1. The World This Week
Dec 26 – Dec 30, 2011

2. Equity View:
Indian equity markets fell by 2% last week. Calendar Year2011 was the second worst year for Sensex since 1980. The
return for the year was -25% in rupee terms & -42% in dollar terms. The three key factors that contributed to this were
slowing GDP growth, policy paralysis on part of the Government & corruption.
For CY 12we expect the GDP growth to be in the range of 6.5%-7%. Inflation is expected to cool down to 6.5%-7%. This
translates to a nominal GDP growth rate of around 13-14%. With the nominal GDP growth of 13%-14% we expect the
corporate earnings to increase by the same number. In addition to this we expect a re-rating of the PE multiple of the
Indian equity market. We currently are trading around 12 times one year forward earnings & we expect it change to 14
times once the growth revives. Hence, for CY 12 we believe returns from the equity markets will be in the range of
around 20-25%. The rupee is expected to stabilize around Rs. 52-53 level which is effectively the real exchange rate.
Hence, we believe that the rupee was overvalued for some time & has now gone down to its fair value number.
th
RBI is expected to start reversing its tight monetary policy, sometime in the first quarter itself. On 24 Jan 2012, we will
have the RBI policy review. The consensus expectation is that RBI might cut the CRR. For the year we see rate cut in the
repo by 50-100 basis points for policy loosening.
For the month we will have Export-Import data to be released on Monday, 2nd Jan 2012. Also, PMI manufacturing data
th
will be released on Monday. Inflation number for month of December is expected to come on the 15 which will be key
th
data to watch out for. In January the earnings season will begin from the 10 . Companies having exposure to imports will
take a huge hit because of sharp depreciation in rupee. On other hand, we would see many companies who have major
exports benefitting from the same. Information technology would be one of the sectors to benefit out of Rupee
depreciation.
News:
DOMESTIC MACRO:
 India's food inflation eased to 0.42% in the year to December 17, from an annual 1.81% rise in the previous
week.
 India's consumer price index rose 9.34% from a year earlier, slower than October's annual rise of 9.39%.
 India's fiscal deficit for the first 8 months of the financial year ballooned to Rs. 3.53 trillion, or nearly 86% of the
full-year target, reinforcing expectations the government will be forced to tap the bond market for additional
borrowing.
 The current account deficit remained unchanged at $16.9 billion in the September quarter from a year earlier, as
a widening trade gap was offset by service-related inflows. The trade deficit widened to $43.9 billion during July-
September compared with $37 billion in the year ago period.
 Japan will invest $4.5 billion in the Delhi-Mumbai Industrial Corridor over the next five years, Japanese Prime
Minister Yoshihiko Noda said on Wednesday after meeting his Indian counterpart in New Delhi.

3. GLOBAL MACRO
Euro:
 German Finance Minister Wolfgang Schaeuble said he expects the euro zone will be stabilised within 12 months
and ruled out a break-up of the single currency in an interview
US:
 The Conference Board's index of consumer confidence rose to 64.5 this month from 55.2 in November, beating
economists' expectations for a reading of 58.3.
 U.S. President Barack Obama has agreed to delay submitting a debt ceiling increase request until next month to
allow lawmakers time to consider it while they are in session.
 Banks tightened the screws on lending to major financial market participants in recent months, the U.S. Federal
Reserve said on Thursday, reflecting concerns about European banks as the region's crisis mounts.
China:
 The HSBC Purchasing manager's Index, designed to preview the state of Chinese industry before official output
data are published, inched up to 48.7 in December from a 32-month low of 47.7 in November.

4. Swapnil Pawar Varun Goel Jharna Agarwal
Palak Nanjani Abbas Naheed Kanika Khorana
Disclaimer
The information and views presented here are prepared by Karvy Private Wealth 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. Mumbai office Address: 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
No’s:”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”