest drop in nearly a year, while
imports also edged down, suggesting Europe's
biggest economy started the third quarter on a
weak footing after Britain's vote to leave the
European Union.
EURO

A push by some euro zone countries to issue debt
that won't need repaying for many decades may
come at a price - but for borrowers who lived
through the bloc's 2010-2012 crisis, it's
probably a price worth paying. France, Belgium
and Spain have all sold 50-year bonds this year,
locking in record low borrowing rates, and Italy
is considering following suit. Ireland and
Belgium have even sold 100-year bonds, albeit in
relatively small sizes.

9
GLOBAL MACRO

• U.S. services sector activity slowed to a
  6-1/2-year low in August amid sharp drops in
  production and orders, pointing to slowing
  economic growth that further diminished
  prospects for an interest rate hike from the
  Federal Reserve this month.

UNITED STATES

• Six years after the Great Recession ended,
  jobless older workers are the forgotten story of
  the economic recovery. U.S. employers are
  creating
• hundreds of thousands of new jobs every month,
  but millions of older workers who want a job
  cannot find work. The economic data documenting
  the problem is clear. So is one of the most
  important causes age discrimination.

10
GLOBAL MACRO

• China's foreign exchange reserves fell to the
  lowest since 2011 in August as the central bank
  intervened to support the yuan currency as it
  weakened to near-six year lows. While the 15.89
  billion drop was in line with market
  expectations and was described by analysts as
  modest, it was the biggest decline since May and
  could signal fresh capital outflows from the
  economy even as it starts to show signs of
  steadying.

CHINA

• Associated British Foods (ABF) said on Monday it
  has agreed to sell its cane sugar business in
  southern China to a consortium led by
  Shenzhen-listed
• Nanning Sugar Industry Co Ltd. ABF did not
  disclose the value of the deal but two people
  with direct knowledge of the matter said the
  transaction value, including debt, was about
  500 million.

11
INDICES
Date Sensex Midcap Auto Bankex CD CG FMCG HC IT Metals OG Power Realty Teck
6/9/2016 28,978 13,474 22,941 23,480 12,843 15,246 8,945 16,339 10,436 10,063 11,112 2,121 1,544 5,721
7/9/2016 28,926 13,459 22,978 23,496 12,719 15,432 8,941 16,360 10,424 10,169 11,072 2,135 1,559 5,714
8/9/2016 29,045 13,479 23,188 23,487 12,871 15,550 9,031 16,720 10,165 10,263 11,091 2,140 1,607 5,610
9/9/2016 28,797 13,345 22,844 23,250 12,716 15,403 8,872 16,587 10,207 10,081 11,194 2,127 1,612 5,616
-0.62 -0.96 -0.42 -0.98 -0.98 1.03 -0.81 1.52 -2.19 0.18 0.74 0.30 4.39 -1.84
12
COMMODITIES AND CURRENCY
Date USD GBP EURO YEN Crude (Rs. per BBL) Gold (Rs. Per 10gms)
5/9/2016 3130.00
6/9/2016 66.5469 88.6471 74.1665 64.2 3184.00 31030.00
7/9/2016 66.3618 89.0376 74.6902 65.46 3145.00 31278.00
8/9/2016 66.4483 88.6088 74.7676 65.33 3184.00 31240.00
9/9/2016 66.5462 88.5863 75.0242 65.13 3322.00 31191.00
0.00 0.07 -1.16 -1.45 -6.13 -0.52
13
DEBT
Tenor Gilt Yield in (Friday) Change in bps (Week)
1-Year 6.79 -3
2-Year 6.79 -4
5-Year 6.94 -7
10-Year 7.09 -2
14
KIASL TEAM
Jharna Agarwal
Nupur Gupta
Head- Advisory
Lead Advisor
Jharna.agrawal_at_Karvy.com
Nupur.gupta_at_Karvy.com
15
DISCLAIMER

• The information and views presented here are
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