Monthly Report: September 2012

1
Monthly Report
September 2012
Monthly Report September 2012
Retail Research
Table of Contents
Title
Slide No.
Monthly Equity Commentary
Market Statistics
Bond yields, commodities and currencies
Comparison of Equity Returns in various emerging

markets
Outlook Going Forward

Technical Commentary
Learning Technical Analysis
Derivatives Commentary
Learning Derivatives
Extract of Calls during August 2012
FII & Mutual Fund Flow & Indices moves during August 2012
Gainers & Losers August 2012
Disclosure
Retail Research
03
04
08
14
20
28
32
35
37
40
42
43
44
Indian equity benchmark indices ended the month of August 2012 in the positive with Sensex gaining 1.5% and
the Nifty ended higher by 0.6% on hopes of quick implementation of reforms by the Indian Government. The
rally was also supported by speculation that US would go for QE3 (Quantitative Easing) and on hopes of positive
outcome from the ECB meeting.
Snapping a losing streak of three straight weeks, Indian equities benchmark indices gained more than two
percent in the first week of the month on the back of positive cues from global markets. BSE Sensex rose 359
points or 2.1% to 17,198. S&P CNX Nifty rose 116 points or 2.3% to settle at 5,216.
The second week saw the markets moving up further. Selling pressure that began mid week however curbed the
gains. Investor sentiment was boosted by data showing that foreign funds remained net buyers of Indian
stocks. Comments from Union Finance Minister P Chidambaram that he intends to shortly unveil a path of fiscal
consolidation aided gains on the domestic bourses. BSE Sensex rose 360 points or 2.1% to 17,558. S&P CNX Nifty
rose 105 points or 2% to settle at 5,320.
BSE benchmark Sensex extended its gains for the third consecutive week by surging another 133 points during
the truncated week on sustained capital inflows coupled with easing of inflation figure though a clutch of CAG
reports dented sentiments to some extent. Data showing sustained buying of Indian stocks by foreign funds
underpinned sentiment. The market gained in three out of four trading sessions in the week. Interest rate
sensitive auto and banking stocks gained. Sensex jumped up 133 points or 0.8% to settle the week at 17,691 while
NSE 50-share Nifty also rose by 46 points, or 0.9%, to finish at 5,366
Retail Research
HOME
contd
Indian shares made a gain for the fourth successive week due mainly to buying by foreign funds. They also
rose as world stocks rose on speculation policy makers in the US and China will ease monetary policy to boost
growth in the world's two biggest economies. However, gains were capped as rally in the global markets fizzled
out on Friday, 24 August 2012, after a US Federal Reserve official threw cold water on the notion that another
round of stimulus from the Federal Reserve is on its way. BSE Sensex rose 92 points or 0.5% to 17,783. S&P CNX
Nifty rose 20 points or 0.4% to settle at 5,387.
Indian markets reversed the uptrend by ending the fifth week ended August 31, 2012 in red after gaining in
the previous four weeks. Investors were also concerned by the Reserve Bank of India (RBI) governor D Subbarao's
hawkish tone in a speech delivered in the US on Tuesday, 28 August 2012. BSE Sensex fell 354 points or 2% to
close at 17,430 and NSE Nifty fell 128 points or 2.4% to settle at 5,259. Selling was seen across the board with
metals and rate sensitive shares leading the decline while IT and FMCG indices ended up 1%. The broader market
also witnessed profit taking at higher levels after select stocks surged over the past few weeks.
Given below is an overview of global markets performance during August 2012 :

