ADVICE for the WISE

Newsletter – December’10

Index Economic Update Equity Outlook Debt Outlook Forex Commodities

Page No. 4 8 17 21 22

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Dear Investor, Indian equity markets experienced significant turbulence in the past month. This was owing to both domestic and global factors. On the domestic front the uncovering of multiple scams spooked the investors who worried about the potential fallout of the scams on political stability. Globally monetary tightening in China and renewed sovereign debt concerns in Ireland renewed the fears of most investors regarding the fragile nature of recovery in global economy. The fears of political instability on the domestic front have now subsided. However the concerns regarding the so-called ‘unknown unknowns’ remain. Globally the state of affairs is unlikely to become much better in near future. Europe is likely to continue to experience periodic bouts of sovereign debt concerns amongst its less stable economies. While this may cause worry for the global investors, it is likely to have limited impact on either the Indian economy or the investor sentiments regarding Indian markets. On the other hand, the policy-driven slowdown in growth in China to tame inflation might cause reduction of risk appetite for emerging markets amongst global investors. There might be a silver line for Indian markets here if the pace of Chinese slowdown is not significant and the global investors merely reallocate the emerging market portions of their portfolios. However, a hard landing for the Chinese economy however will most certainly bring about the proverbial ‘flight to safety’ driving down asset markets in emerging economies!

While we advise staying invested in the equity markets, investors worried about short term volatility or carrying a trading portfolio can use a 2 month slightly out-of-the-money put option on the Nifty Index to hedge the downside. When one looks beyond the next quarter, the effect of global factors on Indian markets is going to play an important role. The desperate efforts of the US Federal Reserve to drive economic activity by bringing down long term yields through quantitative easing will send a wave of liquidity through the globe. Much as it happened in 2006 and 2007, this is likely to boost the asset markets globally. The Indian investors need to be cognizant of the impending over-valuation this may bring to equity and real estate markets here. Equally importantly they should be mindful of the potential falls that come as the risk appetite subsides. The next few years thus are likely to be fairly volatile for Indian asset markets. As we had recommended over last few months, gold continues to be effective as a useful hedge against asset bubble built on easy liquidity and their pricking. Most importantly since the source of the liquidity is the US thus potentially driving value of dollar down, gold becomes relevant as dollar hedge as well. Last month saw several specific stocks drop significantly in price owing to their perceived link to the housing loan scam. While some of these are likely to have a real impact on their books due to the crisis, most are beaten down by panic. That makes a good case for buying selectively into some of the ‘fallen angels’.

“Advisory services are provided through Karvy Stock Broking Ltd. (PMS) having SEBI Registration No: INP000001512. Investments are subject to market risks. Please read the disclaimer on slide no.24”

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Equity markets

BSE Sensex S&P Nifty S&P 500 Nikkei 225

As on th 2010 Nov 30 19,521 5,863 1,180 9,937 8.19% 6.50% 7.00%

Change over last month (2.1%) (2.6%) (0.2%) 8.0% 4 bps (25 bps) 0 bps

Change over last year 15.3% 16.5% 7.8% 6.3% 94 bps 350 bps 100 bps

128 123 118 113 108 103 98 93 88

Sensex S&P 500

Nifty Nikkei 225

Debt markets

10-yr G-Sec Yield Call Markets Fixed Deposit*

8.4 8.2 8 7.8 7.6 7.4 7.2 7 6.8

10 yr Gsec

Commodity markets

RICI Index Gold (`/10gm) Crude Oil ($/bbl)

3,614 20,500 86.60

2.7% 4.2% 6.3%

11.1% 16.1% 11.4%

20000 19500 19000 18500 18000 17500 17000 16500 16000 15500 15000

Gold

Forex markets

Rupee/Dollar Yen/Dollar

46.04 84.15

(3.4%) (4.6%)

