Volatility Carry Forward from 2011 to 2012

Negatives
˜* Global Uncertainty: Europe continues to grapple with its debt crisis.
˜˜* Slowing Slowing domestic domestic economy economy..
*˜ Indian government policy logjam.
*˜ Rupee depreciation concerns mounting.
*˜ High Fiscal & Current Account deficit.
*˜ Volatility.
*˜ Plu g g unging invest e t estment cyc e cycle re a s emains t e the b ggest biggest negative d e driver.

Positives :

*˜ Moderating Inflation.
*˜ Attractive Valuations.
*˜ Sentiments - High investor fear.
*˜ China’s economy facing a ‘Hard‘ landing – positive for India but negative for global growth.
*˜˜ AnAn increasing increasing chance chance of of deep deep interest interest rate rate cuts cuts inin 2012 2012..
*˜ Highly favorable base effect.
*˜ Eventual recovery in some areas of infrastructure construction – are turning favorable and may provide some tailwind to the economy and to the market in the second half.

Positives building up :

Debt Markets :

•Increased Limit for investment in Bond Market
•Possible early growth support from RBI
•Rapid and long Term easing of Monetary Cycle
•Liquidity measures like OMO and Borrowing against excess SLR
•Imposing fines on institutions aiding shorts on currency

Equity Markets :

•Permission for QFI’s to invest directly in equity markets
•Downtrend in inflation
•Base effect in Inflation, IIP, order book earnings in 2H2012

Policy :

•Clear signals from FM on prioritizing of growth recovery
•Dissolution of SUUTI
•Second push to retail FDI, new bills in power and Pension funds etc
•Government’s efforts for revival of reforms and remove policy paralysis