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News U Can Use30th April 2010

The Week that was…24th April 2010 to 30th April 2010

Indian EconomyIndia suggests at the WTO that there should be an objective benchmark for countries levying penal duties on imports that originate from countries that provide various subsidies to their exportersIndia calls for reforms in the IMF with at least a 7% shift in the funds quotas from developed to emerging countries and giving them more seats on the IMF boardIndia’s six core infrastructure industries grew by 7.2% in March from 4.7% a month ago; the growth was 3.3% in the year-ago periodIndia's economic growth this year may be "slightly higher" than the currently estimated 7.2% but faster inflation is a "big worry": RBI GovernorFM says that the Indian economy is likely to pick up full steam and clock a growth of about 8.5% in FY11 as against 7.2% in the previous year; says that inflation is the most worrisome feature in the economyChief statistician says the economy is yet to be on a steady recovery path and the stimulus package needs to be continued for some more timeIndia's primary articles inflation declined to 13.55% in the week ended Apr 17 from 14.14% a week ago; food articles inflation rate fell to 16.61% from 17.65% a week agoRBI Governor expresses concern over possible pressure from an increase in capital flows into the country, as the central bank looks to exit from its accommodative policy in a calibrated manner

Source: Crisil Weekly Market Update

Indian EconomyPlanning Commission Deputy Chairman says that India's headline inflation rate is currently beyond comfort level but it may ease in the next two-to-three months on the back of a good rabi crop harvest and a likely good monsoonCommerce Minister says that India's merchandise exports during FY10 are likely to be about $170 bn compared with around $177 bn a year Government is likely to introduce the new WPI series by June or July; the new series will have over 600 items, compared with 435 items in the present seriesTrade Minister says that India's industrial output growth in March is likely to remain nearly unchanged from the previous month at around 15%India's annual inflation rate based on CPI for Industrial Workers remained unchanged on month at 14.86% in March, the rate was at 8.03% a year agoIndia’s forex reserves fell to $279.48 bn for the week ended Apr 23 from $280.09 bn a week ago


Indian Debt MarketChina has raised its reserve requirement ratio by 50 bps effective from May 10. This is third time in 2010, that China has raised its ratio.

India's WPI based primary articles inflation for the week-ended April 17 declined to 13.55% yoy as against 14.14% in the previous week on base effect. On weekly basis, Primary articles actually went up by 0.07% w/w driven by higher non-food prices. Food prices showed decline of 0.2%w/w Fuel prices increased to 12.69% as against 12.45% previous week. It showed an increase of 0.52% w/w on higher mineral oils prices.

G-Sec market saw a rally this week. Except for 6.35% GS 2020, G-Sec yields declined for most of the securities. This was primarily due to announcement of 10 year G-Sec auction by RBI and better than expected cut-off in the G-Sec auction. 10 year benchmark closed the week at 8.04% (previous week’s close: 8.06%). After the sharp fall in yields witnessed last week, the corporate bonds market saw consolidation. 5 year AAA and 10 year AAA closed the week at 8.20% (Previous week’s close: 8.24%) and 8.75% (previous week’s close : 8.70%) respectively.

Source: RMF Research

Indian Debt MarketDuring the week, although liquidity was ample, the average net LAF was around Rs. 46,500 cr (previous week : Rs. 49,000 cr). Overnight call was in range of 2.20%-4.10 % during the week.In G-Sec auction, 7.38% GS 2015 (Rs. 5000 cr) and 8.28% GS 2032 (Rs. 2000 cr) saw a cut-off of 7.40% and 8.43% respectively. The new 10 year saw the cut-off of 7.80%. RBI conducted 10 year SDL auction (Rs. 4100 cr) for 5 states with the cut-off yield in the range of 8.49%-8.55% (previous : 8.56%-8.58%). In the T-Bill auctions, 91-Days (Rs.7,000 cr) and 364 Days (Rs. 2,000 cr), saw a cut off yield of 4.17% (Previous : 4.17%) and 4.55% (Previous : 4.72%). RBI will conduct T-bill auction of 91 day T-bill (Rs. 7000 cr) and 364 day T-bill (Rs. 2000 cr) on April 28.


Indian Commodities MarketCrude oil prices fell during the week primarily on worries that fraud charges against Goldman Sachs could prompt a pull back from energy commodities to safer investments; further fall was however capped later due to a rise in stock market; prices ended at $83.70 a barrel on April 22 as compared to $85.51 a barrel on April 15

US Crude oil inventories rose by 1.9mn barrels to 355.9mn barrels for week ended April 16

The World Steel Association says global steel demand will grow 10.7% in 2010, faster than expected six months ago, on increasing demand from China and other emerging economies

Government rules out any import of rice despite last year's erratic monsoon rains clipping the staple crop's output

Government to restore customs duty on sugar and ease the stock limit on bulk use once supplies increase and price worries ebb

Government notifies withdrawal of duty entitlement passbook benefit for cotton yarn export in its bid to rein in the rising prices of the fibre

FMC Chairman says that commodity futures turnover in 2010-11 may not witness an exponential rise, despite more exchanges launching operations in the country


Indian Commodities MarketNational Spot Exchange Ltd launches castor oil contract for export with trading unit of 5 tonne and delivery centre at Kandla

Indian Commodity Exchange to sign an MoU with Bombay Bullion Association on Apr 28

Agriculture Minister indicates that government may consider some controls on imported sugar to protect the interests of local farmers and provide a level playing field to the domestic sugar industry