0.9% 2.9%

48 47.5 47 46.5 46 45.5 45 44.5 44
Dec-09 Jan-10 Nov-09

`/$

Apr-10

Jul-10

Feb-10

Mar-10

Jun-10

Aug-10

Sep-10

Oct-10

* Indicates SBI one-year FD

May-10

Nov-10

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US

• The Conference Board Consumer Confidence Index rose to a five month high of 54.1 in November from 50.2 in October. This indicated a positive outlook from the consumers and favorable business conditions as the holiday season begins. • US m-o-m unemployment rate remained unchanged at 9.6 per cent in Oct’10. • Euro-zone purchasing managers index rose to 55.4 in November from 54.6 in October. The growth was driven by improvement in the German and French economies while debt burdened Ireland and Spain continued to struggle. Owing to a strong German recovery, the Service Job index was at its highest level since February ’10. • Unemployment in the Euro zone was at a 10 yr. high of 10.1% in October. • Japan’s industrial production declined by 1.8% in October as stimulus effects waned and slowing global demand hit exports. The manufacturing PMI increased to 47.3 from 47.2 October but still indicated contraction in the Japanese markets. • Japan’s unemployment rate increased to 5.1% in Oct 10 from 5% in Sept 10. • The HSBC China Manufacturing Purchasing Managers Index, rose to 55.3 in November from 54.7 in Oct. indicating accelerating manufacturing activity. • China’s GDP is expected to rise 10% in 2010 (revised upwards from 9.5%) accelerating from 9.1% in 2009. The economy grew at 11.9% in the first quarter, 10.3% in the second quarter and 9.6% in the third quarter. 5

Europe

Japan

Emerging economies

19.0% 14.0% 9.0% 4.0%

IIP monthly data

• The GDP growth rate for Q2 FY11 came in at 8.9% backed by a strong growth in services and agricultural output. • The agriculture sector, which accounts for nearly 17% of GDP, rose 4.4% and this offset the moderation manufacturing sector growth, where production went up by 9.8%. The services sector too grew at 9.7% during July-September this year, led mainly by finance and real estate as well as trade, hotels, transport and communication • The Finance ministry is targeting FY11 growth at ~8.50% - 8.75% which may be revised upwards. We believe the current target is sustainable as we expect manufacturing and service sectors to continue to drive growth in the next few quarters.

• Industrial output as measured by the Index of Industrial Production (IIP) grew by 4.4% (y-o-y) in September ‘10 as compared to an upward revised 6.9% in August ‘10. Decline in capital goods output along with a base effect pulled down the index. • Though 14 out of the 17 industries, which constitute the IIP, posted positive growth in September, the quantum of increase was modest. Important sectors like chemicals, metals and machinery registered negative growth. • Growth in manufacturing, which constitutes around 80 per cent of the IIP saw growth slip to 4.5 per cent from 11 per cent a year ago. • We believe the growth will eventually moderate out and may end lower than that seen in the first part of the fiscal.

10 9 8 7 6 5 4

GDP growth

FY09 (Q2) FY09 (Q3) FY09 (Q4) FY10 (Q1) FY10(Q2) FY10(Q3) FY10(Q4) FY11(Q1) FY11(Q2)

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Growth in credit & deposits of SCBs
23.0% 21.0% 19.0% 17.0% 15.0% 13.0% 11.0% 9.0% 7.0% 5.0% Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Bank Credit Aggregate Deposits

• Inflation as measured by WPI stood at 8.58% (y-o-y) for the month of October -10 as compared to 8.62% during September 10. These figures are based on the new base year and WPI list. • We expect WPI inflation numbers to moderate in m-o-m inflation numbers due to the expected decrease in food inflation and the monetary tightening stance by RBI.

• After a dip in August and September, bank credit growth increased in the month of October to 20.4% as compared to 19.0% in the month of September 2010. • We expect credit growth to further improve in the next few quarters and settle at ~20% levels on the back of improving business confidence and decline in risk aversion on the part of banks. Increase in exposure to Infrastructure projects is also expected in the second half of the fiscal.

