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India Weekly Kickstart
Portfolio Strategy Research
Hike inline with expectations; markets in risk-off mode as RBI fights inflationary pressures
The decline was broad-based with CNXIT Index (-4.5%) and CNX Energy Index (-4%) faring the worst wow.
Mild foreign outflows of US$ 203mn wow and domestic inflows of US$ 251mn, as of the close of June 15, 2011.
WPI print came in at 9.1% yoy for May, higher than expectations of 8.7% yoy. Core & food prices rose sharply.
De-risking continued across Asia as markets fell almost 3% for the second consecutive week.
Overview
Although the 25bp hike was inline with expectations,
markets lost 2.2% wow after the RBI reiterated its
hawkish stance despite softer domestic demand and
mainly due to sticky inflation. The WPI print for May
came in at 9.1% yoy vs. expectations of 8.7% yoy. As
expected, March headline inflation was revised up to
9.7% yoy vs. 9% previously. Rate sensitive stocks
such as CNX Pub. Sector Banks declined 2.2% wow
while CNX Info. Tech. slid 4.5% wow as the Eurozone
debt crisis deepened. Overall, the macro-cyclical
environment remains challenging for Indian equities
amid sharp valuation compression.
NIFTY price performance
NIFTY fell 2.2% last week, down 12.5% ytd
Source: NSE, Datastream, GS Global ECS Research.
Foreign and domestic flows
FIIs have sold US$ 178mn ytd, while DIIs bought
US$ 3.4bn ytd as of the close of June 15, 2011.
Earnings sentiment and relative valuation
MSCI India Telcos. & Financials saw the weakest
EPS sentiment wow. MSCI India is currently
trading at 13.9X forward earnings. FY12E and
FY13E Earnings continue to be revised down.
Commodities
MCX Commodities declined 3.2% last week as
Energy (-5.9%), Metals (-1.4%) and Agri
commodities (-2.6%) pulled back sharply.
Focus
Hiking Away – A stream of poor macro data has
led to renewed expectations of policy tightening
despite the RBI having hiked rates by 75bps since
May 2011.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
India Weekly Kickstart
Portfolio Strategy Research
Hike inline with expectations; markets in risk-off mode as RBI fights inflationary pressures
The decline was broad-based with CNXIT Index (-4.5%) and CNX Energy Index (-4%) faring the worst wow.
Mild foreign outflows of US$ 203mn wow and domestic inflows of US$ 251mn, as of the close of June 15, 2011.
WPI print came in at 9.1% yoy for May, higher than expectations of 8.7% yoy. Core & food prices rose sharply.
De-risking continued across Asia as markets fell almost 3% for the second consecutive week.
Overview
Although the 25bp hike was inline with expectations,
markets lost 2.2% wow after the RBI reiterated its
hawkish stance despite softer domestic demand and
mainly due to sticky inflation. The WPI print for May
came in at 9.1% yoy vs. expectations of 8.7% yoy. As
expected, March headline inflation was revised up to
9.7% yoy vs. 9% previously. Rate sensitive stocks
such as CNX Pub. Sector Banks declined 2.2% wow
while CNX Info. Tech. slid 4.5% wow as the Eurozone
debt crisis deepened. Overall, the macro-cyclical
environment remains challenging for Indian equities
amid sharp valuation compression.
NIFTY price performance
NIFTY fell 2.2% last week, down 12.5% ytd
Source: NSE, Datastream, GS Global ECS Research.
Foreign and domestic flows
FIIs have sold US$ 178mn ytd, while DIIs bought
US$ 3.4bn ytd as of the close of June 15, 2011.
Earnings sentiment and relative valuation
MSCI India Telcos. & Financials saw the weakest
EPS sentiment wow. MSCI India is currently
trading at 13.9X forward earnings. FY12E and
FY13E Earnings continue to be revised down.
Commodities
MCX Commodities declined 3.2% last week as
Energy (-5.9%), Metals (-1.4%) and Agri
commodities (-2.6%) pulled back sharply.
Focus
Hiking Away – A stream of poor macro data has
led to renewed expectations of policy tightening
despite the RBI having hiked rates by 75bps since
May 2011.
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