Government approves 2.1 mn tn sugar for sale during May, including non-levy sugar of 1.9 mn tn, and said that mills would be allowed to sell non-levy sugar on monthly basis now instead of fortnightly

Zimbabwe approaches the FMC seeking help to set up a commodity exchange


Indian GovernmentFM announces sops for several sectors; duty reductions to cost about Rs.300-400 cr:

- Announces relief for the construction sector by increasing the abatement rate to 75% of gross value, including the land, from the current 67% and exempts low-cost housing schemes of the central government from service tax

- Announces a debt relief scheme for coffee plantations by waiving part of the loans taken by small growers

- Cuts customs duty on 11 specified drugs, including two anti-cancer and one anti-retro viral to 5%

- Raises export duty on iron ore lumps to 15% from 10%- New hospitals with at least 100 beds anywhere in India eligible for 100% income tax

deduction- Service tax on domestic air travel not to exceed Rs.100 /travel and on international air

travel not to exceed Rs.500 /travelLok Sabha passes the Union Budget for 2010-11Government is considering a proposal to allow 100% FDI into the country’s defence sectorFinance Ministry calls for tougher FDI in the housing and township sectorGovernment's unique identity project has been renamed 'Aadhar' or foundation


Indian GovernmentGovernment says that as many as 495 central-sector projects costing Rs.20 cr and above are running behind schedule which has resulted in cost escalation by Rs.55175 crGovernment says that India became the seventh largest shareholder in the World Bank with 2.91% voting rights, surpassing countries such as Russia, Canada, Australia, Italy and Saudi ArabiaGovernment to earn a minimum of Rs.33500cr from the 3G auctionGovernment directs mobile operators to stick to the June 30 deadline for launching mobile number portability and makes it clear that there will be no further extensionGovernment officially tells mobile operators not to import any equipment manufactured by Chinese vendors including Huawei and ZTEFinance Ministry to constitute a committee within a month to suggest ways to link interest on small savings instruments, like PPF schemes, with market rates, as suggested by the 13th Finance CommissionGovernment is likely to upgrade the top four 'Navratna' companies-ONGC, SAIL, NTPC and IOC as the first batch of 'Maharatna' public sector enterprises within a monthGovernment plans to aggressively pursue divestment of stake in public sector enterprises and will come out with at least one issue-an IPO or an FPO-each month in FY11: Joint Secretary, Divestment Department


Indian GovernmentPlanning Commission estimates that 74 mn households, about 10 mn more than the central government's list of below poverty line cardholders, could benefit from the ambitious food security plan but the number may still fall far short of states' expectationsDepartment of Industry Policy and Promotion to issue six discussion papers on foreign direct investments in various sectors on May 13Oil Ministry says that state-owned oil marketing companies are likely to get another trancheof around Rs.12000 cr in cash subsidy from the government to partly cover their revenue losses on sale of cooking fuels at regulated price during FY10Petroleum Ministry seeks an additional cash subsidy of Rs.19621 cr from the Finance Ministry for balance revenue losses on sale of cooking fuels during FY10Government forms an empowered group of ministers headed by FM to look into the recommendations of the Kirit Parikh committee on fuel pricingA government panel decides to relax External Commercial Borrowing (ECB) norms to refinance equipment purchases by core companiesFinance Ministry says no to dumping duty on pharma ingredients from China and Mexico


Indian GovernmentGovernment rules out any increase in export duties on iron ore fines, but can allow a marginal rise in the levy on iron ore lumps to discourage exports

Government raises the maximum wage limit to Rs.15000 p.m. from Rs.10000 p.m. for availing social security benefits under the ESI scheme

Government says it is targeting to raise Rs.18000 cr through the 20% share sale in SAIL

DIPP Secretary says that ICICI Bank and HDFC Bank are not Indian going by their current ownership structure under the government's FDI policy

Government invites bids to appoint merchant bankers for the proposed follow-on public offer in state-owned Engineers India

A senior Finance Ministry official says that the yield of 7.80% set by the RBI on the new 10-year sovereign bond is at a "realistic level"


Regulatory Updates in IndiaRBI Governor acknowledges that there could be a crowding out of the private sector's credit needs because of the surge in government bond yields and general level of interest rates; adds that inflationary pressures were restraining the RBI from infusing liquidity through open market operationsRBI Deputy Governor does not see the need for monetary tightening before the policy review in July; expects food inflation to decline further when the rabi crop arrivals hit the marketRBI is not contemplating a Tobin Tax on capital flows, no policy instrument is "off table": GovernorRBI extends the validity of interest rate ceiling on pre-shipment and post-shipment rupee export credit to Jun 30 from Apr 30RBI removes concessional interest rates on export loans by freeing the pricing of these loans with effect from July 1RBI says that it has not issued an extension to all banks to achieve 70% provision cover and will treat banks' requirements on a case-to-case basisRBI expresses deep concern over Asset Liability Mismatches in banks’ balance sheets, arising mainly from lending to infrastructure projectsRBI says the shares in unlisted companies will now have to be valued using a discounted cash flow model to ensure fair value for Indian companies in foreign PE deals