12.0%

Inflation

10.0%
8.0% 6.0% 4.0% 2.0% 0.0% Oct-09

Jan-10

Mar-10

Jun-10

May-10

Nov-09

Apr-10

Aug-10

-2.0%

Dec-09

Sep-10

Feb-10

Oct-10

Jul-10

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Bloodbath that started on the Dalal Street after the Diwali week got extended through the month as global worries and 2G spectrum allocation and housing loan scams back home spooked the bourses. Volatility remained evident throughout the month as futures and options’ (F&O) traders switched their positions from November month contracts to next month series. Realty counter suffered deep cuts during the month as investors rushed for profit booking in anything related to real estate or infrastructure space after the Central Bureau of Investigation (CBI) unearthed fake housing loan scandal. Metal, public sector undertaking and capital goods pockets also took serious beating from the bears. On the flip side, software and technology counters showed some strength in relative sense. The S&P CNX Nifty lost about 2.6% to close at 5,863 in November. The real damage however was inflicted in the mid cap and small cap indices which declined by over 6%. The real estate index lost over 10% during the month, while BSE Bankex fell by a little over 6%. Mirroring their faith on the Indian economy, overseas funds have infused a staggering $4.78 billion in the capital market in November, taking the year-to-date total to $39 billion. The index for food prices came down to a single digit after four months, dipping to an 18-month low of 8.6% in the week ended November 20. The decline came about on arrival of winter crops in the market but onions, fruits and milk became costlier. Food inflation was at this level last in May 2009. The decline is expected to ease pressure on headline inflation, which stood at 8.58% in October, allowing the Reserve Bank some breathing space in its next monetary policy review. The new GDP numbers released by the government show that the Indian economy continues to maintain its growth momentum despite a tough global environment. At 8.9% for a second quarter in a row, the economy is growing near its trend rate and fears of overheating seem to be overdone right now. There are two underlying trends that deserve closer attention. First, the revival in farm output this summer from its drought-induced trough in 2009 has pushed up GDP in the second quarter. Farm output has grown at the fastest rate in 11 quarters. Maintaining this growth rate is almost impossible. Meanwhile, manufacturing growth has slowed down and has also been volatile in recent months. There have been problems with the way the index of industrial production is calculated but that is the best indicator we have for now. The wild swings in factory output are a worry.

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Second, the GDP numbers show that private sector demand continues to pick up. A huge increase in government spending had supported economic activity in the crisis months of late 2008 and early 2009, but the private sector has now stepped it to pick up the slack in domestic demand that could have arisen as the government tries to cut its fiscal deficit. Yet, private consumer demand seems to be doing better than private investment demand. High frequency data on cement dispatches, telecom subscribers, car sales and airline bookings suggest that consumer spending continues to be robust. The domestic equity markets may consolidate around the current levels next month before showing any significant moves either way. Developments on recently unearthed housing loan scandal will be on investors’ radar. Developments from South Korea and Ireland will also be important for the equity markets across the globe. While news flow will continue to impact markets in the near term, the valuations remain fair and will continue to attract foreign money. The prospective risk return ratio looks favorable for entry into these markets for long term investors. Investors should increase exposure to quality equity ideas selectively. At 16.5x FY12 earnings, growth is clearly the guiding valuation influencer for the markets. And that is unlikely to change in the near future.

FII & MF data
25000.0 20000.0 15000.0 10000.0 5000.0 0.0 -5000.0 -10000.0 -15000.0 FII MF

• FIIs invested ` 18,293 Cr. in equities in the month of November. This was ` 10,000 Cr. lesser than last month which witnessed huge inflows in the Coal India IPO issue. The markets declined by 2% in the month on account of the various scams discovered in the real estate, banking and 2G space. • Mutual Funds invested around ` 251 Cr. in the month of November as market correction provided good levels to invest. 9