Jul-12
Aug-12 % Chg
The world markets mostly ended the month of August 2012 on a
13008.7
13102.5 0.70%
US - Nasdaq
2939.5
3067 4.30%
UK - FTSE
5635.3
5711.5 1.40%
Japan - Nikkei
8695.1
8839.9 1.70%
positive note with US (Nasdaq), Japan and Brazil being the top three
gainers, which rose by 4.3%, 1.7% and 1.7% respectively. Indonesia,
Hong Kong, China and Singapore were the only losers, which fell by
2%, 1.6%, 2.7% and 0.4% respectively.
Germany - DAX
6772.3
6790.8 0.30%
Brazil - Bovespa
56097
57061.5 1.70%
Singapore - Strait Times
3036.4
3025.5 -0.40%
Hong Kong Hang Seng
19796.8
19482.6 -1.60%
India - Sensex
17179.1
17429.6 1.50%
5229
5258.5 0.60%
Indonesia - Jakarta Composite
4142.3
4060.3 -2.00%
Chinese - Shanghai composite
2103.6
2047.5 -2.70%
Indices
US - Dow Jones
India - Nifty
Average daily volumes on BSE during the month of June 2012 fell
by 4% M-o-M while NSE daily average volumes ended higher by 1.2%
M-o-M. The average daily derivatives volumes on NSE rose by 3.9%
to Rs.1,15,817.6 cr in August (In July 2012: Rs.1,11,503.8 cr). Mutual
funds were net sellers to the tune of Rs.1,463 cr during the month of
August 2012 after being net sellers of Rs.1,989 cr in July 2012. FIIs
were reported as net buyers to the tune of Rs.9,274 cr in cash
markets in August 2012 after being net buyers of Rs.10,616 cr in July
2012.
Retail Research
contd
The sectoral indices ended on a mixed note last month. IT, Healthcare, FMCG and Auto were the top four
gainers, which rose by 7.4%, 6.2%, 5% and 1.4% respectively. The major losers were Realty, Metal, Bankex and
PSU, which fell by 7.7%, 7.5%, 3.3% and 2.3% respectively.
IT index was the best performer of the month. Among the heavyweights in the sector, Financial Technologies,
Oracle Financial Services, Tech Mahindra and TCS rose by 16.9%, 15.5%, 12.1% and 8.6% respectively. IT stocks
rose after New Jersey-based Cognizant Technology Solutions Corp stood by its full-year revenue forecast at the
time of announcement its second quarter results and also after better than expected US economic data on
Thursday, 9 August 2012. IT stocks rose after minutes from the US Federal Reserve showed that the central
bank's policy committee discussed a third round of quantitative easing at its last meeting. TCS rose as the
company announced that it has entered into a definitive agreement to acquire 100% equity of Computational
Research Laboratories (CRL), a wholly owned subsidiary of Tata Sons, for a cash consideration of Rs 188 crore.
The acquisition of CRL, a pioneering start-up firm in the arena of High Performance Computing solutions in India,
will enable TCS to extend its suite of solutions and offer integrated High Performance Computing (HPC)
application and Cloud services to its large base of customers.
The Healthcare index ended the month on a positive note gaining 6.2%. Among the heavyweights in the sector,
Glenmark, Cipla and Ranbaxy, gained 14.8%, 11.7% and 10.8% respectively. Among other stocks, Wockhardt and
Strides Arcolab gained the most 25.4% and 16.5% respectively. Wockhardt's first quarter consolidated net profit
surged 95% year-on-year to Rs.378 cr, helped by strong growth in the US market. Wockhardt's US and EU
operations have been the major contributor in its growth and the momentum continued in this quarter as they
contributed to 71% of consolidated revenue. Drug maker Cipla rose as, its profit after tax jumped 58.2% to
Rs.400.8 cr on 23.6% growth in income from operations to Rs.2012.4 cr in Q1 June 2012 over Q1 June 2011.
Ciplas domestic sales grew by more than 30% and export sales grew by about 18% in Q1 June 2012. Cipla rose on
reports that the company is partnering South Africa's Aspen Pharmacare to cater to the Australian market. Under
the pact, Cipla would develop generic products, to be launched by Aspen in Australia.
Consumer stocks continue to outperform with the BSE FMCG index up 5% in August versus the Sensexs gain
of 2%. The sector heavyweights, United Spirits, United Breweries, HUL and Godrej Consumer rose by 20.6%,
12.8%, 11% and 10% respectively. Underlying demand continues to be strong and there have been no visible
signs of demand slowdown from most of the companies. FMCG stocks rose as pick-up in monsoon rains last week
of the month will lead to a recovery in yields in summer-sown crops including rice and oilseeds. Expensive
valuations raise concerns in the minds of investors, who look at buying into these stocks. The companies have
invested in brand innovation and augmented their distribution and supply chains over the past three-four years,
and these will have a positive bearing on their performance in the next two-three years. Companies with leading
brands are likely to benefit the most, as they will have high margin resilience and scope for margin expansion.
Retail Research
contd
Realty fell by 7.7% in August 2012. Among the sector heavyweights Indiabulls Real Estate, Unitech and HDIL lost
22.5%, 14.5% and 13.8% respectively. While other stocks like Sunteck Realty, Prestige Estates and DLF ended the
month lower by 10.4%, 6.3% and 5.9% respectively. Realty stocks edged lower on profit booking. Shares of
organised retailers fell after Trinamool Congress chief Mamata Banerjee on Thursday, 23 August 2012, reiterated
her objection to overseas investment in multi-brand retail, insurance and aviation sector. The Maharashtra
government's move to impose a 5% value-added tax retrospectively on flats triggered a fall in realty
stocks, which were already hit by low off-take because of high prices, rising debt and interest rates. The VAT
worries took their toll on Housing Development & Infrastructure Ltd and Indiabulls Real Estate, since the bill does
not make clear whether the builder or the buyer has to pay the additional VAT. DLF could be most impacted
from a potentially stringent land acquisition bill.
The Metals index also lost during the month. Among the industry heavyweights, Hindalco, Tata Steel, Sterlite
and SAIL fell by 13.4%, 12.4%, 10.1% and 8.9% respectively. Shares of metal companies fell sharply, reflecting
investors' worries on the possible fallout of the recent CAG report that raised doubts about coal block
allocations to companies. Globally, investor sentiment in the metals and mining space has been weak as prices
of base metals are falling and demand has slowed. Demand for metals has slowed in Europe and the US as the
overall slowdown has cut purchases. The sentiment has also spread to India and China, the world's two large steel
consuming countries, with the overall demand halving to about 5-6%. Hindalco Industries fell after reporting
weak Q1 results. Its net profit fell by 34% to Rs 424.77 cr on 1.9% increase in total income to Rs.6,329.37 cr in Q1
June 2012 over Q1 June 2011. Hindalco, which is awaiting a crucial Cabinet approval for a coal block, also fell
sharply on concerns that the government would delay the allocation. Supplies from the Mahan coal block are
vital for the Birlas Mahan aluminum smelter, failing which the company will have to buy costly coal from the
open market. Metal shares fall was also triggered by the latest data showing a 5.4% decline in profit from China's
major industrial enterprises for July compared to the year-ago period. China is the world's largest consumer of
copper and aluminum.
The PSU index ended in the red at the end of August 2012. Bank of India, Canara Bank, BEML and HPCL lost
13.6%, 13.3%, 13% and 12.9% respectively. PSU stocks faced the brunt of profit booking. In Q1FY13 on asset
quality front, PSU banks performance was quite dismal with sharp jump in gross slippage ratio. Canara Bank
reported a lower than expected 6.8% year-on-year growth in net profit at Rs.780 cr, and 2.8% rise in net interest
income (NII) for the quarter ended June 2012. Net interest margin (NIM) declined 10 basis points (bps) at 2.4% on
quarter-on-quarter basis primarily driven by sequential drop in the yields and rise in cost of funds. The falling
share of high yielding small and medium enterprise (SME) and retail loans, over 100bps decline in current
account, savings account (CASA) and higher bulk deposit at around 40% led to further contraction in NIMs.
Retail Research
HOME
contd
Top gainers amongst the F&O stocks included Balrampur Chini (up by 23.9%), MTNL (up by 22%), Apollo Tyre
(up by 20.6%), McDowell (up by 20.6%) and Financial Technologies (up by 19.8%). Even Oracle Fin Serv, Tech
Mahindra, Cipla, Glaxo Smithkline Pharma and Ranbaxy did well, rising in the range of 10.9-16.5%. Major losers
from the F&O space included IFCI (down by 27.7%), S Kumars Nationswide (down by 26.8%), Alok Textile
(down by 24.8%), Indiabulls Real Estate (down by 23%) and GMR Infra (down by 21.7%). Jain Irrigation, Patel
Engineering, Opto Circuit, Jaiprakash Prower and Suzlon were some of the other underperformers, which fell in
the range of 18.7-21%.
Fund Activity:
FII Activity (Rs. in Cr) Net Buy / Sell Net Buy / Sell Open Interest Open Interest
Aug-12
Jul-12
Aug-12
Jul-12
Equities (Cash)
9274
10616
Index Futures
3412
10854
12967
Index Options
7399
12445
34336
35201
Stock Futures
-4574
-1890
23464
23248
Stock Options
-224
-335
610
1149
In the equity space, the FIIs were reported as net buyers of Rs.9,274 cr in August 2012 (In July, they were net
buyers of Rs.10,616 cr). In the F&O space, the FIIs were net buyers in the Index Futures segment. This was
along with the decrease in the open interest. This indicates squaring up of some earlier long positions and value
effect. In the Index Options segment, the FIIs were net buyers, which was along with decline in the open
interest. This indicates squaring up of call or put options bought earlier. In the Stock Futures segment, the FIIs
were net sellers, while the open interest remained flat. The Stock Options segment witnessed poor
participation.
Retail Research
contd
Bond Yields:
Indian G-Sec bond yields ended lower by 1 bps at 8.24% at the end of August 2012. Bond yields have
remained largely range-bound in August since hitting a one-month high of 8.26 percent on August 03 2012. Bond
yields fell as investors continued to bet on a lower April-June quarter data that would come below 5%. Bond
yield eased marginally as lower oil prices aided sentiment. Yields fell on the FM's statement that interest
rates are high.
1 0 Y e a r G o v e r n m e n t B o n d Y ie ld - T r e n d
1 0 .0 0
8 .0 0
6 .0 0
10-Jun-12
12-Mar-12
13-Dec-11
14-Sep-11
16-Jun-11
18-Mar-11
18-Dec-10
19-Sep-10
21-Jun-10
23-Mar-10
23-Dec-09
24-Sep-09
26-Jun-09
28-Mar-09
28-Dec-08
29-Sep-08
1-Jul-08
4 .0 0
Pe r io d
Commodities:
In August 2012, the Reuters/Jefferies CRB Index of 19 raw materials ended higher by 3.37% to 309.59. This
was on account of a rise witnessed in commodities like Orange Juice (up by 20.0%), Silver (up by 14.4%),
Heating Oil (up by 11.6%), Crude Oil (up by 9.6%), Cotton (up by 9.5%), Live Cattle (up by 5.6%), Gold (up by
4.8%), Wheat (up by 4.3%), Soya bean (up by 2.8%) and Cocoa (up by 2.9%). Commodities rose broadly for the
month of August with a third straight month of gains, after strong rallies through most of the month in oil,
soybeans and cocoa and also led by U.S. crude as a weak dollar fed the bull market sentiment. Gold prices also
advanced on renewed bets for a U.S. stimulus, while copper eked out a more modest gain due to persistent
worries about demand from top buyer China and global economic recovery. Soybeans extended their JuneJuly rally amid fear of more crop destruction from the drought that ravaged the farm belt in the U.S. Midwest.
Adverse crop weather also boosted prices of West African cocoa beans, giving cocoa futures in New York their
biggest monthly gain since May. The 19-commodity Thomson Reuters-Jefferies CRB index settled August's trade
up by more than 3%, carrying through with its 4 % gain in June and 5% in May.
Retail Research
contd
Behaviour of Metal prices (LME 3 month buyer prices) during the month of August 2012
Metals
31-Aug-12 31-Jul-12 % Chg
Aluminium
1869
1900 -1.63%
Copper
7590
7586
Zinc
0.06%
1829
1858 -1.56%
Nickel
15960
16010 -0.31%
Tin
19625
18225
7.68%
1961
1954
0.36%
Lead
LME metals ended on a mixed note in the month of August. The major losers
were Aluminum, Zinc and Nickel each losing 1.63%, 1.56% and 0.31%
respectively while the gainers were Tin, Lead, and Copper with each gaining
7.68%, 0.36% and 0.06% respectively for the month.
LME Tin prices rose the most last month by 7.68%. LME Tin jumped close to 8%, to end at its highest since mid-
May on concerns about a supply shortfall from Indonesian producers. A stoppage by tin miners in Indonesia
because of weak global prices has increased to encompass over 90% of smelters, leading shipments to decline by
more than half from the world's top exporter of the metal.
LME Lead prices rose in the month of August by 0.36%. Lead prices edged up after speculators enlarged their
positions, which was also supported by rising spot markets demand. Lead prices have risen 5.2% on the London
Metal Exchange (LME) since the start of July, going ahead of other metals such as zinc, aluminium and copper.
The latest release of the International Lead and Zinc Study Group (ILZSG) states that global supply of lead in the
first half of 2012 was 5.3 million tonnes, based on provisional data, and it exceeded demand by a mere
48,000 tonnes. The study said total stocks declined by 1,000 tonnes. While global metal production rose 0.4% in
the first half, demand rose 1.6%. Demand from countries such as China, Mexico, Turkey and Japan was robust.
LME Copper prices ended also most flat up 0.06% in August. Copper rose to end August with a monthly gain,
after Federal Reserve Chairman Ben Bernanke said high unemployment is a "grave concern", leaving investors
hopeful for another round of government bond buying, or quantitative easing, or QE, from the U.S. central
bank. Copper fell to a 10-day low early but recovered with other financial markets after Bernanke said the Fed
would act as needed to strengthen the economy. Copper's gains were spurred by expectations for stimulus in
China, after Premier Wen Jiabao said the world's top copper consumer faced headwinds despite cooling inflation,
with traders saying another cut may be imminent in the reserves banks are required to hold. Copper Prices also
rose as the dollar fell and expectations grew that Europe would take the necessary steps to resolve its debt
crisis and shore up economies there.
Retail Research
10
contd
Gold rose last month by 4.79%. During the month the gold prices exhibited a mixed trend. Gold rose, capping
the biggest monthly gain since January, as Federal Reserve chairman Ben Bernanke said more bond purchases
are an option to aid the US economy, lifting demand for the metal as an inflation hedge. Gold rose 70% from
the end of Dec 2008 to June 2011 as the Fed kept borrowing costs at a record low and bought $US2.3 trillion of
debt in two rounds of quantitative easing. After trading in a range for four months, gold raced toward the $1,700
an ounce level last seen in March. It looked poised to test this year's high on improved investor sentiment and
technical buying. The metal posted a 4.79% gain in August, its third straight monthly rise and its biggest
since January. Sentiment in the gold market also received a boost after a report showed the U.S. consumer
confidence deteriorated in August to the lowest in nine months as Americans were more pessimistic about
labor market prospects. A patchy run of U.S. economic data and comments from Fed policymakers that the
fragility of the recovery may warrant more easing to keep interest rates low has pushed equities to four-year
highs & lifted gold.
Crude oil prices rose 9.55% in August 2012. During the month crude oil prices exhibited an up trend. Oil surged
after U.S. payrolls climbed more than estimated, bolstering optimism about economic strength in the worlds
biggest crude-consuming country and as U.S. crude inventories dropped the most in seven months on
speculation that central banks will take steps to support the economic recovery. Prices rose as indications the
Federal Reserve is likely to provide more stimulus and a sharp drop in U.S. crude inventories countered concerns
about Europe's debt crisis. Rise in crude price was also supported by Chinese data and news that a tropical
storm hovering over Mexico has closed oil installations in that country. Oil prices jumped to a 12-week peak
as falling North Sea output, support for more bond buying by the U.S. Federal Reserve and Middle East
tensions lifted crude futures to a third straight higher settlement. Crude rallied on dollar weakness and on
optimism about the U.S. economy and as investors turned skeptical the U.S. government could be readying the
release of some of its oil reserves. Prices also rose in New York as Hurricane Isaac reduced offshore output in the
Gulf of Mexico and on speculation that U.S. supplies fell to a five-month low and as U.S. crude inventories were
forecast to drop, a storm headed for the Gulf of Mexico and a fire continued to burn at Venezuelas biggest
refinery. Crude-oil rallied as the dollar fell and a speech by U.S. Federal Reserve Chairman Ben Bernanke was
greeted with mild enthusiasm.
Retail Research
11
contd
The Baltic Dry Index (BDI), a measure of shipping costs for commodities, fell by 21.63% last month. The
Baltic Dry Index is more influenced by the movement of goods from / to China and primarily that of iron ore. It
fell due to limited shipping activity on sluggish raw material demand. The index has fallen about 49 percent
this year. A mixture of sluggish raw material demand, a continued oversupply of ships, the Olympic games
and the holiday season are pulling down the Index. The index fell to the lowest since March this year. Britain's
oldest shipping firm, Stephenson Clarke Shipping Ltd, has gone into liquidation after nearly 300 years of
trading, becoming a casualty of the worsening global downturn. The index also fell as weakness in the
panamax segment outweighed a small rise in capesize rates.
Currencies
The US dollar rose against most of its peers for August 2012 except for the Euro, Malaysian Ringgit, Korean
Won, Thai baht and Taiwan dollar against which the USD fell by 2.1%, 1.7%, 1.1%, 0.3% and 0.3% respectively
for the month. The USD gained the most against the Brazilian real, Indonesian rupiah, Argentine peso and
Indian rupee by 1.2%, 1.0%, 0.7% and 0.5% respectively
Given below is a table that shows the depreciation (-)/appreciation (+) of the dollar against various
currencies for the month of August 2012:

Malaysian Ringgit rose by 1.7% against the dollar last month. The
USD to:
31-A ug-12 31-Jul-12 % Chg
Pakistani rupee
96.06
95.41
0.70%
Malaysian ringgit outperformed regional peers on catch-up plays. It rose
Hong Kong dollar
7.76
7.76
0.00%
the most after Germany indicated it may be willing to relax Greeces
Chinese yuan
6.34
6.33
0.20%
bailout conditions, increasing demand for riskier assets and after
I ndian rupee
55.67
55.39
0.50%
economic growth unexpectedly accelerated in the second quarter.
Taiwan dollar
29.97
30.07
-0.30%
Rringgit gained among emerging Asian currencies as better than
Singapore dollar
1.25
1.25
0.50%
Argentine peso
4.63
4.6
0.70%
expected U.S. jobs and hopes for European action to ease the euro
Euro
0.8
0.81
-2.10%
zone's debt crisis spurred risk appetite. The ringgit hit a near threeThai baht
31.49
31.6
-0.30%
month high against the dollar on demand from hedge funds But
Malaysian ringgit 3.13
3.18
-1.70%
investors were reluctant to chase emerging Asian currencies as some,
I ndonesian rupiah 9578.54
9487.6
1.00%
Japanese yen
78.63
78.31
0.40%
such as the ringgit and the Singapore dollar, were seen excessively
Brazilian real
2.05
2.03
1.20%
bought and on caution over possible intervention by regional
Korean won
1135.85
1148.37
-1.10%
authorities to stem currency gains.
Retail Research
12
contd
The USD depreciated against the Euro by 2.1% for the week ended 31st August 2012. The dollar fell against most
major counterparts amid speculation the Federal Reserve may signal further monetary stimulus or extend its
pledge to keep interest rates at virtually zero. The euro rose against the dollar as some investors speculated that
the European Central Bank would announce bold new steps to tackle the debt crisis and boost appetite for
riskier currencies. Euro rise was also supported as investors pared bearish bets against the currency on raised
expectations of action from the European Central Bank to contain the region's more than two year old debt crisis
and also as positive comments made by German Chancellor Angela Merkel continued to buoy expectations
that significant action will be taken to stem the euro zone debt crisis. The Euro gained the most after Italys debt
sale damped concerns that nations in the currency bloc wont be able to access the debt markets and also after
European officials dismissed a report that the European Central Bank was planning to cap peripheral euro-zone
bond yields. The euro rose to a seven-week high against the dollar, after business activity surveys in France
and Germany were not as bad as feared, lifting some of the pessimism surrounding the region's economy and
also on talks that the European Central Bank may act soon to lower the borrowing costs of Spain and Italy,
allaying concerns about the debt crisis that has long plagued the region. Minutes from the U.S. Federal
Reserve's latest meeting, which suggested it was willing to deliver more monetary stimulus "fairly soon", also hit
the dollar.
The Korean Won rose against the dollar by 1.1%. The South Korean won was higher against the U.S. dollar as
local stocks gained following a continued rally in U.S. shares amid growing calls for additional stimulus. Won rose
as minutes from the Federal Reserves latest meeting showed some policy makers favored further monetary
stimulus that may bolster demand for emerging-market assets and as optimism the nations economy will
withstand European turmoil lured global investors to increase purchases of domestic stocks. Korean won rose as
investors were attracted to risky assets on persistent hopes that moves may soon be taken to ease troubles in the
euro zone.
The Brazilian Real fell 1.2% for the last month. Brazils real fell as speculation the central bank will intervene
further to weaken the currency outweighed bets policy makers will add stimulus to bolster the global
economy. Real posted its decline on concern Europes sovereign-debt crisis is undermining the global economic
recovery and as a report showed Brazils consumer confidence dropped. Brazil's real also weakened after China's
release of weaker-than-expected July trade data dampened markets globally, highlighting concern on
recovery prospects in both the Chinese domestic and global economies.
Retail Research
HOME
contd
The Indian Rupee depreciated by 0.5% last month against the dollar. The rupee fell after US policy-makers
refrained from announcing more steps to spur growth, damping demand for riskier assets. Rupee weakened as
dollar demand from oil companies to meet month-end import commitments far outweighed foreign fund
inflows seen into domestic stock markets. The fall in rupee was seen after a rise in July core inflation
tempered expectations for an interest rate cut, while a widening trade deficit highlighted the woes facing the
local currency and also on concerns that the nations current-account deficit will widen to a record as Europes
debt crisis hurts exports. Growing worries that a gridlocked parliament will delay the passage of policy
reforms and on further signs Europes debt crisis is hurting growth in Asias third largest economy added
pressure on rupee.
Japanese Yen fell by 0.4% against the dollar in August 2012. The Japanese currency weakened against all but
one of its 16 major counterparts as stocks rallied and minutes of the Bank of Japans July meeting signaled
policy makers are considering expanding stimulus. The dollar surged to a one-month high against the yen
extending gains after upbeat U.S. data gave a boost to Treasury yields and cooled expectations of monetary
easing by the Federal Reserve. The dollar climbed on stop-loss buying, adding to a rally that began earlier in the
week after strong retail sales data bolstered the view that a recent slowdown in U.S. growth will prove
temporary. Currency analysts also said that an increase in the University of Michigans index of consumer
sentiment helped push the dollar higher.
Retail Research
13
14
contd
Comparison of Equity Returns in various markets - MSCI Indices in US$ terms
MSCI Index
Monthly 3 Month
Y TD
Last Returns Returns
Returns
1 Y ear
Returns MSCI Index
Emerging Mark ets
Monthly
3 Month
Y TD
1 Y ear
Last Returns
Returns
Returns
Returns
Developed Mark ets
BRI C
263.6
-1.0%
2.9%
-1.6%
1,319.0
4.1%
13.2%
5.1%
-2.1%
EM (EMERGI NG MARKETS)
947.3
-0.5%
4.5%
3.4%
-8.3% G7 I NDEX
1,119.8
2.3%
7.8%
8.6%
7.5%
EM ASI A
394.8
-0.9%
2.6%
4.3%
-6.3% WORLD
1,279.2
2.3%
8.6%
8.2%
5.6%
EM EUROPE
426.4
2.3%
16.0%
7.9%
-12.2%
EM EUROPE & MI DDLE EAST
362.5
2.3%
16.0%
7.9%
-12.2% SPAI N
352.0
13.2%
25.2%
-15.6%
-25.6%
3,540.5
-0.7%
4.3%
-1.7%
-12.6% I TALY
229.3
10.9%
19.2%
-2.2%
-13.4%
79.3
9.8%
11.9%
-14.8%
-32.8%
68.7
9.2%
13.5%
-15.9%
-51.4%
EM LATI N AMERI CA
-14.9% EUROPE
PORTUGAL
CHINA
52.5
-3.2%
-1.4%
-0.6%
-11.1% GREECE
INDI A
374.3
1.0%
7.3%
7.9%
-13.7% NORWAY
2,862.0
6.9%
19.9%
10.8%
2.7%
INDONESI A
836.7
-3.6%
6.4%
-3.4%
-8.3% FRANCE
1,269.8
5.8%
14.8%
5.5%
-8.1%
KOREA
382.9
-0.9%
5.7%
7.2%
-1.1% BELGI UM
1,143.9
5.8%
19.1%
24.5%
14.3%
MALAYSIA
468.0
0.4%
4.5%
6.5%
5.8% FI NLAND
304.5
5.8%
9.9%
-6.1%
-21.3%
PHI LI PPI NES
418.3
-2.7%
4.6%
23.2%
1,517.7
5.2%
12.9%
11.0%
1.7%
TAI WAN
249.8
1.9%
0.0%
4.2%
113.5
-0.9%
-0.1%
-4.1%
7.4%
THAILAND
370.4
-0.1%
5.7%
15.2%
3,980.8
-1.4%
12.7%
19.6%
1.3%
185.3
-2.7%
-2.0%
-6.4%
-15.6%
457.8
1.9%
2.0%
-2.0%
-8.9%
-14.7% ESTONI A
617.3
11.0%
14.8%
19.3%
-7.7%
-21.8% JORDAN
108.4
9.2%
5.8%
-1.0%
-5.4%
BRAZIL
2,598.0
0.2%
2.6%
-8.1%
CHILE
2,349.5
-1.5%
3.8%
3.6%
COLOMBIA
1,177.4
-2.6%
-1.4%
13.9%
MEXI CO
6,325.5
-2.3%
12.4%
12.9%
PERU
1,420.0
-0.3%
-2.6%
2.7%
CZECH REPUBLI C
465.1
15.1%
16.9%
4.0%
HUNGARY
480.7
1.6%
16.9%
11.1%
19.5% GERMANY
-7.2% I RELAND
5.7% SI NGAPORE
-19.3% I SRAEL
-9.1%
3.8% Frontier Mark ets
4.1% FM (FRONTI ER MARKETS)
-5.4%
POLAND
745.5
3.8%
15.4%
8.9%
-19.9% BANGLADESH
697.0
7.8%
-1.2%
-9.9%
-28.8%
RUSSI A
751.2
0.9%
13.0%
2.0%
-15.5% GHANA
823.9
7.6%
13.7%
-0.1%
-20.6%
TURKEY
536.3
4.1%
27.5%
35.7%
18.4% NIGERI A
409.1
7.3%
16.5%
28.1%
26.3%
EGYPT
653.7
8.8%
12.7%
48.4%
17.5% ROMANI A
331.8
7.1%
7.2%
5.1%
-20.0%
MOROCCO
329.0
3.6%
-0.1%
-12.2%
-27.6% BAHRAIN
179.8
-5.7%
-11.7%
-7.1%
-22.2%
SOUTH AFRI CA
531.1
-1.1%
6.9%
5.0%
-6.2% VIETNAM
385.5
-7.2%
-9.9%
12.6%
-16.5%
Retail Research
15
contd
Comparison of Equity Returns in various markets - MSCI Indices in US$ terms
The equity markets across the globe ended on a mixed note in the month of August 2012. The developed
markets were the top performers, which gained in the range of 2.3-4.1%. The frontier markets also did well,
gaining 1.9% during the month. However, emerging markets underperformed, ended the month on a weak note
barring EM - Europe and EM - Europe & Middle East.
Amongst the Developed markets, Europe was the top gainer, which rose 4.1%, while G7 Index & World Index
rose 2.3% each. Amongst the constituents of the developed markets, Spain, Italy, Portugal & Greece were the
top four gainers, which rose 13.2%, 10.9%, 9.8% & 9.2% respectively. Norway, France, Belgium, Finland &
Germany also performed well, rising in the range of 5-7%. However, the index gains were restricted due to
underperformance from Israel, Singapore & Ireland, which fell by 2.7%, 1.4% & 0.9% respectively.
Spanish market was the top performer during the month on reports that the country may look to speed up
emergency financial aid for its banking sector. Italian markets also outperformed as there was a speculation
that even it would get support of aid if required. Spain & Italy were amongst the top losers in the previous
month. However, the markets bounced back strongly after European Central Bank head Mario Draghi, towards
the end of July, promised to provide full support for Europe's single currency.
Frances economy unexpectedly avoided its first quarterly contraction in more than 3 years as both companies
and government increased spending. The economys GDP was unchanged in the second quarter from the
first. The figures offer some respite to President Francois Hollandeas, who seeks to cut Frances budget deficit in
the face of recessions in neighboring Italy and Spain. The market also outperformed as Finance Minister Pierre
Moscovici said during the month that France would bring its deficit below the 3% of GDP threshold next year.
Germany reported robust gains during the month as the economys GDP grew by 0.3% in the second quarter,
a touch better than expected and helped by exports to countries outside of Europe as well as a pick-up in
consumption. Germany also reported a slight improvement in the Manufacturing PMI for August, which ticked
up slightly opposed to the contraction reported in the Services PMI. The London Based Markit Economics reported
the August Manufacturing PMI, which improved slightly as the index ticked to 45.1 from 43.0 in July.
Retail Research
16
contd
Israel markets underperformed during the month as the global slowdown propelled Nice Systems Ltd. (a maker
of analytical telecommunications software) and Ceragon Networks Ltd. (a maker of wireless networks) to cut
their outlooks. Israeli companies are getting hit by a faltering economic recovery in the U.S. and the
sovereign debt crisis in Europe. About 40 percent of the nations gross domestic product comes from exports,
with Europe and the U.S. accounting for more than half of the trade. Nice sent more than 60% of its products to
the U.S., while Ceragon received about 25% of its revenue from customers in Europe & the U.S.
Frontier markets reported decent gains of 1.9% during the month. Estonia & Jordan were the top two
gainers, up 11% & 9.2% respectively during the month. Bangladesh, Ghana, Nigeria & Romania were among the
other frontier markets, which did well, rising in the range of 7-8%. However, the index rise was restricted on
the back of underperformance from markets like Vietnam & Bahrain, which fell by 7.2% & 5.7% respectively
during the month.
Bangladesh market ended with robust gains during the month, as institutional investors went on a buying spree
expecting an easy money market after Ramadan. In addition, improved macroeconomic indicators along with
consistent improvements in turnover raised the confidence level of investors to some extent. Expectation of
short-term rallies also motivated investors to make fresh investments.
The strong rally in the Nigerian markets was lifted by strong half-year earnings from banks and cement firms
and an increase in foreign capital inflows. The index gains were also supported by Nestle, which rose
significantly during the month to touch historic high post announcement of strong dividends.
Romanias benchmark stock index rallied to the highest level in more than three months after a
Constitutional Court ruling invalidated an impeachment vote against President Traian Basescu. Six of nine judges
voted to invalidate a July 29 presidential impeachment vote as less than half of the eligible voters
participated in the referendum.
Retail Research
17
contd
Vietnam market was the top loser during the month of August as the stocks plunged on concerns that the arrest
of two banking officials during the month may signal further instability in the nations financial system. Local
investors continued to offload shares to cut losses, thus dragging the benchmark index into a bear market.
However, there was some bounce back witnessed towards the end of the month, as valuations fell to a threemonth low and concern of more arrests in the banking industry eased. State Bank of Vietnam Governor Nguyen
Van Binh said on Aug. 21 that the monetary authority stands ready to ensure banks have adequate cash after the
detention of Asia Commercials Kien. The central bank injected 13 trillion dong into the financial system
through open-market operations on Aug. 22, the most over a seven-day period this year. It further added 3.5
trillion dong on August 28. Still the index ended in the red during the month.
The Emerging Markets ended the month of June on a weak note, down marginally by 0.5%. BRIC index was
the top loser, down 1%. EM-Latin America & EM-Asia fell by 0.7% & 0.5% respectively. However, EM Europe and
Europe & Middle East were an exception, which gained 2.3% each during the month.
BRIC index fall was led by China, which ended lower by 3.2% during the month of August. However, the other
constituents of the index like India, Russia & Brazil all outperformed, rising 1%, 0.9% & 0.2% respectively.
China's industrial production growth slowed again in July, undermining hopes that growth in the world's
second-largest economy has already started to rebound. The weaker than expected industrial output data was
likely driven by inventory de-stocking, and could possibly trigger more loosening in monetary and other policies.
Further, new loans by China's banks fell to 540.1 bn yuan ($85.1 bn) in July, down from 919.8 billion yuan in
June, and the lowest level since September 2011, despite efforts by the central bank to make it easier to lend.
Export growth also disappointed as July exports were up just 1% from a year ago, slowing from June's 11.3% pace.
Moreover, Chinas non-manufacturing industries expanded at a slower pace in July as new orders and
outlooks for future business slipped. The purchasing managers index fell to 55.6 from 56.7 in June. Due to all
these reasons, the Chinese market underperformed the most during the month.
Russian stocks gained during the month as oil rallied, boosting investor appetite for equities in the worlds
biggest energy exporter. Oil is the main export revenue earner for Russia. Hence when oil rallies, Russian
equities rise. Also, there is optimism in the markets that the European Central Bank will take further steps to
save the EU.
Retail Research
18
contd
EM-Latin America was the second worst performer in EM Emerging Markets, ending lower by 0.7% in June.
Columbia & Mexico were the top two losers, which fell by 2.6% & 2.3% respectively. Chile & Peru also fell by
1.5% & 0.3% respectively. However, Brazil ended marginally higher by 0.2%, thus restricting the index fall.
Colombia stocks fell on global worries and as investors sold shares of top food producer Nutresa, state oil
company Ecopetrol and top bank Bancolombia during the month. Soft international prices for crude oil pushed
down prices for local oil stocks. Some analysts have warned that a housing bubble has formed in Colombia
following years of robust growth in the sector. The central bank says it sees no sign of such a bubble but that it
will continue to monitor the situation.
The Mexican markets corrected during the month of August on the back of profit taking. The Vector brokerage
said in a research note that the IPC was vulnerable as it broke through resistance levels, echoing comments by
other analysts that the market was getting expensive in the short-term without much news to keep it climbing.
The Bovespa index rose marginally during the month as reports showed signs of economic improvement in
Europe and the U.S., buoying prospects for Brazils exporters. The stocks rebounded as Federal Reserve minutes
spurred speculation that U.S. policy makers may provide additional stimulus. Further, the economys retail
sales unexpectedly jumped in June. The volume of sales climbed 1.5%, compared with a drop of 0.8% in May
and the biggest rise since a 3.2% jump in January. However, the gains were restricted as the central bank
indicated that it might be done cutting interest rates after nine reductions over the past year.
Among the constituents of EM-Asia, Indonesia, China & Philippines were the top three losers, which fell by
3.6%, 3.2% & 2.7% respectively during the month. Korea & Thailand also underperformed, down 0.9% & 0.1%
respectively. However, the index losses were restricted due to outperformance by Taiwan, India & Malaysia,
which gained 1.9%, 1% & 0.4% respectively during the month.
Indonesia underperformed during the month, with the benchmark index reporting its sharpest loss in more
than two months, on speculation the US Federal Reserve will refrain from a third round of stimulus, hurting
commodity demand. There was a speculation that the overseas investors may also be selling Indonesian stocks on
speculation that the currency may depreciate on the back of weak current account, which is a concern.
Retail Research
HOME
contd
Philippines ended the month in the red, as the local stocks fell, tracking sluggish regional markets, which
were weighed down by weak Japan trade data. Dealers said that the market has been undergoing a correction
coinciding with the Ghost Month, which started in mid August. The period is the time when Chinese people
consider it unlucky to make big bets, also coinciding with the time when most Western investors go on lengthy
summer vacation breaks.
EM-Europe and EM-Europe & Middle outperformed during the month of August, mainly on the back of strong
gains of 15.1% reported by Czech Republic. Turkey & Poland also reported decent gains of 4.1% & 3.8%
respectively. However, Hungary & Russia reported marginal growth of 1.6% & 0.9% respectively during the
month.
The rally in the Turkish stocks was mainly on the back of expectation of some positive announcement related to
quantitative easing from Jackson Hole meeting by U.S. Federal Reserve Chairman Ben Bernanke, which he
left the door open for further quantitative easing.
Polish stocks jumped to a one-month high as Bank Pekao SA, the second-biggest lender, rallied on better-than-
expected earnings and KGHM Polska Miedz SA, the countrys only copper miner, climbed on better than
expected U.S. payrolls data. Further, in a report, Central Statistical Office said that Polish Retail Sales rose to
a seasonally adjusted annual rate of 6.90%, from 6.40% in the preceding quarter.
Among the African markets, Egypt reported robust gains during the month on the back of mounting investor
confidence driven by ongoing discussions between Egypt and the IMF over the terms of a proposed $4.8 bn
loan deal.
Retail Research
19
20
contd
Outlook going forward

