Indian Economy

n Macro and monsoons to determine the course

GDP shocker in 4Q FY12 drags down FY12 growth to five-year low

n Strong Manufacturing and Services Sector PMI in May – Pricing power intact- Will it constrain RBI from cutting rates?

Strong manufacturing PMI and pricing power intact

Strong services PMI indicating reaccelerated activity

n How much would the rates fall?

Government’s massive borrowing program, likely fiscal slippage, falling crude prices and plunging rupee

Falling crude prices a big positive for India. Advantage some what blunted by plunge in the Rupee

n Five macro causes of worry: CAD, Fiscal deficit, plunging growth, somnolent reforms, monsoons

Temporal and Spatial distribution of monsoon is the key

n Rupee: On a slippery slope

Risk on trade in equities in Q4FY12 reversing in Apr-May’12

n Reforms juggernaut stuck in political quicksand:

Does Petrol price hike presage the flurry of impending reforms

n India Presidential polls:

Will the reforms take-off post the polls?

n Risk-off trade sees equities under pressure:

n Markets: Delicately poised

Macro issues to determine the course of the Indian markets

Top Picks

Large Cap

Coal India, ITC, State Bank of India, Infosys, ICICI Bank, Larsen & Toubro, Power Grid Corporation, Axis Bank, Maruti Suzuki, Dr.Reddy’s Laboratories, Adani Port & SEZ

Mid-Cap

LIC Housing Finance, GlaxoSmithKline Consumer Products, YES Bank, Shree Cement, SJVN, Chambal Fertilizers & Chemicals, Amara Raja Batteries, NIIT Technologies, Persistent Systems, KEC International

Source: Prabhudas Lilladher Pvt. Ltd.

IndiaStrategy-5-6-12-PL.PDF

TopPicks-5Jun.pdf