Sector

Stance

Healthcare

Highly Overweight

Remarks We believe in a large sized opportunity presented by Pharma sector in India. India’s strength in generics is difficult to replicate due to quality and quantity of available skilled manpower. With the developed world keen to cut healthcare costs, and a vast pipeline of drugs going off-patent, Indian pharma players are at the cusp of rapid growth. Here, we have taken exposure to medium-sized, nonindex ideas while trying to play on the opportunity in Generics and CRAMS. The USD 1 trillion Infra opportunity is hard to ignore. Here, we have carefully taken Power sector as our dominant bet over other sub sectors such as ports, roads and telecom infrastructure, because of favorable economics under PPP model. Within power, we focus on the engineering companies over utilities, T&D and other infrastructure owners because of their superior profitability and better competitive dynamics. Financial sector is undeniably the lubricant for economic growth. Whether the growth comes from consumption or investments, credit growth is inevitable. Being a well regulated sector, BFSI in India has good asset quality and capital adequacy ratios. This, when juxtaposed to the growth opportunity available makes an attractive long term opportunity. The exposure is in “discretionary consumption” beneficiaries such as Paints and branded food, as the growth in this segment will disproportionately higher vis-à-vis the increase in disposable incomes. This also provides a defensive posture to the portfolio. Despite the regulatory hurdles, competitive pressures and leverage we believe in the mammoth opportunity here, largely because of the continuing under-penetration of voice in rural markets and huge demand for data services in urban markets. 3G & BWA will make sure the revenues grow at reasonable pace. Discretionary consumption again. 10

E&C

Overweight

BFSI

Overweight

FMCG

Neutral

Telecom

Neutral

Sector

Stance

Remarks Rich valuations, maturing growth and the menace of appreciating Rupee makes us little cautious here. We have chosen to be with the bellwether stock here and believe we have better sectors to look at. We believe in the growth prospects here but raw material prices and raging competition indicates issues. The rich valuations don’t help either. We have taken a position in the commercial vehicle segment as things are looking much better there. Through a single company, we have taken a large-sized exposure to refinery and natural gas exploration sector. The regulatory cap on RoE does not allow a vast value creation opportunity in the infrastructure owning companies. We have also purposely tried to stay away from PSUs, due to issues of cross subsidization distorting the underlying economics of oil exploration and refinery businesses. India is not completely isolated from global slowdown. Commodity prices are an international issue. We have chosen to stay away with a cautious view to the global commodity cycle. Cement demand will certainly grow over the next three years. But the issue is on the supply side. We do see an oversupply situation for the next 3-4 quarters. We like power sector but believe that greater value will be created by engineering services providers. Utilities may be a more defensive play, but we have been defensive enough for the time being. 11

IT/ITES

Underweight

Automobiles

Underweight

Energy

Underweight

Metals

Underweight

Cement

Negative

Power Utilities

Negative

Stock

CMP

Price as on 5th Nov.

52 Wk high

52 Wk. Low

P/E

P/B

Central Bank of India
Biocon PNB Orbit Corp

198.4
406.1 1269.6 91.35

243.4
433.0 1376.0 117.75

249.05
464.60 1395.00 178.03

136.55
253.15 842.10 57.00

6.72
27.26 9.33 11.8

1.84
5.19 2.47 1.23

Due to a number of scams being unearthed, Indian equity markets have experienced a correction in the recent weeks. During this correction, some stocks have been hit particularly harder than the rest and thus have witnessed a much sharper fall than their peers. Many of them have fallen well below their fair market value. Such stocks may be interesting investment options at their current levels. Few of these have been specified above. Besides these, several other stocks in the real estate and banking domain will be attractive buys due to the sharp correction experienced by both those sectors.

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Fund Details
Management Style

Fund framework & management style
Active Moderate Passive High Medm Low Extent of diversification

NAV (As on 30th Nov, 2010) Rs. 114.11 AUM: Rs. 1,503 Cr. Minimum investment: Rs. 5,000 Entry Load: Nil Exit Load: < 1 yr Else Options: Growth, Dividend Expense Ratio: 1.99% Risk Analysis Sharpe Ratio: 0.22 Std. Deviation: 37.44% Risk Level: High Return Potential: High Market Cap: Large 1.00% Nil

• Concentrated stock portfolio investing in a single sector • The fund is managed by Mr. Sunil Singhania who believes in capital appreciation though long term investing

Performance and performance attribution

• The fund has very consistent performances over the years and has outperformed the index at every instant over time periods • While the Banking sector as a whole has been an outperformer, the fund has consistently beaten the Banking index due to superior stock selection skills
Sector concentration & view on sector orientation

80% 60% 40%
20% 0%

Reliance Banking

50.0% 36.5% 28.8% 35.6%

BSE Bankex

22.9%

30.1% 23.2%

7.8%

6 mth

1 year

3 years

5 years

Top company exposures & portfolio quality

• Banking is the best proxy to GDP growth • We believe Banking stocks are attractive due to low NPAs and reasonable P/Es. As the economy improves, we expect NPAs to further go down and credit growth to pick up; thereby aiding growth in Banks.