Global Market Outlook
Would history repeat itself this September too for global markets?
The US stock market has an unsettled history during the month of September. Lehman Brothers collapsed in
September 2008, bringing the entire global financial system to its knees. And it also was in September 2000 that
the post-dot com bubble collapse accelerated. Two years later, in September-October 2002, the bear market hit
its lows. And although the 1998 financial crisis began in late August, it was in September that super hedge fund
Long Term Capital Management collapsed, which Bill Clinton (quaintly) called the greatest financial crisis since
the Great Depression.
Since 1926, September is the only month of the year with an overall negative average return in U.S. markets. In
every other month, investors have averaged a 1% gain. Equally importantly, the September anomaly holds true
not only for the United States. A Georgia Tech study looked at data for 18 developed stock markets around the
world going back as far as 200 years. Among the markets examined, investors lost money in September in 15 of
them.
In US, consumer spending may have improved for the first time in three months, but jobless rate is still high. It
is good that US economy no longer decelerating. However, economic improvement is very moderate.
Investors could view the current negativity in global markets as a welcome sign. It lowers expectations. And its
when low expectations are beaten that markets really break out on the upside. After Septembers bout of
nervousness, one could get ready to pile back into global stock markets for a strong fourth quarter.
US - Another round of Quantitative Easing in the offing?
During his Jackson Hole speech on August 30, 2012, Fed Chief Ben Bernanke said the privately owned bankster
cartel will provide additional policy accommodation as needed and may engage in more so-called quantitative
easing. Unemployment stands at 8.3 percent, which Bernanke said is 2 percentage points higher than where the
Fed would feel comfortable. "Unless the economy begins to grow more quickly than it has recently, the
unemployment rate is likely to remain far above levels consistent with maximum employment for some time," he
said. He said studies showed that these policies have helped create more than 2 million jobs.
Retail Research
21
contd
The Fed has thus far squandered more than $2 trillion in quantitative easing and despite this the economy has
slipped further into depression. A third round of quantitative easing could be a possibility, although Bernanke
was vague on the Fed's plans. Quantitative easing is a resort to the money printing press. It means seizure and
coercion of goods and services from the inhabitants of a country. But it also means either a government that is
spending beyond its means, or one whose economy is not strong enough to generate financing by the usual
means, or both.
Easing can boost the economy by increasing the amount of available liquid assets and ability of banks to lend,
but can fail if banks still remain hesitant to lend. Banks can also use their new purchasing power to increase
investment, but don't necessarily lend to the local businesses that are in need of loans. It can also cause too
much inflation if not monitored carefully.
A third round of quantitative easing the process of printing money to buy bonds to push down long-term
borrowing costs looks like a foregone conclusion now. The markets, experts and most economists are betting
the US Federal Reserve announcing QE3 sometime in September or so, at least a month before the presidential
elections in the United States, which are slated for November 6.
The Fed is dragging QE3 as global markets have run up on expectations of an announcement in the recent past.
Once the announcement is made, markets are likely to become subdued. This has been the trend during QE1 and
QE2.
ECB meeting on September 6, 2012 to be keenly watched
Europe's handling of the financial crisis will determine the way other regions of the world and its own citizens
view the continent, affecting foreign investment and prospects for closer political union.
Eurozone states are set to shift into a higher gear in the bond markets this week, marking the end of the
summer quiet period by offloading slightly more than 20 billion euros ($25.06 billion) in government debt, with
all the auctions taking place before the European Central Bank's fateful policy meeting Sept. 6.
Having signalled that ECB will start a programme of government bond-buying to lower Spanish and Italian
borrowing costs, ECB President Mario Draghi will be expected to detail just how the central bank would go about
it if called upon. He faces stiff internal opposition, led by Germany's Bundesbank. If he has not got broad
backing for a plan and fails to flesh it out, stock markets, which have been climbing in the belief that ECB action
is coming, could fall sharply.
Retail Research
22
contd
The need to bring down Spain's borrowing costs is becoming increasingly urgent. The heavily indebted country is
due to pay back 15 billion euros next month, but cannot borrow at affordable rates to refinance the debt. The
yield on Spanish 10-year bonds has got perilously close to 7%, a level considered unsustainable in the long term.
By contrast, the yield on German 10-year debt is 1.3%.
ECB chief Mr. Draghi indicated on Monday September 3, 2012 that the ECB would be open to buying bonds with a
maturity of two to three years, stressing that such purchases wouldn't break European Union treaties. Since
2010, the ECB has stepped in from time to time to buy bonds of countries that have found themselves under
heavy market pressureit now has 209 billion euros ($262.7 billion) of government bonds on its books - but
failed to bring down interest rates for more than a few weeks.
The ECB's grand bond plan depends on politicians and judges, not just central bankers. It could ease any market
disappointment by lowering rates, already at a record-low 0.75%. One potential constraint: a spike in annual
inflation last month to 2.6%, well above the ECB's sub-2% target.
Mr. Draghi's verbal rope-a-dope strategy with governments and markets has worked well so far. But with the list
of potential adversaries both inside and outside the bank growing, he may be the one running out of steam.
Indian Market Outlook

