November 2013
In This Issue
• Market Outlook for the month
• Equity Market Outlook
• Derivatives & Commodities Market Outlook
• Large Cap and Mid Cap Investment Ideas
• Model Advisory Portfolios
• Recommended Funds
• Trading Platform
Key Highlights for the Month
US FED delays QE tapering
RBI hikes repo rate by 25 bps, reduces MSF rate by 25 bps.
Election dates for 5 states announced
Dear Investor,
Market performance:
Nifty moved up by 9% in October primarily due to better
than expected quarterly performance and strong FII flows.
25 Nifty companies that declared their results in October
delivered aggregate PAT growth of ~15% vs expectations
of ~12%. Amongst sectoral indices, Bank Nifty outper-
formed Nifty with 16% returns. CNX IT, on the other hand
underperformed Nifty with 8% returns, as IT stocks took a breather after major
companies declared results.
Economy and macro:
RBI in its credit policy announced 25 bps hike in repo rate and simultaneously reduced
MSF rate by 25 bps. RBI further emphasized the need to tame inflation, but was
comfort able with INR/USD. Increase in repo will have ramifications for entire financial
as interest rate sensitive sectors. Globally, US Fed said in its statement that timeline for
QE tapering will depend on US macro data - positive from perspective of emerging
markets.
Political scene:
The big political development in the month of October was announcement of election
schedule for state assembly elections in MP, Chhattisgarh, Rajasthan, Delhi and Mizoram,
with counting of votes scheduled for 8th December 2013. These 5 states have total
of 73 Lok Sabha seats. Market will await cues from assembly elections for results of
impending Lok Sabha elections which are just 6 months away. A clear mandate will
have a positive bearing on stock market performance.
Outlook:
Postponement in tapering of QE by US Fed will keep liquidity flowing at the current
rate for the time being, which will bring cheers to global and emerging markets. The
government has not moved much on increasing diesel prices to reduce subsidy burden.
On the positive side quarterly performance of Nifty companies has been better than
expectations. PSU Banks results have shown that rate of accretion of NPAs is slowing
down. Hike in interest rates will be negative for interest rate sensitive sectors like real
estate. Things are improving on Current Account Deficit, which combined with increase
in real rates will help rupee to not depreciate further. Valuations at an index level are
still at long term average. Therefore, improving macro and stable liquidity leaves room
for upside in indices.
Global Market
Index
Sensex
Nifty
FTSE 100
Dow
Nasdaq
Hang Sang
31-Oct-13
21,165
6,299
6,731
15,546
3,920
23,206
MoM (%)
9.2
9.8
4.2
2.7
4.0
1.5
YoY (%)
14.4
12.1
16.4
18.7
31.7
7.2
Economic Pulse
Key Indicators
IIP (April)
WPI (May)
10 Year Yield
USD/ INR
Crude ($)
Gold (10 gms)
Current Month
0.6%
6.45%
8.62%
61.83
108.84
31184
Change (%)
-76.92
5.74
-1.49
-1.31
0.53
3.31
Thought for the month
Rakesh Tarway
Vice President