• Fairly concentrated stock portfolio with 18 stocks with top ten stocks constituting 82.6% of the portfolio • Stock selection has been excellent in the last few years
Summary

We believe the recent correction in the markets provides an opportunity to investors to buy the fund at attractive levels. The fund manager’s ability to pick up multi baggers in the Banking space has resulted in the fund’s tremendous performance over the years and is recommended for investors with a long term investment horizon

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DELTA seeks to invest in a portfolio of mutual funds through a PMS route that aims to would provide higher returns than the blended benchmark.

The asset allocation between Debt and Equity would be done on the basis of the risk profile of the investor (conservative, moderate or aggressive)

• •

There is further allocation into sub-asset classes depending on our views on the same The portfolio would be reviewed and rebalanced regularly to maintain the asset allocation and the right selection of funds

Asset Allocation for DELTA:

Asset Class Equity Debt

DELTA Conservative 43% 57%

DELTA Moderate 66% 34%

DELTA Aggressive 82% 18%

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*
Portfolios
Conservative Market Return Benchmark** Moderate Market Return Benchmark** Aggressive Market Return Benchmark** Absolute Return Benchmark

6 Months (Absolute)
7.85% 7.06% 11.70% 10.00% 13.38% 11.68% 5.25%

1 Year (Absolute)
11.46% 9.70% 16.23% 12.59% 18.56% 14.32% 6.00%

Since Inception (29/4/09) CAGR
28.17% 22.33% 40.94% 31.79% 49.50% 38.54% 7.75%

Asset Class
Market Return Benchmark: Equity Market Return Benchmark: Debt Absolute Return Benchmark

Benchmarks
BSE 200 CRISIL Composite Bond Fund Index SBI 1 year Fixed deposit rate

*(Returns as on 30th November 2010) The performance specified is post management fee and all other expenses. The fixed fee model has been considered in all cases. **The Market Return Benchmark is based on BSE 200 and Crisil Bond index, taken in the same proportion as the asset allocation of that variant

15

Karvy Principal Protected Note Linked to S&P CNX Nifty Index Issuer Tenor Index Minimum Investment Principal Protection Participation Rate Assured Coupon Karvy Financial Services Limited 36 / 40 months S&P CNX Nifty Index Rs. 50,00,000 100% 50% 22.50%

Initial Level Outcomes at Maturity Final Level
Payoff 40%

Official Closing level of S&P CNX Nifty Index level on DDA Note Return Average of Official Closing level of S&P CNX Nifty Index level on DDA+1M, DDA+2M, DDA+3M ……..DDA+36M * for all 36 months+
22.50% + Max { 0%, PR* (Final Level/Initial Level -1)}

22.50% + 45% return x 50% participation rate

42.50%

10%

22.50% + 10% return x 50% participation rate

27.50%

-20%

22.50% + 0%

22.50%

This example is for illustrative purpose only and does not constitute a guaranteed return or performance.

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9.2 9.0 8.8 8.6 8.4 8.2 8.0 7.8 7.6 7.4 7.2

Yield curve

• The benchmark 10 yr G-sec yield increased from 8.15% in the month of October to close at around 8.19% in November. • We believe that future monetary tightening measures are unlikely to have a major impact on the longer end of the yield curve. We also believe that this is the peaking of the Interest rate cycle and unless Inflation doesn’t increase drastically, we may not have further tightening in the system. We expect the 10 yr G-sec yields to remain in the broad range of 7.5 – 8.5% in the next few quarters.
8.4 8.2 8

(%)

• We expect yields at the longer end of the yield curve to remain stable. High inflation, monetary tightening and rising credit growth will keep the yields at the longer end range bound. • With increase in rates in the November review, the 10 year G Sec yields were around 8.15%. We expect this to be the peaking of the interest rate cycle and another rate hike may not be seen in the immediate future. The yields will stabilize around 7.5 – 8.5% levels by year end.