Q1FY13 earnings environment - challenging
India Inc continues to struggle as far as higher interest payment is concerned over the past many quarters even
though the broader corporate earnings for the quarter ended June 30 have so far been more or less in line with
street expectations. Companies which have raised huge funds in the overseas markets have been hit hard on
their interest payment as sharp volatility in currency movement and those which have not hedged their foreign
debt, are also under deep stress.
The current earnings season has turned out to be the worst in the last two-and-a-half years for the broader
market, although Sensex companies have delivered results pretty much in line with expectations.
Most of the management shared cautious outlook on growth. Pharma is the only sector where managements are
sounding fairly optimistic. While several consumer staples names have denied any slowdown, they are less
certain about sustaining the strong performance delivered thus far.
Retail Research
23
contd
But the resilience in earnings suggests that Indian companies are adept at dealing with tough situations and will
cut costs to stay profitable.
Earnings in the coming couple of quarters have a reasonable tailwind because of a favourable base effect.
Corporate profits took a beating in the Sept and Dec quarters last year on the back of accelerated decline in
growth and a sharp depreciation of the rupee. However, in the backdrop of the economic slowdown and
volume pressures, intensifying competition and market-share concerns would keep pricing power of corporates
low while keeping costs downward sticky. This would expose profit margins to downside risk in the coming
quarters.
Lack of reforms push impedes growth and fund flows
Delayed policy measures, slowdown in industrial production, elevated interest rates and liquidity concerns
have moderated the growth prospects in the domestic economy.
High interest rate is a very big challenge we have got. As far as the investment engine is concerned, interest
rate is not the only issue there. Land clearances, environmental policies are not clear. Investors are deterred
by macroeconomic imbalances. Therefore, the Government should rein in fiscal deficit and that, in turn, could
help tame inflation and current account deficit. It should free up prices of diesel and fertilisers and allow
parallel marketing of petrofuels. These measures do not require legislation. Agreed, the Opposition should not
play spoilsport and block reforms like GST. But the larger point is about the Government putting its own house
in order and showing the political courage to implement reforms.
The Indian economy is unlikely to improve in the near term because of "policy stasis", the Reserve Bank of India
said in its annual report 2011-12. New investments have slowed down substantially and existing investments'
completion is getting delayed. Inflation is likely to remain sticky around 7% with upside risks emanating from a
deficient monsoon, the RBI said. It urged the government to reduce expenditure by cutting subsidies and called
for "a step-up in capital expenditure to crowd-in private investment."
Poor GDP growth witnessed in Q1FY13 and continued fiscal imbalances could lead to a possible further
downgrade?
The real GDP growth print for Q1FY13 came in at a weak 5.5% y-o-y but was higher than market expectations
primarily on account of strong performance by several sectors. The strength in construction and financing and
insurance sectors were much more than expected. The last quarter in FY12 grew at 5.3% y-o-y.
Retail Research
24
contd
The print on the expenditure side looks even more dismal and stands at a mere 3.9% YoY, which is the lowest
quarterly print since Q4FY09. Although the headline GDP print was more than expected in Q1, it would be too
early to say that weve seen a trough in the growth cycle and a fair amount of data revisions is possible going
ahead.
The most worrying aspect of Q1s release is the dismal performance of the trade, hotels component on the
factor cost side and private final consumption, which are both indicating that consumption demand has
weakened considerably despite the fact that global growth is nowhere near its previous lows.
Unless, policy related clarity emerges soon to prompt productive activity and spending in the economy, which
will also help to reign in inflation, consumption is likely to remain muted. The same factors will also constrain
capacity expansion and gainful addition of fixed capital formation. Apart from the above we must add a word
of caution about agricultural growth considering the fact that this is a drought year and hence farm sector
output could be a considerable drag next quarter onwards. However the late rains seen over the last few
weeks may help recover some lost ground.
With gridlock in both parliament and the government putting big reforms out of reach for now, finance
ministry officials are focused on smaller measures, such as speeding up delayed infrastructure projects, to help
boost the economy in the second half of the fiscal year, which began in April. They still foresee annual
economic growth of around 6.5% for 2012-13.
India's sovereign credit rating can be downgraded to junk status if the government fails to address the fiscal
imbalances in the economy, Standard & Poor's said recently. Even Fitch is of a similar view. Even the RBI
Governor Duvvuri Subbarao recently said India needs to prepare for a downgrade in its credit rating and the
resultant outflows.
With inflation still high, would RBI go for another rate cut?
Reserve Bank of India governor D. Subbarao punctured hopes of a rate cut, as high inflation and wrecked
government finances leave little room for either the central bank or the government to throw policy lifeline.
The governor, who has resisted calls for lowering of borrowing costs, said the challenges for the Indian
economy now are far worse than what they were post-Lehman bankruptcy when RBI could cut interest
rates rapidly to boost demand.
Retail Research
25
contd
At the last policy review, Subbarao raised the year-end inflation forecast to 7%, from 6.5% as deficient
monsoon and high international crude prices may put pressure on prices. It reduced the GDP forecast to 6.5%
from 7.3%. But now many fear it could be even lower than 5%, which may force the central bank to lower
rates.
But Subbarao said that the demand for rate cut is from minority and that a huge section of the population is
the worst hit due to inflation. Cutting interest rates, however, may only support growth in the short-term,
while high and persistent inflation will harm the economy longer term. He noted that much of the criticism of
the bank's policy was coming from a "very articulate" growth lobby in India that includes companies, and said
the central bank must also consider other constituents, including the poor. Subbarao said the RBI has less
room to drive monetary policy than in the financial crisis of 2008-2009, when people were worried about
deflation. He added that the bank would only intervene against the currency if it sees clear benefit to its
monetary policy and the bank's credibility, noting that "a failed defense of an exchange rate" can be more
damaging than no action at all.
RBI governor said the economy may have to sacrifice a bit of growth over the short term, but curbing inflation
is necessary for the long-term prospects of the economy. Some sacrifice of growth may be inevitable as India
seeks to control high inflation, Subbarao said while addressing the Asia Society in New York last night.
Subbarao's defence of the tight-money policy comes at a time when the central bank is facing flak over its
high-interest rate policy, which is seen by might as the villain that is retarding economic growth.
Monsoon revival positive for economy
The monsoon in August has beaten most expectations, including the India Meteorological Department's outlook
of 96% rain for the month, by registering 99.6% of normal rainfall (till August 29). The rain rally, particularly
impressive in north India, has raised hopes of a better than expected kharif crop output.
The overall monsoon deficit now stands at 12%, considerably better than 19% when the month began. The
northern states, which were reeling under a 34% rain deficit till July-end, have received 115% rains this
month. The deficit in these states - that constitute IMD's Northwest India region has now dramatically
reduced to 14%.
The monsoon turnaround in August has not fully helped make up the deficit in area under various kharif crops.
Areas that have been affected by dry weather mainly cover the stretch from Rajasthan through Gujarat,
Maharashtra (outside of Vidarbha) and Karnataka.
Retail Research
26
contd
The annual rains are crucial for farm output and economic growth as over half of India's arable land has no
irrigation and relies on rainwater. The farm sector accounts for about 15 percent of a nearly $2 trillion
economy, Asia's third biggest.
Revival of monsoon over the past one week in the key cotton and groundnut growing regions of Gujarat has
brought some relief for farmers. Rainfall in September is expected to be better as monsoon is unlikely to be
influenced by El Nino weather pattern, helping rice and other kharif crop. El Nino refers to abnormal warming of
surface ocean waters in the Pacific that disrupts weather pattern causing drought and floods in many regions of
the world.
Kharif crops health looks better and the gap in sowing area has been made up due to the recent spell of rains.
Area coverage under rice, oilseeds, cotton and sugarcane is good, though it is slightly lower under coarse
cereals and pulses. The recent spell of rains could help area under coarse cereals to pick up, especially ragi in
Karnataka, bajra and jowar in Rajasthan. Although the kharif crop prospects are improving, there will certainly
be some impact on overall production and productivity. Total area under kharif crops is down at 32.9 million
hectare as on August 24, against 34.2 million hectare in the same period last year.
A rebound in rains has eased the drought situation in more than 50% of India, improving prospects for crops from
rice to corn and soybeans, and easing pressure on government to curb exports to cool domestic prices.
Market to trade in a range of 16800-18000 in the month of September, Pharmaceuticals and Auto to
outperform
Positive news from the upcoming US Fed and the ECB meeting in early September could cause the Indian
markets to move up. However, the previous instances of monetary stimulus have had diminishing impact on
Indian equities, although financials have outperformed. With the recent revival in the rainfall activity, monsoon
is now 12 per cent deficient from 25 per cent earlier in the month of June 2012. This could also provide some
relief to the markets. The ongoing political issues like the scam on coal, policy paralysis, etc, could however
adversely affect the sentiments and have the potential to turn the market trend to fairly bearish in the current
scenario.
Retail Research
HOME
contd
In the month of August, Indian markets were supported by global liquidity and the Indian markets witnessed
inflows of more than Rs.9,000 cr. In the US, there is Presidential election in the month of November and
obviously, there will be higher liquidity which will continue to move into the emerging markets. On the
European side, the ECB is also trying to concentrate on the yield by providing liquidity and somewhere that
liquidity also comes into the search of growth. In the month of September, while we could continue to be
supported by global liquidity, a lot will depend on how growth is revived in the Indian economy. As long as the
Rupee seems to remain stable vis--vis the US dollar, the flows could continue.
The Indian markets have done well over the past two months despite deteriorating fundamentals. This is fueled
mainly by expectations of reform measures being undertaken by the Govt under pressure. However when would
the FIIs run out of patience is anybodys guess.
Corporate earnings have been on a downgrade mode. We are currently trading below 15 times FY13 earnings,
which is not particularly cheap.
Two big events are scheduled in the middle of the month i.e. US Fed meet on Sept 12-13 and RBIs meet on Sept
17. Markets could see some run-up ahead of these and later sell-off (in varying proportions depending on the
outcome).
Given the weaker growth trajectory, both in terms of earnings and GDP, we believe the markets have a higher
chance of de-rating than re-rating from here on. That said, real reforms in India and easing of global woes could
continue to drive these markets higher in the early part of September. We expect the Sensex to trade in a range
of 16,800-18,000 in the month of September. While speedy reform implementation could change the overall
sentiments, we dont see that happening soon. Until then, the market is likely to be range bound and run into
profit taking bouts.
The two big risks that we see at this point for the markets include downgrade of Indias credit rating and
adverse major political developments at the center. If either of this plays out, markets could see a sharp selloff.
Retail Research
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28
For the last 8 months we have been assuming that on a larger degree wave D of the contracting triangle is
unfolding and the construction of this wave D is a Normal Flat. Its construction is A-B-C out of which wave
A and wave B are already over and are marked on the chart above. Currently the Sensex is in upward wave
C.
Wave C of any flat is always an impulse as the construction of any flat variation is always 3-3-5. And the
number 5 indicates impulse in Elliott wave analysis.
The current wave C had already achieved 61.8% of wave A and time wise it has so far taken 62 trading
sessions. So both time wise and price wise the minimum requirements are satisfied and thus assures that our
assumption is on the right track.
Retail Research
29
contd
There are 2 types of impulse in Elliott wave analysis and the wave which decides the type of the impulse is wave
4. If the wave 4 Ovelaps with wave 1, then this type of impulse is known as Terminal Impulse .
In the present case wave 4 had indeed Overlapped with wave 1 as shown in the chart above and the maximum
limit this downward wave 4 can go has been arrived using different techniques given in the theory.
Retail Research
30
contd
Wave 2 had retraced wave 1 by 55% and wave 4 had retraced wave 3 by 46%(so far). So according to theory the
probable target for wave 4 is in between 17,287 to 17,125 which are 50% and 61.8% of the wave 3.
We have drawn 0-2 line on the chart and the current value of this upward sloping line is at 17,135 which matches
with the 61.8% of retracement of wave 3. So at this juncture we can say that the maximum damage which can be
done in wave 4 is upto 17,125.
Once the wave 4 is over, an uptrending wave 5 will begin. Depending on whether the first subwave of that wave
is dynamic or not, the structure of wave 5 can be anticipated. If the first subwave is indeed dynamic, then the
whole wave 5 will develop into a triangle and consume quite some time. Otherwise wave 5 will be a normal flat
and develop in a sluggish manner.
In either case, once wave 5 finishes, a sharp downward move post the terminal failure could follow. In case
wave 5 does not reach till the top of wave 3, the the fall could be even sharper.
Retail Research
HOME
Technical Commentary - Month Gone By
contd
In the month of August 2012, the Sensex opened at 17,244 and for the next 2 trading sessions it came down
and made an intermediate low at 17,027.
Once the low was made at 17,027, in the next week the Sensex opened with a Western Gap Up between
17,208 to 17,313 and so far after 18 trading sessions this weekly gap remains unfilled.
For next 12 trading sessions the Sensex was continuously moving in the upward direction and finally it made
an intermediate top at 17,973.
There onwards it is continuously coming down for last 7 trading sessions and finally the Sensex ended the
month of August at 17,430.
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32

