Weekly Insight
13 April 2015
For private circulation only
Review and Equinomics’ Views on Economies and Markets
Last week, almost all major global equity indices posted significant gains. Chinese Shanghai
Index posted the performance – it moved up by 4.4% last week. It was followed by European
FTSE with 3.8% increase, NIKKEI 2.4% and BSE Sensex 2.2%. Suddenly all-round optimism
has emanated in the global equity asset classes. Oil price too jumped 5.3% last week.
 Russia’s capital outflows more than halved in the first quarter from the previous
three months, even as departing funds continued to pose a challenge for an
economy facing recession, falling oil prices and sanctions over Ukraine. Net private
capital outflows, swollen by foreign debt redemptions, were $32.6 billion from January
through March, the 23rd consecutive negative quarter, compared to $72.9 billion in the
prior three months. The current account showed a surplus of $23.5 billion in the first
quarter, 9% down from a year earlier;
 U.K. industrial production barely rose in February as an increase in manufacturing
output was offset by a drop in oil and gas. Total production gained 0.1% following a
0.1% decline in January. Oil and gas slid 3.8%, while manufacturing rose 0.4% amid higher
car output. The figures suggest the industrial sector faltered in the first quarter, with
output in the three months through February declining 0.2%;
 US import prices fell in March as rising petroleum costs were offset by declining
prices for other goods, a sign of muted inflation that supports the view the Federal
Reserve will probably not raise interest rates in June. Import prices dropped 0.3% last
month after a downwardly revised 0.2% gain in February. In the 12 months through
March, prices plunged 10.5%, the largest drop since September 2009;
Review of the Domestic Economy and Equity Markets
 The domestic market took a breather on Friday as the market closed flat with the
Sensex snapping five-day rally but the broader markets maintained up move –The
BSE Sensex fell 6 points to close at 28,879 while the broad based NSE Nifty gained 2 points
to close at 8,780. For the week, the Sensex climbed 2.2% and Nifty rallied 2.3% while
CNX Midcap Index jumped 3.5% and BSE Small cap Index rose 6.3%;
 For the week as a whole the FIIs were net buyers of stock worth Rs.2,391.82 crore while
the DIIs were net buyers of stock worth Rs.253.71 crore. So far in 2015 the FIIs have
invested Rs.38,865 crore in the Indian equity markets;
 India’s Industrial production grew at 5% in February, close to 18 month high,
mainly on account of improvement in manufacturing activity and also base effect.
o The manufacturing segment grew at 5% in February as against de-growth of
(-) 3.9% in February 2014;
o Similarly capital goods, and consumer goods grew at 8.8% and 5.2% as
against de-growth of 17.6% and 5.2% in the last year;
o However, there is an overall improvement in the industrial economy as the
IIP for the cumulative period April-February FY2015 grew at 2.8% yoy as
against -0.1% in the same period of last year;
 India's foreign exchange reserves surged for the third consecutive week as overseas
investors betting heavily on India growth story and pouring in dollars, prompting
Reserve Bank of India to buy it from open market to keep the local currency within
a tight band. RBI added $1.628 billion in the forex coffer in the week to April 3 to take the
total reserves to $343 billion;
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13 April 2015
Equinomics
Weekly Insight
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Indian Economy (Continued)
 The rupee rose 0.3% for the week to 62.32 a dollar to complete the best weekly advance since March 20,
while the 10-year bonds completed their biggest weekly decline since mid-March after the central bank
signalled it will be patient before cutting interest rates again. The yield on government notes due July
2024 climbed six basis points for the week to 7.80%, the biggest increase since the five days ended March 13;
 India is likely to miss the exports target of $340 billion set for 2014-15, falling short of the mark by
almost 8% at around $314 billion. During FY2014, total value of exports stood at $ 465.90 billion, with
merchandise and services accounting for $ 314.40 billion and $ 151.5 billion, respectively. The target for total
exports for FY2015 is $ 500 billion, with merchandise and services expected to be at $ 340 billion and $ 160
billion, respectively;
 Banks non-food credit grew at the lowest pace in a decade in fiscal year FY2015 as a slowdown in the
economy crimped fresh loan The rupee rose 0.3% for the week to 62.32 a dollar to complete the best weekly
advance since March 20, while the 10-year bonds completed their biggest weekly decline since midMarch after the central bank signalled it will be patient before cutting interest rates again. The yield on
government notes due July 2024 climbed six basis points for the week to 7.80%, the biggest increase since the
five days ended March 13;
 India's gold imports more than doubled to 125 tonnes in March from 60 tonnes in the same period a year ago.
Gold imports in the fiscal year FY2015 ended March 31 jumped to 900 tonnes, up 36 percent from a year ago;
Equinomics’ View: We continue to maintain our stance that the structural bull run would continue in the
domestic markets this year as we believe that the industrial economy would pick up further significantly. February
IIP number shows some confidence in the rebound. The areas of concern are stagnation in the exports (for the
cumulative period April-February FY2015, the yoy export growth remained at mere 0.88%) and poor banking
credit (remaining at below 10%). However, we believe that as the global economy picks up India’s trade would also
pick up. Similarly, the banking credit is expected to improve along with anticipated further pick in the industrial
economy and rate cuts. The risk to our view is any possible major failure of forthcoming rainfall. Any marginal
deviation in the rainfall would be still manageable as the entire world is going through deceleration in food crop
prices, hence, India can always import crop products and contain the inflation. However, if monsoon fails in a big
way, then it would be a major risk to the domestic equity markets. We will remain alerted on the same.
Sector Developments
 For the entire fiscal FY2015, ended March 31, domestic car sales grew by 4.99% .Total two-wheeler
sales were up 8.09%. Motorcycle sales for the fiscal ended March 31, were up 2.50%. Sales of commercial
vehicles were down 2.83 %. Overall, the grand total of all vehicles' sales grew by 7.22% at 19.75 crore units
during 2014-15 as compared with 18.42 crore units in 2013-14;
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