0.0 0.7 1.4 2.1 2.8 3.5 4.2 4.9 5.5 6.2 6.9 7.6 8.3 9.0 9.7 10.4 11.1 11.8 12.4 13.1 13.8 14.5 15.2 15.9 16.6 17.3 18.0 18.7 19.4

10-yr G-sec yield

7.8 7.6 7.4 7.2 7 6.8

17

Category

Outlook

Details
We recommend short term bond funds with a 6-12 month investment horizon as we expect them to deliver superior returns due to high YTM and concerns over credit quality ease as the economy recovers, thereby prompting ratings upgrade. We have seen the short term yields harden due to reduced liquidity in the market and it may further increase as we see outflows for Advance tax payments in December. Positive economic climate has reduced credit risks without a commensurate decrease in credit spreads. Some AA and select A rated securities are very attractive at the current yields. A similar trend can be seen in the Fixed Deposits also. Tight liquidity in the system has also contributed to widening of the spreads making entry at current levels attractive.

Short Tenure Debt

Credit

Long Tenure Debt

We expect this to be the peaking of the yields at the longer end of the yield curve. Yields may move to the broad range of 7.5– 8.5% in the next few quarters. As the inflationary pressure settles down towards the end of the fiscal, these may be an attractive investment. We recommend gradual entry into long tenor debt.

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Objective:
• To invest in a portfolio of High Yielding Securities

Investment Rationale:
• The strategy of this portfolio is to invest in lower rated higher yielding securities. We believe that the risk-adjusted returns for such bonds are currently very attractive. We would be actively monitoring these bonds, thereby selecting the ones which are relatively safer and offering higher returns. Fund manager Vehicle Target Returns Minimum returns expected Risks Minimum investment Entry Load Exit Load Management Fee Profit Sharing K.P. Jeewan The investments will be made through the PMS structure 11% - 13% 8% - 9% Interest Rate Risk and Liquidity Risk (No credit risk since all investments are in Sovereign/ Quasi Sovereign Instruments.) Rs. 50,00,000 NIL NIL; (If withdrawal is earlier than 12m, full years management fee will be charged on the funds or securities withdrawn) 0.5% p.a. 10% p.a. of incremental gains beyond 8% p.a.

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NABARD:
• • • • • • Set up as an apex Development Bank with a mandate for facilitating credit flow for promotion and development of agriculture, small-scale, cottage and village industries, handicrafts and rural crafts Fully owned by the Government of India and Reserve Bank of India Minimum Ticket Size Tenure Yield Rating : `100,000 : 10 Years : 8%-8.05 for bonds maturing Jan 2019 if held till maturity : ‘AAA’ rating by CRISIL & CARE

Taxation

: If held for less than a year : Marginal rate of taxation
If held for more than a year : 10% without indexation or 20% with indexation whichever is lower

Attractiveness

As interest rates are near their peak it is a good time to invest into these Zero Coupon bonds. As yield curve goes down it can present situations to make Capital Gains. Else clients can also hold them till maturity which itself would result in a higher yield vis-à-vis fixed deposits
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Rupee movement vis-à-vis other currencies (M-o-M)
0.04 0.03

Trade balance and export-import data
80 60 40 20 0 -20 Export Import Trade Balance (mn $) 0 -2000 -4000 -6000 -8000 -10000 -12000 -14000

0.02
0.01 0.00 -0.01 -0.02 -0.03 -0.04 USD GBP EURO YEN

-40

• Exports for the month of October increased by 21.2% y-oy while imports increased by 6.8% increasing the trade deficit to USD 9.7 bn.
140000

•The Rupee marginally depreciated v/s the US dollar in the month of November but appreciated against the Euro on account of the increased uncertainty regarding the Eurozone crisis.