Regulatory Updates in IndiaRBI asks all unlisted companies to shift to a market based valuation, from the existing book value method for takeover of such companiesRBI had declared 108 Non Banking Financial Companies as vanishing companies during the last three yearsRBI extends relaxation for trade and industry in Jammu & Kashmir until Mar 31, 2011, from Mar 31, 2010 earlierSEBI releases guidelines on market makers on small and medium enterprise exchange and allows only five market makers per scrip that would be traded on the SME exchangeSEBI permits stock exchanges to introduce derivative contracts on Volatility Index, subject to the condition that the underlying Volatility Index has a track record of at least one year and the exchange has in place the appropriate risk management framework for such derivative contractsSEBI asks all stock exchanges to amend the rules to enable FIIs to offer domestic and foreign government securities as collateral for cash segment transactionsSEBI moves the Supreme Court seeking transfer of all cases relating to the issue of ULIPs’regulation to a single courtThe Supreme Court issues notice to IRDA on a petition filed by the SEBI to transfer all cases relating to regulation of ULIPs to a single court; also issues notices to the Centre, 14 life insurers on SEBI's petition on Public Interest Litigations over ULIPs issue


Regulatory Updates in IndiaSEBI decides against filing a joint application before a court to resolve its dispute with IRDA over ULIPsSEBI likely to put an end to cash payouts, junkets for MF agentsSEBI puts on hold its decision to approve the launch of futures and options on gold exchange traded funds by NSE in face of objections raised by FMCSEBI says that it is not mandatory for clients opening broking accounts to give stock brokers or depository participants 'power of attorney'SEBI to expand the list of Institutional Buyers for IPOs; may also include merchant bankers and brokersA panel constituted by SEBI, to review issues related to ownership and governance of market infrastructure institutions, seeks views of market participants on concerns on the sameSEBI warns HSBC MF, its CEO and the trustees to comply with the regulatory norms for AMCs; the warning comes after the regulator found that that HSBC MF failed to inform investors before making fundamental changes in its HSBC Gilt FundAMFI says that total AUM in Gold ETFs rose to Rs.1591 cr as on Mar 31 from Rs.743 cr a year ago; the retail investor base in gold more than doubled to 142270 in FY10 as compared with 63422 during the same period last yearPFRDA is likely to allocate Rs.4100cr in 2010-11 among the three pension managers, SBI, UTI MF and LIC MF as against Rs.3700cr allocated last yearEPFO is switching to an electronic payment system, which will allow it to credit the PF amount to the members’ bank accounts within two days of claim authorisation


Regulatory Updates in IndiaIRDA informs finance ministry that it will not accept any widening of the SEBI ActIRDA says insurance companies with new ULIPs can approach itIRDA tells insurers to disclose explicitly the commission in the ‘benefit illustration’ – a document that contains the benefits due to a policyholder upon maturity of an insurance policyIRDA gives instructions to Maruti Suzuki to rejig its insurance businessDoT seeks legal opinion on whether it is mandatory to seek the views of TRAI every time the government wants to change the existing licence conditions in the futureDoT says procurement of telecom equipment from Chinese manufacturers will not be recommended for clearance unless there is complete supply chain overseeing and auditing to its satisfactionTDSAT quashes a government order to increase microwave spectrum chargesNational Pharmaceutical Pricing Authority cuts by 5.42% the price of bulk drug analginPetroleum & Natural Gas Regulatory Board hikes hauling tariff for GAIL and Reliance GasCREDAI Chairman says that government’s decision to include land cost in construction expenses, while calculating abatement in service tax on construction, is not justified


International MarketsIMF's Chief says countries that weathered the global economic crisis with their financial systems relatively unscathed are being short sighted by opposing a global bank levyG-20 nations split on a proposal by the IMF to establish a global tax on banks and charge them for the cost of government bailouts US President says that it is the reckless and irresponsible speculation on the Wall Street that led to a recession and hammered Main Street across the USUS Fed decided to keep interest rates stable at near 0% and said that the labour market is "beginning to improve", and noted that housing starts have edged up; it also said that it expects to keep rates low for an "extended period" to help strengthen the economyUS Fed Chairman says the country's budget deficit is on an unsustainable path and requires near-term action from policymakers to avoid dangerous outcomesUS Treasury Secretary says emerging-market economies should be given an increased say in global financial institutions at the cost of rich countriesUS Treasury Secretary says there are some signs that a sustained job recovery is beginning, but concedes that Americans still face difficult economic conditionsUS gross domestic product expanded at a 3.2% pace in the first quarter after a 5.6% growth pace in the fourth quarter of last yearUS Treasury Secretary says the final cost of the government's heavily criticized financial bailout effort could be as low as $87bn; a year ago, officials were estimating the bailout could cost as much as $500bn


US Treasury says that it was launching its plan to sell off its 7.7 bn share stake in Citigroup "in an orderly fashion"US Commerce Department said that sales of new homes jumped 27% in March, bouncing off a record low in FebruaryS&P's/Case-Shiller home price index showed a 0.6% increase on a non-seasonally adjusted basis in February, the first annual increase in more than three years; on a monthly basis, however, home prices fell by 0.9% in FebruaryUK house prices goes up 1.8% year on year in April, but monthly house price growth slowed to 0.2% in April from 0.3% in MarchUS orders for durable goods fell 1.3% in March to a seasonally adjusted $176.7bn after a 1.1% gain in FebruaryUS consumer confidence rose to 57.9 in April, the highest level since September 2008, from 52.3 in MarchUS initial jobless claims dropped 11,000 to a seasonally adjusted 448,000 in the week ended April 24US Chicago Fed national activity index rose to -0.07 in March from an upwardly revised -0.44 in FebruaryUS Richmond Fed Manufacturing Index jumped to a score of 30 in April, its highest level since the beginning of the recession, from March's score of 6


