1. The World This Week
July 22 – July 26, 2013

2. Equity View:
There has been almost a 2.5% correction in the broader markets last week on the back of new measures
announced by RBI to control the rupee depreciation. On the back of the recent changes in the policy
regime, we have also changed our estimates of Nifty and Sensex earnings for FY14 and FY15. The revised
target Nifty earnings is now around Rs 365 for FY13 and we have assumed a 10% growth in earnings as
compared to 12% growth that we were assuming earlier. We are assuming a 12% growth in FY15 based
on which we have our Nifty earnings target of around Rs 450. Accordingly, we arrive at a Nifty target of
6720, which is equivalent to 22,400 on the Sensex. Hence, we are downgrading our expectation on
Sexsex of 25,000 to 22,400, which again is a good 15% upside from the current levels. We expect the
target to be hit by the end of this calendar year. We believe that markets still continue to be positively
inclined, valuations continue to be supportive and that we have hit only a temporary rough patch which
is largely due to rupee deprecation.
As we have seen the broader markets have been holding up quite well, Sensex has been around 20,000
levels for quite a few months now despite all the negative news on inflation, interest rates and rupee, the
equity markets have broadly held on to their own. In terms of corporate earnings, we have seen a decent
set of earnings results so far and we maintain an earnings growth target of 10% for this quarter and for
the rest of the year. The reason why we have reduced the earnings forecast is as we essentially expect
some slowdown in GDP growth expectation as compared to what we were expecting earlier. We
expected a 6% of GDP growth number in the beginning of the year, we believe that with the current
measures that RBI has undertaken, the GDP growth can come down to 5% – 5.25%. However this year if
the RBI does not withdraw these measures, then there is a chance that this number could change again.
We have the RBI policy meet tomorrow which we believe would be a non event. The RBI has already
done what it wanted to in order to stem the rupee depreciation in terms of hiking the repo and other
such measures. Short term Call money rates are also above 10% currently which is also the effective rate
at which banks are borrowing from broader markets. On back of these measures we do not think the RBI
is going to tinker with the Repo rate or the CRR tomorrow. Last week the RBI has already changed the
banks CRR requirement to 99% of the daily requirement as opposed to the 70% which existed before
that. So the CRR has also been hiked without explicitly mentioning it. Hence, we believe RBI would want
to see how these measures pan out – i.e. if they are able to strengthen the Rupee.
We also have the fiscal deficit number coming for the first quarter of FY14 on 31st July. We believe that
fiscal deficit so far has been broadly under control. The government is working with a number of around
4.8% to 4.9% of GDP for the full year which we believe might be overshot to the extent of 5.1% and 5.2%.

3. News:
DOMESTIC MACRO:
 RBI reduced the liquidity adjustment facility (LAF) for each bank from 1 per cent of the total deposits to 0.5
per cent, limiting the access to borrowed funds from the central bank.
 Also, RBI asked banks to maintain higher average CRR (cash reserve ratio) of 99 per cent of the
requirement on daily basis as against earlier 70 per cent.
 Government bonds rose the most in over three years on Thursday, as the central bank paid high yields in
its sale of short-end bills, signaling its resolve to bolster the rupee by draining liquidity.
GLOBAL MACRO
EURO
 Euro zone officials have approved the transfer of 4 billion euros ($5.3 billion) of funding to Greece by
Monday which would cover its funding gap of 10 billion euros due in September.
 Spain has shown a positive sign of the economy with Positive unemployment data and bank earnings. This
fall in the unemployment rate was unexpected and has slipped for the first time in two years.
United States
 U.S. consumer sentiment rose in July to the highest level in six years when the final reading on the overall
index on consumer sentiment climbed to 85.1 from 84.1 in June which is the highest level since July 2007.
 Sales of new U.S. single-family homes vaulted in June with an increase of 8.3 percent Y-o-Y, making it the
highest number since May 2008. In May 2013, this number was up by 38.1 percent Y-o-Y, the largest
increase since January 1992.
China
 Profits earned by China industrial firms rose 6.3 percent in June from a year earlier to 502.4 billion yuan
($81.9 billion), easing from a year-on-year growth of 15.5 percent in May.
Indices:
Date Sensex Midcap Auto Bankex CD CG FMCG HC IT Metals O&G Power Realty Teck
22/7/2013 20,159 5,996 10,800 12,666 6,327 8,801 7,435 9,324 7,149 7,459 9,010 1,629 1,449 4,156
23/7/2013 20,302 5,999 10,838 12,830 6,571 8,830 7,548 9,341 7,181 7,518 9,059 1,637 1,469 4,158
24/7/2013 20,091 5,890 10,698 12,238 6,365 8,567 7,521 9,317 7,255 7,361 9,017 1,610 1,450 4,199
25/7/2013 19,805 5,837 10,714 12,124 6,308 8,452 7,271 9,164 7,245 7,233 8,895 1,590 1,445 4,208
26/7/2013 19,748 5,780 10,650 11,950 6,317 8,374 7,279 9,186 7,241 6,979 8,865 1,585 1,422 4,200
-2.04% -3.61% -1.39% -5.65% -0.15% -4.86% -2.09% -1.49% 1.29% -6.44% -1.62% -2.69% -1.85% 1.04%

4. Commodities and Currency:
Date USD GBP EURO YEN
Crude
(Rs. per BBL)
Gold
(Rs. Per 10gms)
22/07/2013 59.40 90.73 78.11 59.37 6462 27219
23/07/2013 59.68 91.66 78.68 59.96 6425 27646
24/07/2013 59.44 91.24 78.43 59.51 6471 27673
25/07/2013 58.94 90.47 77.86 59.01 6372 27343
26/07/2013 58.91 90.67 78.21 59.67 6345 27643
27/07/2013 6314 27895
0.83%
Rupee
Appreciated
0.07%
Rupee
Appreciated
-0.13%
Rupee
Depreciated
-0.50%
Rupee
Depreciated
-2.29% 2.48%
Debt:
Tenor Gilt Yield in % (Friday) Change in bps (Week)
1-Year 9.26 49
2-Year 8.91 61
5-Year 8.63 34
10-Year 8.16 22

5. Satadru Mitra Varun Goel Jharna Agarwal
Abbas Naheed Kinjal Doshi
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 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”