Capital Account Balance
90000

40000

•We expect the Rupee to remain volatile in the next month with no clear direction. Higher interest rates in India would attract large capital inflows putting an upward pressure on the Rupee while increase in the Current account deficit would put a downward pressure on the Rupee. Hence, a clear trend might not be seen.

-10000 FY 07 FY 07 FY 07 FY 07 FY 08 FY 08 FY 08 FY 08 FY 09 FY 09 FY 09 FY 09 FY 10 FY 10 FY 10 FY 10 (Q1) (Q2) (Q3) (Q4) (Q1) (Q2) (Q3) (Q4) (Q1) (Q2) (Q3) (Q4) (Q1) (Q2) (Q3) (Q4) -60000

• Capital account balance was positive throughout FY10 and ended at `2,53,058 Cr. for the year. • We expect the capital account balance to remain positive as higher interest rates would make investment in the Indian markets attractive hence drawing investments into the market.

21

Precious Metals

The geo political tensions in Korea, the European crisis and continued concerns on global economy will all keep gold afloat. However, any persistent strength in USD would be fatal to risky assets worldwide and gold in particular. Given this scenario, it is prudent for the investor to stay aside in the near term or reduce exposure to gold in the short term. Needless to say that the long term bullishness is intact and gold should find a place in strategic asset allocation. Nevertheless, it is time to move towards tactical asset allocation that would keep smart investor high from the rest of the crowd.

20000 19500 19000 18500 18000 17500 17000 16500 16000 15500 15000 Dec-09 Nov-09 Jan-10

Gold

May-10

Aug-10

Oct-10 Nov 10

Mar-10

• The crude prices increased by 6.3% (m-o-m) in November. This was due to uncertainty in the Global markets. During the month, prices moved between $83-$88 per barrel.

90 85 80 75

Crude

Oil & Gas

• We expect the oil prices to moderate Although emerging market economies are showing robust growth, developed economies are expected to remain sluggish next year, which combined with abundant supply, high inventories and weak OPEC quota compliance may cap a further oil price rally.

70 65 60 Nov 09 May 10 Feb 10 Jul 10 Mar 10 Aug 10 Dec 09 Sep 10 Jan 10 Apr 10 Jun 10 Oct 10

Nov-10

Feb-10

Jul-10

Sep-10

Apr-10

Jun-10

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Leveraging breadth of related businesses that KARVY is in
KARVY is an integrated financial services group, with Karvy Private Wealth being one of its arms. The entire group’s strengths are leveraged to provide end-to-end wealth advice to Karvy Private Wealth clients. For example, SME clients can receive advice on their personal wealth while also getting investment banking advice from the I-banking arm of Karvy.

Maximum choice of products & services
KARVY Private Wealth offers the widest breadth of products and services, providing clients a variety of options through a single contact. Products and services include equities, debt instruments, commodities, Mutual Funds, Insurance, Structured Products, Financial Planning, real estate advice, etc.

Product-neutral advice
We ensure that our recommendations are 100% product-neutral and unbiased because unlike other players, we are neither tied up with any one particular insurance company nor do we have our own mutual funds.

All-India presence
Set to have business in 20 - 25 cities we are poised to cater to families and businesses spread across multiple cities in India providing them with combined and integrated advice. For one-off services, if required, we can also leverage KARVY Group’s presence in 400 cities.
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The information and views presented here are prepared by Karvy Private Wealth or other Karvy Group companies. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended here may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned here, investors may please note that neither Karvy nor any person connected with any associated companies of Karvy accepts any liability arising from the use of this information and views mentioned here. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above-mentioned companies from time to time. Every employee of Karvy and its associated companies are required to disclose their individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Stock Broking Ltd. The information given in this document on tax are for guidance only, and should not be construed as tax advice. Investors are advised to consult their respective tax advisers to understand the specific tax incidence applicable to them. We also expect significant changes in the tax laws once the new Direct Tax Code is in force – this could change the applicability and incidence of tax on investments

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