International Markets

International MarketsUK Gfk Consumer Confidence Index dropped a point to -16 in AprilS&P's downgrades Greece's debt to junk status and lowers Portugal's debt two notches to A minus from A plusAccording to S&P, holders of Greek bonds may lose 200bn euros should the government defaultS&P's cuts Spain's credit rating to AA from AA plus, citing a more protracted period of sluggish growth than previously expectedIMF promises to increase the 45bn euro aid package for Greece to as much as 120bn euros over three years to quell the crisisGreece agrees to a 24 bn euros austerity package that includes wage cuts for public sector employeesGreek PM says that the debt-stricken country's survival was at stake as social tensions mounted over the price to be paid for an international bailoutEuropean Commission says that talks on putting in place emergency aid for debt-laden Greece are making "rapid progress"Greece moves toward getting an emergency aid package before debt payments come due in mid-May German Chancellor says that Greece needs to show its budget is on a “sustainable” path and a full German agreement to a bailout may take “a few days”European Union figures show that the euro zone unemployment rate remained unchanged at 10% or 15.8 mn people in March Eurostat estimates euro zone consumer price inflation to be 1.5% in April, up from 1.4% in March


International MarketsEuro zone’s Economic Sentiment Indicator rose to 100.6 in April from 97.9 in March, the highest level since March 2008According to a study by UK-based research firm Preqin, infrastructure focused private equity funds raised a total of $6.2 bn in Jan-Mar, up 72% from $3.6 bn raised in year ago periodIMF says Asia could grow 7.1% this year; previously, it had put this year's growth at 6.9% and 7% for next year; for 2011 it believes the economy could grow 6.8%, higher than 5.3% forecasted previouslyIMF says Asia’s recovery that’s outpacing the rest of the world is attracting capital inflows that may cause the region to overheat and lead to formation of asset bubblesJapan's central bank kept its key interest rate near zero and said it would redouble efforts to boost the economyJapan's core consumer price index fell 1.2% in March from a year earlierJapan's jobless rate rose to 5% in March compared with 4.9% in the previous monthJapan's industrial production rose a seasonally adjusted 0.3% in March following a 0.7% contraction in FebruaryJapan’s retail sales rose 4.7% from a year earlier as compared to 4.2% expansion in FebruaryIMF says China's yuan remains undervalued, but increased currency flexibility is just part of a range of policies needed for rebalancing in AsiaChina’s Central Bank governor says the country will keep its proactive fiscal measures and maintain its relatively easy monetary policy, as the global economic recovery remains tentative


International MarketsChina’s Central Bank calls for tighter controls on derivatives and warns that the global financial system remains quite fragileChina cuts its short-term foreign debt quota for 2010 by 1.5% to prevent "abnormal" capital inflows The city of Beijing issues rules limiting families to one new apartment purchase as authorities try to rein in rampant property speculation and soaring pricesIMF says the Singapore economy may expand 8.9% this year, sharply higher than its previous prediction of 5.7% made in the World Economic OutlookSingapore’s overall unemployment rate dipped to 2.2% in March 2010 from a revised 2.3% in December 2009South Korea's real GDP grew 1.8% during the first quarter of this year as compared to 0.2% in the fourth quarter last yearGoldman Sachs, as reported, may soon settle its fraud case with the US SECFord Motor Co posts a $2.1 bn first-quarter profit and raises its 2010 outlook to "solid profits”Barclays PLC reports that profit rose 29% in the first quarter due to fewer bad loansUSFDA warns Pfizer on faulty testing proceduresPower company PPL Corp. agrees to acquire the parent company of Kentucky's two major utilities for $6.7bn in cash


Global EquitiesIndices Apr 30 Apr 23 Change

% Change

DJIA 11167.32* 11204.28 -36.96 -0.33Nasdaq Composite 2511.92* 2530.15 -18.23 -0.72Nikkei 225 (Japan) 11057.40 10914.46 142.94 1.31Straits Times (Singapore) 2974.61 2988.49 -13.88 -0.46Hang Seng (Hong Kong) 21108.59 21244.49 -135.90 -0.64FTSE 100 (London) 5617.84* 5723.65 -105.81 -1.85

DJIA – Dow Jones Industrial Average *April 29 figures

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Global EquitiesKey global indices analysed ended mostly negative in the week ended April 29/30, except for Japan’s Nikkei which emerged as the sole gainer ending 1.31% higher while Britain’s FTSE was the worst performer down around 2%Wall Street benchmarks witnessed heavy fluctuation during the week ended April 29 amid persistent concerns regarding Eurozone’s debt crisis and due to the ongoing negotiations on financial overhaul legislationDow Jones saw biggest fall in nearly three months on April 27 on these negative sentiments Markets however bucked up losses on positive corporate results and after the US Fed’s upbeat comments on the economy while keeping interest rates stable at zero levelsBritain’s FTSE plunged around 2% and was biggest loser during the week ended April 29 due to growing pessimism that debt crisis in Greece may spread to other Euro regions.The FTSE marked its biggest loss in over five months on April 27 as sentiments for index was badly hurt by series of downgrades by S&P for Greece, Portugal and Spain. Singapore’s Straits Times ended 0.5% lower for week ended April 30 tracking negative global cues.Japan’s Nikkei, the sole gainer, ended 1.3% higher in holiday curtailed week ended April 30 due to strong domestic and US corporate earnings amid intermittent profit taking spurred by Greece financial woesHong Kong’s Hang Seng index was lower by 0.7% on negative global cues coupled with renewed concerns that the government will introduce further tightening measures to curb real estate.


