1. The World This Week
May 27 – May 31, 2013

2. Equity View:
Last week, we witnessed a flattish week for both Nifty and Sensex. We had a big sell off last Friday,
especially on back of GDP data that came out, although the number was more or less in line with
expectations. The GDP number was 4.8% for fourth quarter of last fiscal and for the full year it came
around 5%. As far as our own view is concerned, we believe that FY14 should have a GDP growth of
around 6%. The good thing is that the slowdown in GDP growth seems to be over. What we saw was a
continuous 7 quarters of decline in the GDP growth and we had the worst quarter in Q3 of FY13 with GDP
growth of 4.5%. This quarter growth has bounced back slightly but still remains in and around the same
area. So we believe that the upturn will be slow and gradual and we would see the next two quarters of
growth between 5% – 5.5% and later on we would see a growth of 6% and 6% plus in the next two
quarters, taking the full year’s average to around 6%.
The recovery that we have seen so far has been led by investment growth, although there are several
infrastructure projects which are stalled. There are small steps which have been taken by the
Government of India to kick start these processes, i.e. the reforms in the power space and the big bang
project in the form of dedicated Industrial corridor between Delhi and Mumbai which seems to be
getting active. We are going to see a lot of work on that front in the times to come.
In terms of consumption demand, there’s a clear pressure on discretionary consumption demand. We
have seen significant pressure on discretionary incomes and hence companies like Automobiles which
necessitate a discretionary consumption have taken a hit in terms of volume growth. We have the auto
sales number for the month of May which came out on the 2nd June 2013, where most of the companies
delivered negative numbers. Maruti Suzuki delivered a 15% Y-o-Y degrowth in sales volume which is
negative for the overall cars space.
The big surprise though was the huge bounce back in tractor sales and we believe that with the
expectation of a normal monsoon, tractor companies should really do well this year, especially
considering the fact that last year was a year of drought and agricultural production had taken a cut.
Reports of monsoons seem to indicate normal monsoon for this year. It seems that Kerala has already
seen the onset of monsoons and in the next two weeks it is expected that more and more parts of the
country will get covered by that. So if the monsoons remain normal we would see a sharper bounce back
in agricultural growth, which will also support full year GDP numbers.
The earning season is almost over, we have seen most of the companies coming up either with numbers
in line or better than expectations. For the Sensex companies we have seen 11% growth in profit on ex-
energy basis. If we include the energy companies, specially the Oil and Gas companies, the profit growth
becomes higher at 13% on a Y-o-Y basis. So as far as Sensex companies are concerned we have seen a
very decent and a healthy growth in profits.

3. In terms of broader markets there’s still a lot of stress for the market as a whole. If we consider CNX500,
the profit growth will be very low, almost nearing zero and we believe that things will get better in the
next few quarters as EBITDA margins continue to improve. We’ve been talking about a significant cool off
in commodity prices which is benefitting the bottom-line of most of the companies. So we feel that in the
next two quarters we could see a good expansion in profits primarily on the back of EBITDA margin
expansions and reduction in interest rates..
News:
DOMESTIC MACRO:
 India's fiscal deficit during the 2012/13 fiscal year that ended in March was 4.9 trillion rupees, or
equivalent to 4.9 percent of the country's gross domestic product. The deficit is lower than the
downwardly revised estimate of 5.2 percent provided by the government in the federal budget in
February and is narrower than 5.8 percent a year ago.
 Indian economy grew at 4.8 percent from a year earlier in the January-March quarter, slightly
faster than an upwardly revised 4.7 percent growth in the previous three months, which was the
lowest in fifteen quarters.
GLOBAL MACRO
EURO
 After three years of deep spending cuts, the European Union confirmed a shift in policy on
Wednesday, telling countries they must focus on structural economic reforms to boost growth,
while not abandoning budget discipline.
 EU ministers agreed on Tuesday to allocate 31.5 billion euro in development funding to African,
Caribbean and Pacific countries over the next seven years, a slight rise in support despite the
domestic austerity in many EU member states.
US
 Gross domestic product, a measure of the country's total economic output, expanded at a 2.4
percent annual rate during the first quarter, down a tenth of a point from an initial estimate, the
Commerce Department said.
 Initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 354,000,
the Labor Department said on Thursday. Claims for the prior week were revised to show 4,000
more applications received than previously reported.
China
 The International Monetary Fund cut its growth forecast for China this year to 7.75 percent from 8
percent, citing a weak world economy and exports, adding to concerns that the world's second-
largest economy is losing momentum.

4. Satadru Mitra Varun Goel Jharna Agarwal
Abbas Naheed Kinjal Mehta
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”