India Weekly Kickstart - Portfolio Strategy Research: Goldman Sachs

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India Weekly Kickstart
Portfolio Strategy Research
ait WPI print & EGoM meet on fuel prices   Markets end flat wow despite Friday’s surge; aw
ANK Index declined 1.1% wow, while CNXFMCG Index gained 3.9% wow.  Banks continued to underperform; CNXB 
FIIs have bought US$398 mn ytd and DIIs have bought US$3.1bn ytd. 
le, losing 13% and 7%, respectively wow. MCX Silver and Energy continued to tumb 
to 15% vs. consensus’ 19%; reiterate underweight view. We have pared our top-down 2011E EPS growth for India  
Overview
NIFTY (-0.1%) and SENSEX (+0.1%) ended almost
unchanged wow despite continued weakness in
commodities and better than expected macro data,
which showed that IP grew 7.3% yoy in March,
above the revised +3.7% (from 3.6%) yoy in Feb.
The IP print was significantly higher than
consensus expectation of 4% yoy. We remain
underweight on India mainly on macro concerns,
are overweight on IT, Energy, Telcos & Healthcare,
and look for, among others, a turn in the macro
and policy cycle to adopt a more positive stance.
NIFTY price performance
NIFTY ended flat last week, and is down 9.6% ytd
 GS Global ECS Research.  , Datastream , Source: NSE
Foreign and domestic flows
FIIs sold US$86mn, while DIIs bought US$460mn
last week as of May 11, 2011.
Earnings sentiment and relative valuation
MSCI India Financials had the strongest EPS
sentiment (+10.7%) last week. MXIN is trading at
14.6X forward earnings after valuations tightened
sharply.
Commodities
MCX Silver fell 13% further, Energy fell 7.3% wow
to drag commodities 5.1% lower wow. MCX Crude
Oil also fell, 9.9% wow. Soft commodities were
more resilient and ended flat wow.
Earnings results and events
FY11 results: SBI (May 17), Bajaj Auto (May 18).
Events: Monthly WPI (May 16)