Global DebtYield on benchmark 10-year note fell to 3.73% on April 29 compared to 3.77% as on April 22 with downside bias as investors preferred to invest in safety assets after worries regarding Greece debt crisis got aggravated.Global sentiments were hurt after rating agency S&P cut its credit ratings on Greece, Portugal and Spain, thereby rising demands for treasuriesMarket participants were concerned that Greece could default on its debt and that the trouble there would spread to other countriesFall in yield however was restricted after IMF promised to increase the 45bn euro aid package for Greece to as much as 120bn euros over three years to quell the crisisPrice also got support after US Federal Reserve sounded more upbeat on economic recovery while keeping its interest rate unchanged at zero levelsDemand for treasuries were modest earlier in the week due to positive report on new home sales and as investors pulled back their purchases ahead of three significant auctions during the week on hopes of getting better dealsMeanwhile, foreign central banks' holdings of US Treasuries and agency debt at the Federal Reserve rose in the week ended April 28.Treasuries held by overseas central banks at the Fed rose by $10.07 bn to $2.227 trillion


Global DebtHoldings of securities issued or guaranteed by Fannie Mae and Freddie Mac rose by $3.58 bn to $789.18 bnThe combined holdings of Treasuries and agency securities by foreign central banks at the Fed rose by $13.65 bn to $ 3.066 trillion

US 10-Year Govt Bond Yield

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USAWall Street benchmark indices saw heavy fluctuations throughout the week but ended on the lower side, primarily on heightening worries over debt problems in EuropeMarkets witnessed heavy selling on April 27, with the Dow Jones witnessing its biggest fall in nearly three months after S&P's downgraded Greece's and Portugal's debt ratings, renewing worries about the global economic recoveryInvestors’ concern about the ongoing negotiations on financial overhaul legislation also weighed on the marketsMarkets however recovered remarkably after the US Fed’s upbeat comments on economy

- US Fed decided to keep interest rates stable at near 0% and said that the labour market is "beginning to improve", and noted that housing starts have edged up; it also said that it expects to keep rates low for an "extended period" to help strengthen the economy

Losses in the market got capped further on a series of positive earning reports from US corporates, including Caterpillar Inc, Motorola and Time Warner CableIntermittent positive economic data also supported the markets,

- US Commerce Department said that sales of new homes jumped 27% in March, bouncing off a record low in February

- US consumer confidence rose to 57.9 in April, the highest level since September 2008, from 52.3 in March

- US initial jobless claims dropped 11,000 to a seasonally adjusted 448,000 in the week ended April 24


UKBritain’s FTSE finished a turbulent week around 2% lower, with the Europe’s debt crisis wreaking havoc on the marketThe negative sentiment caused by a series of downgrades of European countries, pulled down the benchmark by 2.6% on April 27, its the biggest fall in over 5 months

- S&P's downgraded Greece's debt to junk status and lowered Portugal's debt two notches to A minus from A plus

- S&P's cut Spain's credit rating to AA from AA plus, citing a more protracted period of sluggish growth than previously expected

Market sentiments were however bright earlier in the week as investors’ worries over Greece debt problems easedIntermittent positive global cues especially from the US also supported the benchmarkA rally in mining stocks earlier on the back of firm metal prices also induced some gains in the marketMeanwhile, investors ignored the news that Britain's economy grew at a slower pace than expected in the first three months of the year,

- UK’s GDP grew by 0.2% between January and March, the first quarter of 2010; the last quarter of 2009 saw GDP growth of 0.4%


ASIASingapore’s Straits Times ended 0.5% lower for the week ended April 30 tracking negative global cuesMarket tracked losses on regional bourses which fell after sentiments were hit on S&P’sdowngrades on Greece, Portugal and SpainIntermittent profit taking in the week also weighed on the marketLosses were capped to some extent, as market rose on hopes of an impending bailout of GreeceJapan’s Nikkei was the only gainer among major indices analysed, and ended 1.3% higher for the holiday curtailed week, ended April 30 Market started on a positive note after investors’ worries over debt problems in Greece recededStrong domestic and US corporate earnings brightened the mood in the marketGains were however reduced significantly after downgrades in Greece and Portugal's credit ratings sparked fears that the euro zone's debt problems were spreading; the benchmark however recovered later on signs that a bailout for Greece could come soon, easing fears of wider credit woesIntermittent profit booking also took off some gains from the market


ASIAHong Kong’s Hang Seng was volatile in the week and ended around 0.6% lower primarily on Europe’s debt woesMarket sentiments dipped on concerns that credit rating downgrades of Greece and Portugal would dampen the global economic reboundFundraising plans by China Construction Bank also weighed on the market dragging banking counters downRenewed concerns that the government will introduce further tightening measures to curb real estate prices also had negative effect on the benchmarkLosses were cut short however on hopes of a bail out of the debt laden Greece and due to strong first quarter earnings by Chinese banks.Intermittent positive global cues especially from the US also contributed in reducing the losses to certain extent


Indian Futures and Options Market ReviewNifty Futures –

The week saw the near month contract changing from April 29, 2010 to May 27, 2010 on April 30.The Nifty near month contract (expiry May 27) ended down with over 15 point discount to the spot index on April 30, 2010. Over the week, the spot index fell 0.49% to finish at 5278 points amid high volatility primarily on weak global cues over the Euro zone's financial stability.The Nifty near-month contract fell by around 42 points or 0.80% over this period to end at 5263 points. The open interest in the near-month contract closed the week up at 2.54 cr on April 30 compared with 2.49 cr on April 23.The other Nifty future contracts, viz., June contract ended at 5262 points (down 47 points over the week) while the July contract contract ended at 5264 points.Overall Nifty futures saw a weekly trading volume of Rs. 73791 cr arising out of 28 lakhcontracts with an open interest of 266 lakhs.


