Financial Assets @ November 2015

MARKET UPDATE

• Economic growth: Declining commodity prices, especially crude oil, bodes well for India and will further help reduce the Current

Account Deficit. We also believe that declining domestic inflation, deflationary pressures globally and positive policy actions by the government will support further rate cuts by the RBI.

• Earnings growth: We believe earnings growth will average closer to 17-18% p.a. for FY 2016 and FY2017. India’s ROEs seem to

have bottomed out and we see a recovery from here on.

• Markets will benefit: Pick up in corporate earnings growth, fall in interest rates and expanding return on equity (ROE) for

corporate India should be the key drivers in the medium to long term.

Fixed Income Market Outlook

• RBI policy: We believe that the RBI’s larger-than-expected rate cut is aimed at jump-starting economic activities ahead of commencement of busy-season credit period. Based on that, we expect the RBI to maintain a status quo on the Repo Rate till

March 31, 2016.

• Government bond yields: We are constructive on government bond yields over the medium-term and expect the yield curve to

gradually steepen. We expect systemic liquidity to remain benign in the near-term.

Equity Market Outlook

Eqy Markets

• S&P BSE SENSEX had a positive month (up 1.9% in INR terms and 2.7% in USD terms)

• Mid caps underperformed large caps by 0.3% but small caps outperformed large caps by 0.8% (both in INR terms)

Inflation

• September CPI increased to 4.4% vs 3.7% in August, in line with expectations; core CPI remained soft at around 4%

• This increase can be attributed to uptick in prices of vegetables and pulses, and waning base effect

• US Federal Reserve kept rates unchanged citing weakness in exports and soft inflation

• People’s Bank of China cut 1 year lending rates to a record low of 4.35%, while ECB announced that it

was ready to expand stimulus and cut rates

Global Macro

• August IIP numbers saw an encouraging pick-up at 6.4% vs 4.1% in July, hitting a multi-year high

• Manufacturing, electricity, mining, capital goods and consumer durables sectors all displayed improvement in growth

Economic Growth

• Fiscal deficit reached 68% of the annual target, lower than 82.6% achieved in same period last year

• Falling oil subsidy costs and curbs on spending helped rein in the deficit, even as revenues from asset sales fell short of expectations

Fiscal Deficit

Submission:

BSE Sensex looks like consolidating at current levels with 10% - 15% plus, minus. This consolidation phase is expected to be seen in market till March 2016. Good time to participate  in the market in installments. Debt Market with further interest rates cut has been investment heaven.