January 2014
In This Issue
• Market Outlook for the month
• Equity Market Outlook
• Derivatives & Commodities Market Outlook
• Large Cap and Mid Cap Investment Ideas
• Model Advisory Portfolios
• Recommended Funds
• TradeGuide Signal
Key Highlights for the Month
Comprehensive defeat for Congress in Assembly Polls
RBI maintained status quo on rates despite persistent inflation.
Start of taper by US Fed.
Dear Investor,
Market performance:
Nifty moved up by 2% during the course of December
after hitting all time high on 9th December post decla-
ration of Assembly election results. IT was the best
performer in December with CNX IT increasing by 8%.
CNX MidCap outperformed Nifty with 5% positive return
in December.
Economy and macro:
RBI, surprisingly, did not raise rates and commented that it will watch out for more
data on inflation during future months to take a call on interest rates. Inflation has
been persistent during the last six months with WPI remaining ~ 7% and CPI at ~10%.
RBI also announced start of CPI linked bonds for retail investors, which will give returns
over and above CPI by 1.5%. Globally, US Fed announced much talked about taper of
its bond buying program by $10bn every month.
Political scene:
December saw announcement of assembly election results in MP, Chhattisgarh (CG),
Rajasthan (Raj), Delhi and Mizoram. BJP had an easy and decisive win in MP, CG and
Raj whereas in Delhi it emerged as the largest party. Congress faced comprehensive
defeat in all states barring Mizoram. New political party, AAP formed government in
Delhi with support of Congress. The equity market will likely take positive cues on BJP's
performance in Lok Sabha elections from performance of BJP in assembly elections.
Equity markets favour a decisive non incumbent government at the centre to drive
conducive policy for economic and business growth.
Outlook:
Improvement in agriculture growth augurs well for economy and overall GDP also seems
to be bottoming out. Quarterly performance of companies has been better than
expectations. Assembly election results indicate voters’ mood towards a decisive
government. On the other hand firm inflation will make interest rates rise. Globally, start
of tapering by US Fed will decrease global liquidity, which will be negative for emerging
markets. Valuations at an index and macro level are still at long term average. Markets
will start discounting favourable outcome in Lok Sabha polls sooner than later. Please
watch out for our yearly outlook on equity markets, which will give detailed analysis
of macroeconomic environment and likely outperforming sectors.
Global Market
Index
Sensex
Nifty
FTSE 100
Dow
Nasdaq
Hang Sang
31-Dec-13
21,171
6,304
6,749
16,577
4,177
23,306
MoM (%)
1.8
2.1
1.5
3.1
2.9
-2.4
YoY (%)
9.0
6.8
14.4
26.5
38.3
2.9
Economic Pulse
Key Indicators
IIP (April)
WPI (May)
10 Year Yield
USD/ INR
Crude ($)
Gold (10 gms)
Current Month
-1.8%
7.52%
8.82%
61.8
111.2
29252
Change (%)
-
7.43
0.92
-0.85
1.38
-4.09
Thought for the month
Rakesh Tarway
Vice President
‘Wish you all a very happy new year.’