Indian Futures and Options Market Review

Nifty Options Nifty 5400 call continued to witness the highest open interest of 65 lakhs on April 30, while Nifty 5300 call recorded the highest number of contracts over the week at 19 lakhs.For put options, Nifty 5200 put continued to witness the highest open interest of 82 lakhs on April 30, and also recorded the highest number of contracts at over 18 lakhs during the week under review. Overall, options saw 97 lakh contracts getting traded at a notional value of Rs. 255771 crduring the week.

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Indian Futures and Options Market ReviewStock Futures and Options –

NSE witnessed 42 lakh contracts in stock futures valued at Rs. 145012 cr while stock options saw volumes of 5.29 lakh contracts valued at Rs. 19738 cr during the week ended April 30.

NSE F&O Turnover -Overall turnover on NSE's derivatives segment stood at Rs 5.04 lakh cr (177 lakh contracts) for the week ended April 30, 20 vs., on Rs 5.16 lakh cr (182 lakh contracts) for the previous week. Meanwhile Put Call ratio rose from 0.93 on April 23 to 0.97 on April 30.

Week Ended April 30, 2009

TurnoverRs. Cr. % to Total

Index Futures 83,161 16.47Index Options 256,871 50.89Stock Futures 145,012 28.73

Stock Options 19,738 3.91

Total 504,781 100

Put Call Ratio 0.97 (Apr 30) 0.93 (Apr 23)


Indian Futures and Options Market ReviewFII Segment

On April 29, (last available SEBI data), foreign institutional investors' open interest stood at Rs. 73326 cr (26 lakh contracts). The details of FII derivatives trades for the period April 23 – 29, 2010 are as follows: -

Buy Sell Buy % Sell %Week Ended

April 30, 2009

No. of contracts

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No. of contracts

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No. of contracts Amt in Rs Cr

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Index Futures 793299 21177

19832

29037

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72085

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709566 27.51

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29627

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2.83

100.00

28.54

36.15

1.74

100.00

30.77

25.79

41.01

2.43

100.00

Index Options 759228

Stock Futures 875214

Stock Options 52144

Total 2479885

Source - SEBI


Week Ahead 3 May 2010 – 7 May 2010

The Week AheadDay Event

Monday, May 3

US Personal Income/ Spending, March

US Construction Spending, March

US ISM Manufacturing Index, April

US Auto sales data, April

Euro-Zone Purchasing Manager Index Manufacturing, April

India’s Trade data, March

Tuesday, May 4

US Factory Orders data, March

US Pending Home Sales index, March

US Johnson Redbook Retail Sales Index

UK Net Consumer Credit, March

UK Nationwide Consumer Confidence, April

UK Purchasing Manager Index Manufacturing, April

Euro-Zone Producer Price Index, March

Wednesday, May 5

US Crude Inventories, week ended May 1

ADP Employment Report, April

US ISM Non-manufacturing Index, April

Euro-Zone Purchasing Manager Index Services, April

Euro-Zone Purchasing Manager Index Composite, April

Euro-Zone Retail Sales, March

Thursday, May 6

US Initial Jobless Claims, week ended May 1

US Non-farm Productivity and Costs data, Q1

UK Purchasing Manager Index Services, April

European Central Bank Interest Rate Decision

India Primary Articles Inflation for week ended April 17

Friday, May 7

US Nonfarm payrolls data, April

US Unemployment rate, April

US Consumer Credit data, March

UK Input/Output Producer Price Index, April

India’s Forex Data, Week ended April 23


Indian Debt Market OutlookNext week, the G-Sec markets are expected to take cue from G-Sec auction cut-offs and policymakers statements.

Next week, the money market outflows of around Rs.24,000 cr (in form G-Sec and T-bill auctions) are scheduled as against the money market inflows of around Rs.11,000 cr.

Corporate bond market is expected to take cues from G-sec market and primary

issuances.


Indian Debt Markets

Maturities of duration funds (except for G-Sec Fund) were at previous week's levels.

The maturities of liquid funds (except for FRF) have been reduced on increased cash levels in the portfolio as fresh inflows are deployed in near cash assets.

Particulars 23-Apr-10 30-Apr-10 Change (bps)

10 year Gsec yield (%) 8.06 8.04 -0.02

Scheme Maturity (years) Change

G-sec Fund 4.80 3.52 -1.28

Income fund 3.19 3.72 0.53

Short Term Fund 0.97 1.17 0.20

MIP 1.66 1.69 0.03

Liquid Schemes Maturity (days) Change

Floating Rate Fund 35 44 9.28

Money Managers Fund 115 103 -12.40

Liquidity Fund 41 38 -2.50

Medium Term Fund 139 109 -30.35

Treasury Plan 38 34 -4.43

Cash Plan 0 0 0.00


Fund Performance as on 30 April 2010

Equity Funds

Returns are of the Growth Option. Returns for less than 1 year are absolute and for above 1 year are calculated on compounded annualised basis. Returns assumed that all payouts during the period have been reinvested in the units of the scheme at the then prevailing NAV. "Past performance may or may not be sustained in future”

