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Karvy Wealth - The World This Week - 7th - 11th Nov, 2016 PowerPoint PPT Presentation


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Karvy Wealth - The World This Week - 7th - 11th Nov, 2016

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Karvy wealth the world this week 7th 11th nov 2016

THE WORLD THIS WEEK

November 7 – November 11, 2016


Karvy wealth the world this week 7th 11th nov 2016

EQUITY VIEW


Karvy wealth the world this week 7th 11th nov 2016

EQUITY VIEW

In the last week there were corrections in the market. Large cap indices have fallen close to 4-5% where as mid

cap indices have fallen almost by 7-8% till date. These corrections happened on account of two major events

which were 1) US Presidential Elections 2) Demonetization of 500 and 1000 rupee notes.

The objective of demonetization is to fight against black money or unaccounted money. Almost 25% of India’s

wealth is in the form of black money which ranks among the top five in the world with China and Russia being the

top two. Hence this move is highly significant. The 25% black money in the country has induced the interest rates

to remain artificially high in the system.


Karvy wealth the world this week 7th 11th nov 2016

EQUITY VIEW

There is almost 100 trillion worth of deposits into the Indian banking system and roughly around 17lakh crores of

the currency is in circulation of which 86% is in 500 and 1000 rupees notes. The amount of currency which is in

circulation but does not come back into the banking system is like derived profit for the Reserve Bank. Hence it is

expected that even if one third of this currency does not come back into the system it would literally be equal to if

not greater than the fiscal deficit of the country. This is something big.

The money that comes back into the system for instance the 5 lakh crores worth of money which came back into

the banking system with SBI alone accounting for 1 lakh crores is surplus liquidity for the banking system. Thus

there would be negatives for quite a few sectors particularly the cash sensitive sectors. However, it would be

positive for banking and in the long run it would be positive for the rate sensitive sectors.


Karvy wealth the world this week 7th 11th nov 2016

EQUITY VIEW

When there is inflow of such large sums of money into the system, inflation and interest rates come down because

credit growth is around 10-12% but deposit growth rate is high. In order to reduce the deficit, interest rates will

come down and as rates come down the whole money would be pumped back into the economy. This leads to

revival of the economic cycle.

In the near term it is going to be negative for cash sensitive sectors which include real estate developers, gems

and jewelry, travel and tourism, hospital and to some extent housing finance companies. Sectors like

infrastructure, automobiles and banking will become positive in the medium to long term. GDP will also be

negatively affected because spending has reduced. GDP will show negative growth for a quarter or two but in the

long run i.e. FY 18 – FY 19 it will become positive.


Karvy wealth the world this week 7th 11th nov 2016

EQUITY VIEW

In the near term there is going to be uncertainties on account of US Presidential Elections and Donald Trump’s

victory. He is a pure trade man who believes in protectionism. With him winning and coming in to power dollar

zoomed.

US bond yields crashed and came down to 2% which also meant that emerging market economies would crash

which they did whether it was Indonesian Rupiah or Malaysian Ringgit or even Indian Rupee which lost more than

60 bps in one day. Emerging market currencies fell, the dollar index shot up and US yields also shot up because

Trump is believed to be a man who would stroke inflation and all his polices would be inflationary in nature. It is

too early to comment on what his polices would be but, based on current opinions one must have a cautious view

on the IT sector and a positive view on pharmaceutical and commodities. Since he wants to revive the

infrastructure sector it will give a boost to the commodities cycle.


Karvy wealth the world this week 7th 11th nov 2016

EQUITY VIEW

Based on US elections one can be positive on pharmaceutical and infra sectors. In between there were small

events such as October PMI coming at a 2 year high, China gaining growth, India IIP at .7% indicating some

expansion coming into picture but the two key events are much bigger and it overshadows the smaller events.

Markets in the near term should remain cautious and if one really wants to guess with regards to levels, 7800-

8000 would be a support zone in the near term. Last week during the panic period Nifty touched 8000 which can

be considered as a near term support. However, rather than thinking about near term, one has to focus on the long

term. On account of the two events FY18 and FY19 will become good for the Indian markets and long term

remains bullish.


Karvy wealth the world this week 7th 11th nov 2016

NEWS


Karvy wealth the world this week 7th 11th nov 2016

DOMESTIC MACRO

Industrial production grew a meagre 0.7% in September mainly due to poor show by manufacturing and

mining sectors coupled with decline capital goods output. The factory output for the April-September

period of the current financial year declined by 0.1% compared to 4% growth in the year-ago period, as

per the data released by Central Statistics Office.