What Can Traders Learn From Investors?
What are investors doing that traders should do too? Despite the vastly different strategies that these two
groups employ, there are a handful of hints that a trader could successfully take from the typical long-term
investor - after all, both groups are just looking to buy low and sell high. In this article, we'll take a look at
earnings, market hype, buy-and-hold strategies and diversification - if you think these principles can't be used
by traders, think again!
Earnings Still Mean Everything
If sound trading strategy can be boiled down to just one key idea, it's this: You want to move before the rest of
the market does. Sounds too simple, doesn't it? However, no matter what technique a trader is using, all he or
she is really trying to do is find current opportunities that nobody else has found yet.
The goal for traders is to deduce what investors are likely to do to a stock over a particular time frame - usually
a short time frame. Now ask yourself, what single piece of data is most scrutinized by the investing crowd? The
answer: earnings. The only compelling reason anybody would want to own shares in a company for the long haul
is that the company has at least the potential earnings of similar investment options.
As a trader, keeping tabs on earnings could provide an edge when it comes to being able to answer two key
questions about a company: First, is the company profitable, and what kind of earnings growth are they
achieving? Second, and perhaps most important, what kind of response will any earnings news create? It pays to
find out whether the company has a history of over-promising and under-delivering as well as how investors
typically behave before, during and after earnings news. Also keep in mind that individual stocks have 'groupies'
that create reasonably predictable movement patterns around earnings.
Hype Can Defy The Odds
As any trader will tell you, trading is a game of odds, not a game of logic. That's why most traders use some sort
of data-oriented or charting software. These programs help traders weigh the odds that a particular event will
actually happen. In fact, the more mechanical the trading system, the more effective it usually is.
Retail Research
33
contd
However, there is a flaw in the methodology. The odds that a trader seeks to define are largely based on
history. For instance, a chart-watching technician is looking for particular historical patterns that have
repeatedly led to the same result. When that same pattern is seen again in the future, the trader will act on
the assumption that the same result will yet again be achieved. This gives the trader an idea of his or her odds
for success on a given trade.
The flaw in the trading strategy becomes evident when things go awry. Take the year 1999, for instance. In
that particular year, most traders were seeing all sorts of overbought chart patterns - a condition that
indicates stocks have moved too high too quickly and are likely to pull back. Despite these signals, stocks didn't
pull back until early 2000. Had a trader acted on those bearish signals, he or she would have been well into the
red that year.
How can a methodology that works so well in most cases end up working so poorly in others? In many cases,
hype and hysteria can overcome odds and tendencies and the historical patterns used to calculate the odds
don't account for the kind of madness and euphoria we saw in 1999. In other words, trading software assumes
that all trading environments are always the same when, in many cases, they're not.
As a trader, you absolutely must be able to recognize when a particular trading system is ineffective because
of an abnormal trading environment. This is tough to do, as it bucks the discipline that most traders have
worked hard to develop. However, this skill will save you - and your account balance - a lot of pain.
Buy and Hold - Not Just for Investors Anymore
The term "buy and hold" has become largely interchangeable with long-term investing, but this doesn't mean
that it's something a trader should be unwilling to do.
Traders don't just try to get in and out of trades as quickly as possible because they're trying to fit the mold the issue is one of efficiency. Although everyone knows the market moves, we tend to forget that it moves in
short bursts, rather than with a lot of daily consistency. Long-term investors are OK with this; they just want
to stay invested so they can benefit from the points when stocks do move. Traders, on the other hand, are
simply looking to avoid being in a stagnant stock or index. They prefer to find hot spots or stocks, making the
most of time that would otherwise be wasted.
Retail Research
HOME
contd
However, as a trader, it's easy to get into the habit of rapid entries and exits, even when you shouldn't. Take
the run-up in crude oil prices between late 2001 and early 2006, for instance. Crude futures went from under
$20 per barrel to over $70, for a gain of more than 250%. And if you had the full leverage that futures can
provide, you would have done even better. Would a trader love to have an annualized gain of that magnitude?
You bet! And it could have been achieved with only a handful of contract rollover transactions. However,
trading oil futures in the short term (two weeks to three months) proved to be rather difficult over that fouryear period. As choppy and erratic as oil prices were, most traders weren't able to reap the full benefit of the
major move in oil prices. The most profitable oil futures choice, after commissions, may have been a buy-andhold approach.
Diversification Is Always Prudent
Finally, traders should take a cue from the diversity investors seek, at least in a sense. A traditional investing
strategy typically has a diversification component to it, primarily designed to limit volatility and provide more
chances at holding a winner. Usually this involves spreading a portfolio out among all the major sectors, and
sometimes dividing a portfolio up between different market capitalizations and countries. The idea, though, is
simple - don't put all your eggs in one basket.
Traders tend to be at the other end of the spectrum, solely focusing on just one market, or just a small set of
securities. That, however, is still too much reliance on one kind of opportunity. For example, in a slow or
sideways market, an index futures day trader may not have enough movement in any direction to even cover
commissions. Or, in the same kind of non volatile market, an option trader may find that time decay is far
greater than the net gains of his or her slow-moving option trades. And even for stock swing traders, who focus
on a particular group of names (like technology stocks), an individual equity really needs other stocks in the
same sector or industry to move in the same direction. Otherwise, those trades make little to no progress.
In other words, any style, market, or strategy has a limited useful lifespan. While it's true that everything is
cyclical and that hot markets that turn cold will eventually turn hot again, a one-trick pony may find that he or
she is not getting enough viable opportunities over the course of a year to make it worth the effort. Most good
traders have a couple of different ways to make monetary progress.
The Bottom Line
Nobody owns the corner on how to beat the market, but investors do understand several concepts that help
reach that goal. Traders can use those same concepts too, and significantly improve their returns without
significantly changing their approach.
Retail Research
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35
The month of Aug 2012 saw the markets continuing to trade in a narrow range between the 5164-5449 levels.
The month began with the markets moving higher. The Nifty gained for three consecutive weeks and touched a
high of 5449. Selling however emerged in the last week and wiped out almost all the gains seen in the preceding
three weeks. M-o-M, the Nifty gained a marginal 0.56%.
In the equity space, the FIIs were reported as net buyers of Rs.9,274 cr in August 2012 (In July, they were net
buyers of Rs.10,616 cr). In the F&O space, the FIIs were net buyers in the Index Futures segment. This was along
with the decrease in the open interest. This indicates squaring up of some earlier long positions and value
effect. In the Index Options segment, the FIIs were net buyers, which was along with decline in the open
interest. This indicates squaring up of call or put options bought earlier. In the Stock Futures segment, the FIIs
were net sellers, while the open interest remained flat. The Stock Options segment witnessed poor
participation.
The Sept series has started on a lighter note compared to the previous series. In terms of value, the
Sept 2012 series has begun with market wide OI at Rs.82,760crs. Vs. Rs.86,624crs. at the beginning of the Aug
2012 series. It was Rs.88,921crs. at the beginning of the July 2012 series. The lower participation levels in the
Sept series (compared to the previous series) indicates that traders did not want to aggressively participate
amid heightened worries that the market may give up some of the recent gains if the Government does not push
through market friendly policy measures immediately.
Retail Research
HOME
contd
Rollovers to the Sept series too were lower. While Nifty rollovers were lower at 64% Vs. 70% during the same
time in the previous series, Market wide rollovers were slightly lower at 83% Vs. 84% the same time in the
previous series.
Sectorally, highest rollovers were seen in Power, IT and Metal sectors. Weaken rollovers were seen in Telecom
and Oil and Gas sectors. Coming to stock specific rollovers, highest rollovers were seen in Piramal Health, Tata
Comm, Raymond, NCC and McDowell. The lowest rollovers were seen in Bhushan Steel, HDFC, HCL Tech and
Asian Paints.
Reflecting the range bound market, the Nifty IV remained steady at around 16%. The Nifty OI PCR gave weak
signals as it slid to 1.0 from 1.18 levels last month. This also indicates that there was a lot of put unwinding or
call accumulation happening during the month.
Technically, Nifty is in a downtrend after breaking the lows of 5294. It is now trading in a gap area between the
5220-5260 levels and could fill this gap in the coming weeks. The 200-day EMA resides at 5200, implying that
this is a crucial support to watch and the Nifty could witness at least a temporary bounce from this level.
Index option activity suggests that traders are expecting the Nifty to trade within the 5400-5200 levels in the
coming month. We say this because the maximum call writing is currently being seen in the 5400 strikes.
Maximum put writing is being seen in the 5200 strikes.
Retail Research
36
37
Learning Derivatives Analysis

