1. The World This Week
Mar 03 – Mar 08, 2014

2. Equity View:
The Nifty and Sensex both rallied by 4% last week. Markets closed at lifetime highs on the back of
political bet about NDA coming to power. The recent opinion polls indicate further support building up
for NDA and Modi.
From a macroeconomic perspective, the good news is that the CAD (Current Account Deficit) is expected
to come down further in this fiscal. This could be even lesser than 2% of the GDP versus 4.5% of the last
fiscal. This has led to sharp strengthening of rupee to the levels of almost 61/USD as compared to most of
the other Asian market currencies which have been weakening in the last couple of months. Another
point of comfort is the fiscal deficit which has been kept under constraint for this FY. Also, the PMI data
for the last three months has continuously moved upwards which shows some revival in the
manufacturing space. Though these data points are encouraging, it would take additional measures to
conclude whether the economy is actually reviving.
Similarly, even though both CPI and WPI inflation have shown downward trend in the last couple of
months, only these two parameters might not be sufficient for an expectation of a rate cut in the second
half of this year. We expect the IIP data to be published tomorrow and WPI inflation on Thursday to show
month-on-month improvement. Hence this would lead to RBI pausing from the rate hike atleast in the
April policy. And, actual reduction in the interest rate is going to be contingent on how inflation – CPI and
WPI - play out during the rest of the year.
Thus there are still lots of concerns about the pace of economic revival on which we believe that the
economy has bottomed out at around 4.5% of GDP. However the pace of revival will depend on a lot of
things including the kind of monsoons and interest regime floats in the country during this year.
Our March-end target quoted last year was 22,400 and we have almost achieved the same with a
difference of 2%. In the beginning of the year we had also mentioned that in last six general elections, the
markets tend to rally during the three and six months period going into the elections and this time again
the markets are turning out to be exactly the same. We believe that this rally will continue until 16th
May
and we continue to have a positive bias for the equity markets with the year end target of 24,800.

3. News:
DOMESTIC MACRO:
 India's Q3 FY14 CAD drops to a 4yr low of $4.2 bn; services PMI rises to 48.8 in Feb.
 India's HSBC manufacturing PMI grows to 52.5 in February
 The Reserve Bank of India accepted all 26 bids for 78.23 billion rupees at its one-day reverse repo
auction last week, through which it absorbs liquidity from the banking system.
 Indian banks' loans rose 14.3 percent in the two weeks to Feb 21, 2014 from a year earlier,
while deposits grew 15.8 percent.
GLOBAL MACRO
EURO
 The European Central Bank left interest rates on hold at 0.25% and unveiled no other measures
to bolster a fragile euro zone recovery, despite forecasting low inflation for years to come.
 Greece's major banks must raise an extra 6.4 billion Euros ($8.9 billion) in capital to make
themselves strong enough to deal with the fallout from future crises, the central bank said.
United States
 The Institute for Supply Management said US services sector index fell to 51.6 last month, the
worst read for the index since February 2010 as bad weather impacted business activity. The
results were below the January read of 54, as well as analyst expectations for a read of 53.5.
 The jobless rate rose to 6.7 percent in February from 6.6 percent in January.
 U.S. trade deficit steady in January as exports bounce back. The trade gap was at $39.1 billion
from December's revised shortfall of $39.0 billion.
China
 China's consumer prices rose at their slowest rate in 13 months in February to 2% as pork prices
fell by their most in over a year, a sign that slowing growth rather than rising prices poses a
bigger risk to the world's second-biggest economy.

4. Indices:
Date Sensex Midcap Auto Bankex CD CG FMCG HC IT Metals O&G Power Realty Teck
3/3/2014 20,947 6,481 12,450 12,181 6,055 10,268 6,465 10,672 9,670 8,648 8,446 1,511 1,203 5,207
4/3/2014 21,210 6,566 12,508 12,482 6,173 10,473 6,522 10,629 9,669 8,935 8,579 1,538 1,216 5,217
5/3/2014 21,277 6,628 12,479 12,665 6,027 10,592 6,547 10,613 9,687 8,995 8,566 1,544 1,239 5,227
6/3/2014 21,514 6,708 12,585 12,878 6,118 10,784 6,576 10,585 9,712 9,196 8,757 1,582 1,290 5,252
7/3/2014 21,920 6,693 12,721 13,567 6,183 11,221 6,612 10,370 9,520 9,348 9,077 1,611 1,360 5,191
4.65% 3.28% 2.18% 11.38% 2.11% 9.28% 2.28% -2.82% -1.55% 8.10% 7.46% 6.64% 12.99% -0.31%
Commodities and Currency:
Date USD GBP EURO YEN
Crude
(Rs. per BBL)
Gold
(Rs. Per 10gms)
3/3/2014 61.86 103.52 85.31 61.01 6770 30606
4/3/2014 61.90 103.26 85.14 60.84 6879 30411
5/3/2014 61.86 103.06 84.92 60.56 6766 30386
6/3/2014 61.32 102.54 84.19 59.74 6665 30158
7/3/2014 60.99 102.07 84.53 59.22 6629 30504
1.44%
Rupee
Appreciated
1.42%
Rupee
Appreciated
0.93%
Rupee
Appreciated
3.02%
Rupee
Appreciated
2.08% 0.33%
Debt:
Tenor Gilt Yield in % (Friday) Change in bps (Week)
1-Year 8.91 4
2-Year 8.65 0
5-Year 8.96 -2
10-Year 8.81 -5

5. Satadru Mitra Varun Goel Jharna Agarwal
Nupur Gupta Kinjal Doshi
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