Scheme Name

1 Month 3 Months 6 Months 1 Year 3 Years 5 YearsSince

Inception

Reliance Equity Fund 0.34% 2.67% 6.47% 45.30% 8.49% N.A 10.24%S&P CNX Nifty 0.30% 8.11% 12.02% 51.76% 8.88% 22.61% 11.21%

Reliance Equity Opportunities Fund 4.11% 14.65% 29.82% 112.33% 14.40% 27.22% 25.86%BSE100 0.69% 7.71% 12.55% 61.39% 10.06% 23.11% 21.52%

Reliance Growth 4.32% 10.56% 21.66% 88.15% 18.43% 29.98% 30.01%BSE100 0.69% 7.71% 12.55% 61.39% 10.06% 23.11% 12.72%

Reliance Long Term Equity Fund 8.68% 13.05% 23.91% 82.07% 13.16% N.A 12.78%BSE 200 1.24% 7.99% 13.62% 66.28% 10.20% 22.10% 9.33%

Reliance NRI Equity Fund 4.08% 9.01% 14.76% 75.65% 13.67% 27.03% 26.54%BSE200 1.24% 7.99% 13.62% 66.28% 10.20% 22.10% 21.12%

Reliance RSF - Balanced 2.41% 12.76% 19.71% 67.26% 21.86% N.A 16.48%Crisil Balanced Fund Index 0.22% 5.53% 8.77% 33.62% 9.80% 16.96% 15.79%

Reliance RSF - Equity 2.59% 7.83% 19.53% 89.85% 23.27% N.A 24.55%BSE 100 0.69% 7.71% 12.55% 61.39% 10.06% 23.11% 21.13%

Reliance Tax Saver Fund 4.02% 10.29% 22.42% 76.92% 11.61% N.A 15.71%BSE 100 0.69% 7.71% 12.55% 61.39% 10.06% 23.11% 18.15%

Reliance Vision 1.71% 7.13% 14.42% 69.59% 11.68% 24.35% 24.93%BSE 100 0.69% 7.71% 12.55% 61.39% 10.06% 23.11% 12.72%

DIVERSIFIED EQUITY FUNDS - Performance as on 30.04.2010Absolute Compound Annualized

Equity Funds


Scheme Name 6 months 1 Year 3 Years 5 YearsSince

Inception Reliance Banking Fund - Growth 19.89% 96.88% 31.01% 29.45% 36.43%Bankex 18.53 96.88 20.34 25.68 30.66

Reliance Diversified Power Fund - Growth 12.69% 74.47% 29.18% 41.34% 42.08%India Power 7.03 40.12 12.88 24.41 22.01

Reliance Pharma Fund - Growth 38.22% 146.91% 31.97% 33.13% 31.17%BSE-HC 22.10% 73.95% 13.00% 17.07% 15.85%

Reliance Media & Ent. Fund - Growth 23.24% 80.73% 2.37% 21.39% 20.24%S&P CNX Media & Entertainment Index 27.40 106.17 -6.50 18.43 15.36

SECTOR FUNDS - Performance as on 30.04.2010Absolute Compound Annualised

Debt Funds


Scheme Name 1 Week 1 Month 3 Months 6 Months 1 Year 3 Years 5 Years Since InceptionReliance FRF - Growth 0.09% 0.40% 1.10% 2.21% 4.82% 7.27% 7.06% 6.84%Crisil Liquid Fund Index 0.05% 0.30% 0.95% 1.66% 3.17% 6.38% 6.21% 6.01%

Reliance Income Fund - Retail - G P - Growth 0.32% 0.94% 1.35% 2.97% 2.26% 10.21% 8.04% 9.67%Crisil Composite Bond Fund Index 0.23% 0.88% 1.57% 3.37% 3.26% 7.07% 5.82% NA

Reliance Money Manager Fund - Retail- Growth 0.09% 0.42% 1.11% 2.25% 4.86% 7.26% N.A 7.44%Crisil Liquid Fund Index 0.05% 0.30% 0.95% 1.66% 3.17% 6.38% 6.21% 6.60%

Reliance MIP - Growth 0.33% 1.40% 2.85% 6.18% 18.41% 14.56% 13.87% 12.02%Crisil MIP Blended Index 0.06% 0.73% 2.49% 4.65% 9.93% 8.17% 8.84% 7.12%

Reliance MTF- Retail - Growth 0.10% 0.45% 1.21% 2.37% 4.95% 6.76% 5.95% 6.99%CRISIL Short-Term Bond Fund Index 0.15% 0.68% 1.38% 2.83% 4.66% 8.11% 6.85% NA

Reliance Short Term Fund - Growth 0.15% 0.86% 1.56% 3.16% 5.75% 10.04% 8.71% 7.92%Crisil Liquid Fund Index 0.05% 0.30% 0.95% 1.66% 3.17% 6.38% 6.21% 5.62%

Reliance NRI Income Fund - Growth 0.04% 0.77% 1.73% 2.14% 2.61% 1.94% 3.49% 3.54%Crisil Composite Bond Fund Index 0.23% 0.88% 1.57% 3.37% 3.26% 7.07% 5.82% 5.89%

Reliance Regular Savings Fund-Debt Option 0.19% 0.82% 1.81% 3.91% 6.16% 6.24% N.A 5.02%Crisil Composite Bond Fund Index 0.23% 0.88% 1.57% 3.37% 3.26% 7.07% 5.82% 5.64%