Using Futures Volume, Price and Open Interest When Trading Futures Markets
Futures volume and open interest are significant factors to monitor when trading futures, for several reasons.
First, let's define the two terms.
Open interest is the total number of futures that have not yet been offset or fulfilled by delivery. It is an
indicator of the depth or liquidity of a futures market, which influences the ability to buy or sell at or near a
given price. Open interest can be a tricky concept, especially for beginners. In a nutshell, here's how open
interest is calculated: If a new buyer (a long) and new seller (a short) enter a trade, open interest increases
by one. However, if a trader already holding a long position sells to a new trader wanting to initiate a long
position, open interest remains the same. And if a trader holding a long position sells to a trader wanting to
get rid of his existing short position, open interest decreases by one.
Volume is the number of transactions in a futures contract made during a specified period of time. It is
usually recorded for one trading session.
You normally will not want to trade a market with very low volume and open interest--or in other words, an
illiquid market. Good and timely fills (order execution) may be hard to obtain. Also, markets with lots of
liquidity are less likely to be manipulated by traders.
Most veteran futures traders agree that volume and open interest are "secondary" technical indicators that
help confirm other technical signals on the charts. In other words, traders won't base their trading decisions
solely on volume or open interest figures, but will instead use them in conjunction with other technical
signals, or to help confirm signals.
For example, if there is a big upside price "breakout" in a futures market (or a stock, for that matter) that is
accompanied by heavy volume, then that only makes the upside move a stronger trading signal. Also, a big
upside move or a move to a new high that is accompanied by light volume makes the move suspect. Big price
moves (up or down) accompanied by heavy volume are powerful trading signals. If prices score a new high or
new low on lighter volume, then that is an indication a top or bottom may be near or in place. Also, if volume
increases on price moves against the existing trend, then the trend may be nearing an end. This is called
divergence.
Retail Research
38
contd
As a general rule, volume should increase as a trend develops. In an uptrend, volume should be heavier on updays and lighter on down-days within the trend. In a downtrend, volume should be heavier on down-days and
lighter on up-days.
Changes in open interest also can be used to help confirm other technical signals. Open interest can help the
trader gauge how much new money is flowing into a market, or if money is flowing out of a market. This is
helpful when looking at a trending market.
Another general trading rule is that if volume and open interest are increasing, then the trend will probably
continue in its present direction--either up or down. And if volume and open interest are declining, this can be
interpreted as a signal that the current trend may be about to end.
Here are two more rules for open interest:
Very high open interest at market tops can cause a steep and quick price downturn.
Open interest that is building up during a consolidation, or "basing" period, can strengthen the price breakout,
when it happens.
Four types of indicators traders can watch for Price fluctuation with OI
Pric e Open Interest Interpretation
Rising
Rising
Market is Strong
Market is
Rising
Falling
Weakening
Falling
Rising
Market is Weak
If prices are rising and open interest is increasing at a rate faster than its
average, this is a bullish sign. More participants are entering the market,
involving additional buying, and any purchases are generally aggressive in nature
If the open-interest numbers flatten following a rising trend in both price and
open interest, take this as a warning sign of an impending top
Market is
Falling
Falling
Strengthening
High open interest at market tops is a bearish signal if the price drop is sudden, since this will force many 'weak'
longs to liquidate. Occasionally, such conditions set off a self-feeding, downward spiral
Retail Research
HOME
contd
Rising prices and a decline in open interest at a rate greater than the seasonal norm is bearish. This market
condition develops because short covering and not fundamental demand is fueling the rising price trend. In
these circumstances money is flowing out of the market. Consequently, when the short covering has run its
course, prices will decline
If prices are declining and the open interest rises more than the seasonal average, this indicates that new short
positions are being opened. As long as this process continues it is a bearish factor, but once the shorts begin to
cover it turns bullish
A decline in both price and open interest indicates liquidation by discouraged traders with long positions. As
long as this trend continues, it is a bearish sign. Once open interest stabilizes at a low level, the liquidation is
over and prices are then in a position to rally again.
Retail Research
39
40
contd
Index Futures Calls

Date
Entry at
Sloss
30-Aug-12
B/S
B
Bank Nifty Sept Fut
Trading Call
0044-10020
9985.0
10165.0
10082.0
30-Aug-12
0.5 Premature Profit Booked
2-3 days
10032.0
50.0
24-Aug-12
Bank Nifty Aug Fut
0415-10430
10475.0
10300.0
10352.6
24-Aug-12
2-3 days
10415.0
62.5
23-Aug-12
Bank Nifty Aug Fut
0565-10595
10620.0
10440.0
10468.0
23-Aug-12
2-3 days
10565.0
97.0
10-Aug-12
Nifty Fut
5348-5334
5320.0
5400.0
5377.0
13-Aug-12
3 days
5345.0
32.0
8-Aug-12
Nifty Fut
3-Aug-12
Bank Nifty Fut
Targets Ex it Pric e / CMP
Ex it Date
% G/L Comments
-0.5 Stop Loss Triggered
Time Horizon A vg. Entry A bs. Gain/Loss
5374-5380
5352.0
5436.0
5352.0
10-Aug-12
0330-10360
10320.0
10463.0
10515.0
6-Aug-12
Entry at
Sloss
2-4
1.5
15.0
5.0
30-Aug-12
1 day
2.8
2.2
1.4-1.1
0.8
2.8
1.8
24-Aug-12
2-3 days
1.4
0.4
1-3 days
5377.0
-25.0
2-3 days
10358.0
157.0
Stock and Nifty Options Calls

