the world this week - november 14 - november 18 '2011

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The Q2 earnings have been disappointing for several sectors. While private banks, automobiles and pharmaceuticals witnessed good set of numbers, companies in infrastructure, capital goods and real estate have continued to disappoint.


  • 1. The World This WeekNovember 14 November 18, 2011
  • 2. Equity View:The Q2 earnings have been disappointing for several sectors. While private Banks, automobiles and pharmaceuticalswitnessed good set of numbers, companies in infrastructure, capitals goods & real estate have continued to disappoint.We have the cabinet meeting on Monday to decide whether FDI should be allowed in the retail sector. There is anexpectation of 51% of FDI being allowed multi brands retail.With the Italian bonds yields closer to 7%, debt servicing will be extremely difficult & expensive. The Spanish bond yieldshave also been rising lately. Last week, new Government came into office in Spain after Italy & Greece in the Eurozone. Itwill be important to watch the steps taken by the new government for stabilizing the debt crisis. The results of theelections in Spain are expected to be declared on 21 November 2011.US Super committee is expected to come up with deficit reduction plan by Wednesday, 23 November 2011. The planrevolves around reduction of deficit by $1.2 trillion in the next 10 years. No agreement has been reached till now.Commodity View:Concerns in Eurozone remain with Italy and France also getting involved in the debt crisis. Also the sell-off witnessed lastweek in the global equity markets has turned out to be a positive for precious metals especially gold. Gold is beingconsidered as a safer investment avenue than debt. Fourth quarter of the calendar year has always been a strong quarterfor gold being the festive season. Strong buying by the investors during this period has being witnessed and hence weexpect gold to continue doing well. And with further expectations of rupee depreciating beyond 51, the domestic pricesof gold will go up higher though the international gold prices remain flattish.Crude continues to correct and we expect the correction in crude & base metal space predominantly due to globalslowdown.News:DOMESTIC MACRO: Indias food price index declined to 10.63% from last weeks 11.81%. Indias foreign exchange reserves fell to $314.339 billion on Nov. 11, from $314.665 billion in the previous week. The Reserve Bank on Wednesday said it will buyback bonds from the market to ease a liquidity crunch in the banking system, a move which is expected to cool the sharp spike in yields that have raised the governments borrowing costs.
  • 3. GLOBAL MACROEuro: The International Monetary Fund is inserting itself more forcefully into Europes efforts to resolve its debt crisis, hoping to stem a contagion that is spreading worldwide and threatening global growth. Greeces austerity-fuelled recession drove the budget deficit wider in October. The central government deficit grew by an annual 11 percent to 20.10 billion euros ($27.19 billion) in the first 10 months of the year The euro zone economy grew just 0.2 percent in the third quarter as solid growth in Germany and France was dampened by countries at the sharp end of the debt crisis and economists expect a slide into recession by early next year.US: Fitch Ratings warned that it might reduce its "stable" rating outlook for U.S. banks with large capital markets businesses because of contagion from problems in troubled European markets. By a vote of 298 to 121, the Republican-controlled House passed a bill that would allow the government to keep running when current funding expires on Saturday. New U.S. claims for jobless benefits hit a seven-month low last week and permits for future home construction rebounded strongly in October, the latest data to suggest the economic recovery was gaining traction
  • 4. Swapnil Pawar Varun Goel Jharna AgarwalPalak Nanjani Neha Arora Kanika Khorana DisclaimerThe information and views presented here are prepared by Karvy Private Wealth or other Karvy Groupcompanies. The information contained herein is based on our analysis and upon sources that we considerreliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personalinformation 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 maketheir own investment decisions based on their specific investment objectives and financial position and usingsuch independent advice, as they believe necessary. While acting upon any information or analysis mentionedhere, investors may please note that neither Karvy nor any person connected with any associated companies ofKarvy 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 theabove-mentioned companies from time to time. Every employee of Karvy and its associated companies arerequired to disclose their individual stock holdings and details of trades, if any, that they undertake. The teamrendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares orother securities till such a time this recommendation has either been displayed or has been forwarded to clientsof 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 applicableto them. We also expect significant changes in the tax laws once the new Direct Tax Code is in force this couldchange the applicability and incidence of tax on investmentsKarvy Private Wealth (A division of Karvy Stock Broking Limited): Operates from within India and is subject toIndian 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 registrationNos: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