- Reliance Industries reported better than expected quarterly results with a 10% increase in profits. Surprisingly, production from its US shale gas assets exceeded expectations and output from its KG D6 basin. - Most major IT companies also reported decent results, with Tata Consultancy Services revenue increasing 3% quarter-over-quarter and profits growing 40% year-over-year. - Both the Consumer Price Index and Wholesale Price Index showed declining inflation in June compared to the previous month, falling to 7.3% and 5.43% respectively, which is positive for the economy.

1. The World This Week
July 14 – July 19, 2014

2. Equity View:
Last week Reliance industries published their results which were better than expected with almost a 10%
increase in profits Y-o-Y. The surprise was an extremely firm gas output from its shale gas assets in the
United States. In fact, the production is more than that of KG D6 basin. We believe that this kind of
output might continue going forward which will provide an extra cushion and revenue for Reliance as
compared to market expectations. The capex cycle for the company continues with almost 7 billion
dollars invested in fresh oil and gas assets, these will produce results going forward. The retail business
continues to grow in size and is also a breakeven at the EBITDA level now so we believe this will also
provide an extra cushion for growth in the company in future. For the year as a whole, we expect 10%-
15% earnings and revenue growth and the stock might outperform in short to medium term. Hence we
continue to be positive on Reliance industries.
In terms of other corporate results most of the IT companies have published decent numbers. TCS came
up with a good set of numbers with 3% Q-o-Q increase in dollar revenue. The company also delivered a
healthy profit growth of almost 40% Y-o-Y. We continue to maintain a positive stance on TCS.
One of several key macro economic data points published last week was CPI which was at 7.3% v/s 8.3%
last month primarily due to fall in prices of fruits and vegetables. The WPI inflation also showed a
downward trend at 5.43 v/s 6% last month thus both the data points on inflation continue to be positive
for the economy. We do not expect any change in RBI’s stand thus do not expect any rate cut till the time
there is more clarity on monsoons as there is always a threat that food prices might go up if the monsoon
fails significantly. However most of areas in the country have seen either average or above average
rainfall in last one week and the overall deficiency has come down except some areas of Gujarat and
Maharashtra. We believe monsoon would be good for the remaining part of the month and a large part
of deficiency seen in June could be compensated for. But it is still too early to predict overall monsoon
but there is also news about the El-Nino effect weakening which could be a significant positive for India.
News:
DOMESTIC MACRO:
 India’s trade deficit rose to a 11 month high of $11.76 bn in June from $11.23 bn in May and $11.28 bn
in the same month last year, driven by a surge in gold imports; exports rose 10.22% on year to
$26.48 bn in June and imports climbed 8.33% annually to $38.24 bn in the same month.
 According to data from the Department of Industrial Policy and Promotion, the foreign direct
investment (FDI) flows into India more than doubled to $3.60 bn in May, the highest in the last
eight months.
 Asian Development Bank (ADB) upgrades India's economic growth forecast to 6.3% in 2015-16 on hopes of
speedy reform process, but retains growth forecast of 5.5% this year.
 The headline Inflation (both CPI & WPI ) depicted declining trends for the month of June. While headline
WPI inflation for the month of June eased by 61 bps to 5.43% y/y (May 2014: 6.01% y/y), the headline CPI
inflation eased remarkably by 97 bps to 7.31% y/y (May 2014: 8.28% y/y).

3. GLOBAL MACRO
EURO
 Euro zone’s industrial production fell 1.1% month-on-month in May, the biggest drop since
September 2012, and reversed the 0.7% rise in April.
 Euro zone’s trade balance stood at a surplus of 15.4 bn euros in May, in line with the surplus in
April.
 UK’s unemployment rate fell to 6.5% in the three months through May, the lowest since the fourth
quarter of 2008, from 6.6% in the three months through April.
United States
 US industrial production rose 0.2% in June, compared to May's revised increase of 0.5%;capacity
utilization came in at 79.1% in June, in line with May.
 US retail sales rose 0.2% in June after an upwardly revised 0.5% advance in May.
 US Treasury Department reports a budget surplus of $71bn in June, following a $130bndeficit in
May.
China
 China’s economy expanded 7.5% annually in Q2 2014 compared to 7.4% in the previous quarter.
 China attracted FDI of $14.42bn in June, up 0.2% from a year earlier.
Indices:
Date Sensex Midcap Auto Bankex CD CG FMCG HC IT Metals O&G Power Realty Teck
14/07/14 25,007 8,874 15,304 16,596 8,163 15,140 6,888 11,667 9,260 12,573 10,601 2,146 1,891 5,199
15/07/14 25,229 9,045 15,519 17,054 8,393 15,478 6,867 11,693 9,244 12,737 10,768 2,178 1,932 5,204
16/07/14 25,550 9,166 15,742 17,480 8,406 15,711 6,900 11,782 9,261 13,017 10,900 2,206 2,015 5,227
17/07/14 25,561 9,292 15,716 17,478 8,584 15,893 6,923 11,849 9,268 13,337 10,854 2,258 1,999 5,238
18/07/14 25,642 9,253 15,713 17,612 8,508 15,961 6,911 11,832 9,401 13,266 10,770 2,228 1,981 5,286
2.54% 4.27% 2.67% 6.12% 4.23% 5.42% 0.33% 1.42% 1.52% 5.51% 1.60% 3.82% 4.77% 1.66%

4. Commodities and Currency:
Date USD GBP EURO YEN
Crude
(Rs. per BBL)
Gold
(Rs. Per
10gms)
14/07/2014 60.01 102.72 81.60 59.18 6419 28235
15/07/2014 60.22 102.79 81.95 59.27 6419 27985
16/07/2014 60.19 103.14 81.66 59.19 6384 27808
17/07/2014 60.14 103.00 81.33 59.25 6451 27846
18/07/2014 60.33 103.18 81.58 59.54 6489 28085
-0.54%
Rupee
Depreciated
-0.45%
Rupee
Depreciated
0.02%
Rupee
Appreciated
-0.60%
Rupee
Depreciated
1.09% -0.53%
Debt:
Tenor Gilt Yield in % (Friday) Change in bps (Week)
1-Year 8.68 13
2-Year 8.51 5
5-Year 8.62 -3
10-Year 8.77 0

5. Varun Goel Jharna Agarwal
Nupur Gupta Ridhdhi Chheda
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