2. Equity View: The result for this quarter is extremely
promising. Sensex earnings growth is around 18.5%-19% which is best
among last nine quarters. Sensex revenue growth is at 15% which is
quite high compared to last several quarters. In terms of corporate
earnings we have seen very good quarter after a very long time. In
terms of three broad parameters i.e revenue growth, EBITDA margins
& profitability all three were extremely promising. For a year
as a whole, we continue to maintain projections of around 15%
growth in corporate earnings. The top performing sectors are IT,
Pharma, Auto & some private sector banks. IT & Pharma
continue to be strong due to rupee depreciation last year. In the
short to medium term rupee might stabilize around 60 levels which
is healthy levels in terms of corporate earnings for IT &
Pharma. There are signs of cyclical turnaround as far as auto
industry is concerned. Auto sector earnings were extremely
promising, Maruti Suzuki came up with a very healthy 25% y-o-y
growth in volumes, if this trend continues auto sector should end
up delivering a very good volume growth. A change in appetite
across the country in terms of shift from bikes to scooters is
being witnessed, so battery operated scooters, automatic scooters
are already big hits & companies which have big presence in
those areas like Honda & TVS are doing well in two wheeler
segments. There are no big signs in commercial vehicles space but
in next two quarters there can be some improvements as we have seen
EBITDA margins going up due to price hikes undertaken by these
companies. In terms of global events, we saw Federal Reserve
Governor making a statement that how employment in US still remains
fragile , there is speculation in the market that the US would
increase interest rates sooner than later, however we heard the
Federal Reserve Governor hinting that the first rate hike is still
sometime away. We expect the first rate hike to kick in early next
year and the QE to fully wound down in the next couple of months.
India continues to be in a much better situation in terms of
current account and fiscal account is concerned, we have forex
reserves of ~$ 320 bn which is ~8 months import cover. As far as
current account deficit is concerned, the full year current account
deficit should be ~2%. Indian stock markets are up 23% YTD which is
best in terms of major emerging markets and developed markets
across the globe. Emerging Market index is up ~7% and hence Indias
outperformance is huge. In terms of FII inflows we have seen $ 12.5
bn inflow in equity so far and for the whole year we expect it to
be around $ 22-25 bn. We continue to maintain a very positive bias
towards Indian equities in the month and quarters to come, we
maintain our year end target on Sensex 29,300 which is a good
10-15% away from current levels.
3. News: DOMESTIC MACRO: RBI pegs Indias growth at 5.5% for the
current fiscal in its annual report for 2013-14. RBI revises
liquidity management framework for banks; says it will conduct 14
day term repo auctions four times in a reporting fortnight every
Tuesday and Friday starting from September 5 Government raises the
import duty on sugar to 25% from 15% as part of efforts to help
regional mills struggling with lower prices and higher stocks.
GLOBAL MACRO United States US Federal Reserve Chief Janet Yellen
says the economy is improving but the central bank is awaiting more
evidence about the health of labour markets before deciding when to
start raising interest rates. U.S. housing, jobs data bolster
economic outlook - Nonfarm payrolls increased by 209,000 in July,
marking the sixth consecutive month that job growth topped 200,000,
a sign of strength last seen in 1997. China China economy fears
deepen as August HSBC flash PMI at three-month low Indices: Date
Sensex Midcap Auto Bankex CD CG FMCG HC IT Metals O&G Power
Realty Teck 18/08/14 26,391 9,170 16,608 17,658 8,796 14,667 7,234
12,684 9,834 12,963 11,142 2,093 1,834 5,510 19/08/14 26,421 9,271
16,982 17,759 8,843 14,830 7,243 12,765 9,779 13,041 11,180 2,119
1,864 5,490 20/08/14 26,314 9,276 16,887 17,707 8,814 14,754 7,192
13,139 9,801 13,007 11,032 2,135 1,873 5,495 21/08/14 26,360 9,321
17,021 17,916 9,148 14,851 7,206 13,173 9,788 12,832 11,089 2,113
1,838 5,485 22/08/14 26,420 9,341 17,034 18,100 9,132 14,874 7,170
13,190 9,948 12,849 11,081 2,106 1,822 5,539 0.11% 1.86% 2.57%
2.50% 3.82% 1.41% -0.88% 3.99% 1.16% -0.88% -0.55% 0.61% -0.61%
0.53%
4. Commodities and Currency: Date USD GBP EURO YEN Crude (Rs.
per BBL) Gold (Rs. Per 10gms) 18/08/14 - - - - 6321 28117 19/08/14
60.73 101.48 81.04 59.19 6204 28104 20/08/14 60.67 100.81 80.73
58.80 6167 27996 21/08/14 60.77 100.72 80.56 58.53 6205 27795
22/08/14 60.44 100.24 80.35 58.29 6947 27691 0.48% Rupee
Appreciated 1.24% Rupee Appreciated 0.86% Rupee Appreciated 1.54%
Rupee Appreciated -1.33% -1.52% Debt: Tenor Gilt Yield in %
(Friday) Change in bps (Week) 1-Year 8.67 -8 2-Year 8.46 -30 5-Year
8.57 -5 10-Year 8.52 -20
5. Varun Goel Jharna Agarwal Mahesh Gaddamedi Disclaimer The
information and views presented here are prepared by Karvy Private
Wealth (a division of Karvy Stock Broking Limited) or other Karvy
Group companies. The information contained herein is based on our
analysis and upon sources that we consider reliable. We, however,
do not vouch for the accuracy or the completeness thereof. This
material is for personal information and we are not responsible for
any loss incurred based upon it. The investments discussed or
recommended here may not be suitable for all investors. Investors
must make their own investment decisions based on their specific
investment objectives and financial position and using such
independent advice, as they believe necessary. While acting upon
any information or analysis mentioned here, investors may please
note that neither Karvy nor any person connected with any
associated companies of Karvy accepts any liability arising from
the use of this information and views mentioned here. The author,
directors and other employees of Karvy and its affiliates may hold
long or short positions in the above- mentioned companies from time
to time. Every employee of Karvy and its associated companies are
required to disclose their individual stock holdings and details of
trades, if any, that they undertake. The team rendering corporate
analysis and investment recommendations are restricted in
purchasing/selling of shares or other securities till such a time
this recommendation has either been displayed or has been forwarded
to clients of Karvy. All employees are further restricted to place
orders only through Karvy Stock Broking Ltd. The information given
in this document on tax are for guidance only, and should not be
construed as tax advice. Investors are advised to consult their
respective tax advisers to understand the specific tax incidence
applicable to them. We also expect significant changes in the tax
laws once the new Direct Tax Code is in force this could change the
applicability and incidence of tax on investments Karvy Private
Wealth (A division of Karvy Stock Broking Limited) operates from
within India and is subject to Indian regulations. Karvy Stock
Broking Ltd. is a SEBI registered stock broker, depository
participant having its offices at: 702, Hallmark Business plaza,
Sant Dnyaneshwar Marg, Bandra (East), off Bandra Kurla Complex,
Mumbai 400 051 . (Registered office Address: Karvy Stock Broking
Limited, KARVY HOUSE, 46, Avenue 4, Street No.1, Banjara Hills,
Hyderabad 500 034) SEBI registration Nos:NSE(CM):INB230770138,
NSE(F&O): INF230770138, BSE: INB010770130, BSE(F&O):
INF010770131,NCDEX(00236, NSE(CDS):INE230770138, NSDL SEBI
Registration No: IN-DP-NSDL-247-2005, CSDL-SEBI Registration
No:IN-DP-CSDL-305-2005, PMS Registration No.: INP000001512