India Monthly Wrap- Sept 2011: Reflecting European hope and despair:: JPMorgan

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


 MSCI India (US$) lost a meaningful 7% over the month, but
outperformed the MSCI EM index (down 15%) significantly.
Globally, risk assets sold off on risk aversion due to the European
sovereign crises. India equities fared relatively better given lower
exposure to the global economy. IT Services, Consumer Discretionary
and Energy were relative outperformers, while Telecom, Industrials and
Materials underperformed.
 RBI hiked benchmark rates by 25 bps. In line with market
expectations, the Repo rate was hiked to 8.25% in the mid-quarter policy
review. The Central Bank emphasized that inflation remains
significantly above its comfort zone and that any premature change of
monetary stance would risk hardening inflationary expectations.
 INR depreciated significantly. INR depreciated a significant 7% over
the month, in line with the depreciation of most other key EM currencies,
ex China. Disappointing policy developments in Europe led to
heightened risk aversion and a sharp appreciation of US$.
 July IP disappointed. July IP increased at a significantly lower-thanexpected
3.3% oya. The negative surprise came from a sharp contraction
in the Capital goods segment.
 DIIs and FIIs buyers. FIIs invested a marginal US$ 6 mn into Indian
equities. DII remained buyers over the month. Insurance companies
bought US$496 mn, while domestic mutual funds sold US$153 mn over
the month.
 Other key developments over the month:
 Headline WPI Inflation for August reported at 9.8%.
 10 year treasury yield increased by 11 bps to 8.43% over
September.