Date
B/S
Trading Call
Targets Exit Pric e / CMP
Exit Date % G/L Comments
30-Aug-12
Nifty Sept 5300 Call Option
24-Aug-12
Hindalco 110 Put Option
22-Aug-12
R Power 85 Put Option
1.45
1.0
2.4
2.2
22-Aug-12
1-3 days
1.5
0.8
17-Aug-12
Sterlite 110 Call Option
2.25-1.9
1.2
4.5
3.3
17-Aug-12
2-3 days
2.3
1.1
14-Aug-12
Adani Enterprise 190 Call Option
3-5.5
2.5
10.0
7.3
14-Aug-12
2-3 days
4.8
2.6
8-Aug-12
SBI 2100 Call Option
63-50
40.0
90.0
40.0
9-Aug-12
3 days
60.0
-20.0
7-Aug-12
Tata Motors Aug 240 Call Option
3-Aug-12
Dena Bank 90 Call Option
1-Aug-12
BHEL 230 Call Option
6.3
4.4
10.3
8.1
7-Aug-12
1-3 days
6.3
1.8
3.6-3
2.0
7.0
4.8
6-Aug-12
2-3 days
3.6
1.2
2.5-3.5
2.4
7.0
4.5
2-Aug-12
2-3 days
3.4
1.1
Entry at
Sloss
189.65-180
175
210
197.5
31-Aug-12
4.1
Premature Profit Booked
57.50-56
55
61
55.0
29-Aug-12
-3.5
Stop Loss Triggered
36-38.5
41
44
44.0
28-Aug-12
14.6
Target Achieved
Trading/BTST/Futures Calls
Date
B/S
Trading Call
Exit Date
% G/L Comments
30-Aug-12
Claris Life
29-Aug-12
I nox Leisure
7 days 189.65
28-Aug-12
HCL Info Systems
27-Aug-12
Dishman Pharma
96-96.8
93
104.5
101.0
27-Aug-12
4.4
1-3 days 96.65
4.3
24-Aug-12
AP Paper
316-327
335
352
338.3
24-Aug-12
3.6
2-3 days 326.5
11.75
2-3 days 163.55
-5.55
3 days 57
2-3 days 38.4
7.85
-2
5.6
23-Aug-12
Mastek
158
176
158.0
23-Aug-12
-3.4
Stop Loss Triggered
17-Aug-12
UB Holding
97.35-96
93.75
105
102.4
17-Aug-12
5.3
2-3 days 97.27
5.13
14-Aug-12
Jai Corp
58-57.25
55.5
63
60.7
14-Aug-12
4.6
2-3 days 58
2.65
13-Aug-12
Tinplate
56.9-56.2
54.5
62
54.5
21-Aug-12
-4.2
Stop Loss Triggered
2-3 days 56.9
-2.4
13-Aug-12
Dishman Pharma
84
95
90.8
13-Aug-12
3.5
2-3 days 87.7
3.05
10-Aug-12
ARSS Infra
41.45-40.8
39.5
45.5
43.0
10-Aug-12
4.1
2-3 days 41.3
7-Aug-12
Cox & Kings
140-144.5
139
151
146.2
8-Aug-12
2.8
2-3 days 142.25
1675-1725
163.6-163.5
85-88
6-Aug-12
Astrazeneca
1673
1816
1673.0
6-Aug-12
-1.6
Stop Loss Triggered
2-Aug-12
Britannia
464-472
463
500
482.0
6-Aug-12
3.0
2-3 days 468
14
2-Aug-12
Jindal Saw Holding
620-641
618
684
618.0
3-Aug-12
-1.9
Stop Loss Triggered
2-3 days 630
-12
Retail Research
2-3 days 1700
1.7
3.95
-27
HOME
contd
Positional Calls
Date
B/S
Trading Call
Entry at
Sloss
17.2-17.7
16.7

19.7
16.7
28-Aug-12
Exit Date
585-590
562.0
650.0
622.5
24-Aug-12
% G/L Comments
Gujarat NRE Coke
17-Aug-12
Shriram Tranport Finance
13-Aug-12
Everonn
163.5-157
148.0
180.0
157.0
16-Aug-12
13-Aug-12
Shasun Pharma
129-133.5
125.0
152.0
141.0
17-Aug-12
6-Aug-12
Arshiya
25.6-123.5
119.0
140.0
130.2
17-Aug-12
1 week
Retail Research
24-Aug-12

4-8 days
17.6
-0.9
1-2 weeks
587.5
35.0
7 days
163.0
-6.0
1-3 weeks
133.4
7.6
124.8
5.4
41
HOME
FII & Mutual Fund Flow and indices moves during August 2012
Total FII Inflow s/Outflow s during the month of August 2012. (A ll figures in Rs. Cr.)
W eek Ended
Buy
Sold
Net
Cumulative
4/8/2012
5379.8
4387.6
992.2
992.2
11/8/2012
11545.5
8511.9
3033.6
4025.8
18/8/2012
8613.7
7510.2
1103.5
5129.3
25/8/2012
8340.4
7274.8
1065.6
6194.9
31/08/2012
13872.8
10793.3
3079.5
9274.4
Total
47752.2
38477.8
9274.4
Total MF Inflow s/Outflow s during the month of August 2012. (A ll figures in Rs. Cr.)
W eek Ended
Buy
Sold
Net
Cumulative
4/8/2012
1247.8
1291.5
-43.7
-43.7
11/8/2012
2250.3
3042.7
-792.4
-836.1
18/8/2012
1920.4
1773.7
146.7
-689.4
25/8/2012
1804.8
2161.6
-356.8
-1046.2
31/08/2012
2312.4
2866.5
-554.1
-1600.3
Total
9535.7
11136.0
-1600.3
BSE Indic es
31-Aug-12
31-Jul-12
17429.6
17236.2
Smallcap
6395.1
6447.9
-0.82 Power
1870.8
1896.9
-1.37
Midcap
6005.0
6012.3
-0.12 Capital Goods
9447.5
9600.2
-1.59
500
6632.3
6605.7
0.40 Auto
9240.4
9114.1
1.39
200
2124.1
2114.5
0.45 Oil & Gas
8211.5
8158.2
0.65
100
5251.1
5229.2
0.42 PSU
6939.4
7105.0
-2.33
Realty
1510.9
1637.6
-7.74 IT
5742.0
5345.0
7.43
Consumer Durables
6241.0
6296.9
-0.89 FMCG
5355.6
5045.5
6.15
Metal
9687.5
10477.6
-7.54 Healthcare
7495.6
7141.6
4.96
Sensex
% c hg BSE Indic es
1.12 Bankex
Retail Research
31-Aug-12
31-Jul-12
% c hg
11515.9
11910.5
-3.31
42
HOME
Gainers & Losers August 2012

Top Gainers From F&O
Pric e
Top Losers From F&O
Pric e
Pric e
31-Jul-12
31-Aug-12
BALRAMCHIN
54.2
67.2
23.9
MTNL
30.4
37.1
Pric e
31-Jul-12
31-Aug-12
IFCI
35.4
25.6
-27.7
22.0
SKUMARSYNF
26.7
19.5
-26.8
% c hg
% c hg
APOLLOTYRE
77.8
93.8
20.6
ALOKTEXT
15.8
11.9
-24.8
MCDOWELL-N
809.2
969.2
19.8
IBREALEST
55.9
43.0
-23.0
FINANTECH
720.7
840.6
16.6
GMRINFRA
23.3
18.2
-21.7
2554.3
2975.0
16.5
JISLJALEQS
81.1
64.1
-21.0
TECHM
713.1
798.6
12.0
PATELENG
83.8
66.5
-20.6
CIPLA
338.6
376.5
11.2
OPTOCIRCUI
153.9
123.3
-19.9
GSPL
70.6
78.4
11.0
JPPOWER
31.8
25.6
-19.5
497.5
551.7
10.9
SUZLON
18.5
15.0
-18.7
OFSS
RANBAXY
Top Losers From CNX 500
Top Gainers From CNX 500
DISHMAN
Pric e
Pric e
31-Jul-12
31-Aug-12
% c hg
Pric e
Pric e
31-Jul-12
31-Aug-12
% c hg
69.6
98.6
41.7
KEMROCK
398.6
115.4
-71.0
AMARAJABAT
294.1
375.0
27.5
SUJANATOW
6.3
4.2
-32.8
LAXMIMACH
1553.6
1981.0
27.5
MOSERBAER
8.0
5.5
-30.8
127.0
160.7
26.5
IFCI
35.4
25.6
-27.7
54.2
67.2
23.9
SKUMARSYNF
26.7
19.5
-26.8
5.8
4.4
-25.0
SHASUNPHAR_T
BALRAMCHIN
MTNL
30.4
37.1
22.0
MVL
JKIL
154.6
187.5
21.2
ALOKTEXT
15.8
11.9
-24.8
COROMANDEL
247.7
299.0
20.7
3IINFOTECH
10.3
7.9
-23.8
APOLLOTYRE
77.8
93.8
20.6
IBREALEST
55.9
43.0
-23.0
426.4
512.9
20.3
IBPOW
12.8
9.9
-22.7
VENKEYS
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43
44
RETAIL RESEARCH TEAM

Head of Research
Fundamental Analyst
Deepak Jasani
Mehernosh Panthaki
Technical/Derivatives
Analyst
Sneha Venkatraman
Tiju K Samuel
Adwait Sapre
Kushal Sanghrajka
Subash Gangadharan
Siji Philip
Siddharth Deshpande
Nagaraj Shetti
Mutual Fund Analyst
Dhuraivel Gunasekaran
Production
Sushma Chavan
HDFC Securities Limited, I Think Techno Campus, Bulding B, Alpha, Office Floor 8, Near Kanjurmarg Station,
Opp. Crompton Greaves, Kanjurmarg (East), Mumbai 400 042 Phone (022) 30753400 Fax: (022) 30753435
Disclaimer: This document has been prepared by HDFC Securities Limited and is meant for sole use by the recipient and not for
circulation. This document is not to be reported or copied or made available to others. It should not be considered to be taken as an
offer to sell or a solicitation to buy any security. The information contained herein is from sources believed reliable. We do not
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Monthly Report September 2012

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Monthly Report September 2012

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Monthly Report September 2012

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Monthly Report September 2012

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Monthly Report September 2012

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Monthly Equity Commentary

Monthly Report September 2012

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Monthly Report September 2012

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Monthly Report September 2012

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Monthly Report September 2012

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Monthly Report September 2012

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Monthly Report September 2012

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Monthly Report September 2012

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EM EUROPE & MI DDLE EAST

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Monthly Report September 2012

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Comparison of Equity Returns in various markets - MSCI Indices in US$ terms

Monthly Report September 2012

Monthly Equity Commentary

Monthly Report September 2012

Monthly Equity Commentary

Monthly Report September 2012

Monthly Equity Commentary

Monthly Report September 2012

Monthly Equity Commentary

Monthly Report September 2012

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Monthly Report September 2012

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Monthly Report September 2012