India’s wholesale inflation rose to 3.39 percent in October year-on-year, marginally lower than the

previous month’s 3.57 percent. Food inflation moderated to four month low of 4.34 percent aided by fresh

arrival of seasonal vegetable supplies, official data showed.


Karvy wealth the world this week 7th 11th nov 2016

GLOBAL MACRO

The German economy likely expanded moderately in the third quarter despite the sense

EURO

of uncertainty created by Britain's vote to leave the European Union - a sense now added

to by Donald Trump's victory in the U.S. presidential election, according to the Economy

Ministry.

More Chinese banks want to set up shop in London despite the Brexit vote which has

prompted foreign lenders in the capital to consider bases in continental Europe. British

and Chinese government officials met in London to unveil a "strategic plan" to deepen

financial and economic ties between the two countries.


Karvy wealth the world this week 7th 11th nov 2016

GLOBAL MACRO

The International Monetary Fund said it looks forward to working with the

UNITED STATES

Trump administration and believes the United States will remain fully

committed to the Fund and other international institutions.

President Barack Obama said he would reassure US allies during his trip

overseas this week that Republican President-elect Donald Trump plans to

maintain core US strategic relationships around the world, including with

Nato.


Karvy wealth the world this week 7th 11th nov 2016

GLOBAL MACRO

GChina's economy largely showed further signs of steadying in October as

CHINA

expected, but disappointing retail sales growth and fears of U.S. trade

frictions under incoming President Donald Trump are increasingly clouding

the outlook.

China's producer prices jumped more than expected in October as prices of

coal and other raw materials surge in the midst of a supply crunch and a

pickup in the economy. Consumer prices also beat expectations,

accelerating to a six-month high, though analysts say the room for further

rises is limited.


Karvy wealth the world this week 7th 11th nov 2016

INDICES

Date

Sensex

Midcap

Auto

Bankex

CD

CG

FMCG

HC

IT

Metals

O&G

Power

Realty

Teck

7/11/2016

27,459

12,915

21,889

22,151

12,451

14,329

8,605

15,437

9,816

10,455

11,787

1,982

1,478

5,401

8/11/2016

27,591

12,961

22,255

22,335

12,478

14,345

8,590

15,247

9,848

10,493

11,904

1,989

1,476

5,419

9/11/2016

27,253

12,722

21,693

22,374

11,956

14,172

8,409

15,472

9,525

10,378

11,906

1,964

1,325

5,265

10/11/2016

27,518

12,932

21,539

23,186

11,947

14,422

8,467

15,664

9,456

11,006

12,098

2,017

1,351

5,262

11/11/2016

26,819

12,464

20,563

22,604

11,446

14,172

8,193

15,477

9,254

10,773

11,825

1,974

1,297

5,131

-2.33%

-3.49%

-6.06%

2.04%

-8.07%

-1.09%

-4.80%

0.26%

-5.72%

3.04%

0.32%

-0.39%

-12.26%

-4.99%


Karvy wealth the world this week 7th 11th nov 2016

COMMODITIES AND CURRENCY

Date

USD

GBP

EURO

YEN

Crude (Rs. per BBL)

Gold (Rs. Per 10gms)

66.73

82.93

73.84

63.88

2940

30421

7/11/2016

66.71

82.71

73.65

63.91

2996

30292

8/11/2016

66.80

83.43

74.97

65.05

3000

30292

9/11/2016

66.43

82.51

72.71

63.02

3024

30648

10/11/2016

67.03

84.18

73.12

62.94

2967

30389

11/11/2016

-0.45%

-1.50%

0.99%

1.47%

-0.92%

0.11%


Karvy wealth the world this week 7th 11th nov 2016

DEBT

Tenor

Gilt Yield in % (Friday)

Change in bps (Week)

1-Year

6.44

-15

2-Year

6.40

-15

5-Year

6.57

-16

10-Year

6.72

-12


Karvy wealth the world this week 7th 11th nov 2016

KIASL TEAM

Nupur Gupta

Shantanu Awasthi

Lead Advisor

Head- Advisory

[email protected]

[email protected]


Karvy wealth the world this week 7th 11th nov 2016

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, “KARVYHOUSE”, 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:

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