Performance as on 30.04.2010Absolute Compound Annualized

Debt Funds


Scheme Name 1 Day 3 Days 1 Week 1 Month 6 Months 1 Year 3 Years 5 Years Since InceptionReliance Liquid Fund - Cash Plan - Growth 0.01% 0.03% 0.05% 0.25% 1.35% 2.42% 4.44% 5.06% 4.98%Crisil Liquid Fund Index N.A 0.02% 0.05% 0.30% 1.66% 3.17% 6.38% 6.21% N.AReliance Liquid Fund - TP - Retail - Growth 0.01% 0.04% 0.08% 0.38% 2.01% 4.44% 6.79% 6.49% 6.78%Crisil Liquid Fund Index N.A 0.02% 0.05% 0.30% 1.66% 3.17% 6.38% 6.21% NAReliance Liquidity Fund - Growth 0.01% 0.04% 0.09% 0.40% 2.09% 4.54% 7.08% N.A 7.01%Crisil Liquid Fund Index N.A 0.02% 0.05% 0.30% 1.66% 3.17% 6.38% 6.21% 6.26%

Performance as on 30.04.2010Absolute Compound Annualized

Investment ObjectivesReliance Floating Rate Fund (An Open-ended Liquid Scheme): The primary investment objective of the scheme is to generate regular income through investment in a portfolio comprising substantially of Floating Rate Debt Securities (including floating rate securitised debt, Money Market Instruments and Fixed Rate Debt Instruments swapped for floating rate returns). The scheme shall also invest in Fixed Rate Debt Securities (including fixed rate securitised debt, Money Market Instruments and Fixed Rate Debt Instruments swapped for fixed returns).Reliance Gilt Securities Fund (An Open-ended Govt. Securities Scheme): The primary investment objective of the scheme is to generate optimal credit risk-free returns by investing in a portfolio of securities issued and guaranteed by the Central Government and State Government.Reliance Income Fund (An Open-ended Income Scheme): The primary investment objective of the scheme is to generate optimal returns consistent with moderate level of risk. This income may be complemented by capital appreciation of the portfolio. Accordingly, investments shall predominantly be made in Debt & Money Market Instruments.Reliance Money Manager Fund (Open ended income scheme): The investment objective of the Scheme is to generate optimal returns consistent with moderate levels of risk and liquidity by investing in debt securities and money market securities.Reliance Monthly Income Plan (An Open-ended Fund-Monthly Income is not assured & is subject to the availability of distributable surplus): The primary investment objective of the scheme is to generate regular income in order to make regular dividend payments to unitholdersand the secondary objective is growth of capital.

Investment ObjectivesReliance Medium Term Fund (An Open-ended Income Scheme with no assured returns): The primary investment objective of the scheme is to generate regular income in order to make regular dividend payments to unitholders and the secondary objective is growth of capital.Reliance Short Term Fund (An Open-ended Income Scheme): The primary investment objective of the scheme is to generate stable returns for investors with a short term investment horizon by investing in fixed income securities of a short term maturity.Reliance NRI Income Fund (An Open-ended Income Scheme): The primary investment objective of the scheme is to generate optimal returns consistent with moderate levels of risk. This income may be complemented by capital appreciation of the portfolio. Accordingly, investments shall predominantly be made in Debt Instruments.Reliance Liquid Fund (An Open-ended Liquid Scheme): The primary investment objective of the scheme is to generate optimal returns consistent with moderate levels of risk and high liquidity. Accordingly, investments shall predominantly be made in Debt and Money Market Instruments.Reliance Liquidity Fund (An Open-ended liquid scheme): The investment objective of the scheme is to generate optimal returns consistent with moderate levels of risk and high liquidity. Accordingly, investments shall predominantly be made in Debt and Money Market Instruments.

Investment ObjectivesReliance Growth Fund (An Open-ended Equity Growth Scheme): The primary investment objective of the scheme is to achieve long term growth of capital by investing in equity and equity related securities through a research based investment approach.Reliance Vision Fund (An Open-ended Equity Growth Scheme): The primary investment objective of the scheme is to achieve long-term growth of capital by investment in equity and equity related securities through a research based investment approach.Reliance Equity Opportunities Fund (An Open-ended Diversified Equity Scheme): The primary investment objective of the scheme is to seek to generate capital appreciation & provide long-term growth opportunities by investing in a portfolio constituted of equity securities & equity related securities and the secondary objective is to generate consistent returns by investing in debt and money market securities.Reliance Tax Saver (ELSS) Fund (An Open-ended Equity Linked Savings Scheme): The primary objective of the scheme is to generate long-term capital appreciation from a portfolio that is invested predominantly in equity and equity related instruments. Reliance Banking Fund (An Open-ended Banking Sector Scheme): The primary investment objective of the scheme is to generate continuous returns by actively investing in equity and equity related or fixed income securities of Banks. Reliance Pharma Fund (An Open-ended Pharma Sector Scheme): The primary investment objective of the scheme is to seek to generate consistent returns by investing in equity and equity related securities or fixed income securities of Pharma and other associated companies. Reliance Media & Entertainment Fund (An Open-ended Media & Entertainment Sector Scheme): The primary investment objective of the scheme is to generate continuous returns by investing in equity and equity related or fixed income securities of Media & Entertainment and other associated companies.Reliance Diversified Power Sector Fund (An Open-ended Power Sector Scheme): The primary investment objective of the scheme is to seek to generate continuous returns by actively investing in equity and equity related or fixed income securities of Power and other associated companies.

Investment ObjectivesReliance Equity Advantage Fund (An Open ended Diversified Equity Scheme): The primary investment objective of the scheme is to seek to generate capital appreciation & provide long-term growth opportunities by investing in a portfolio predominately of equity & equity related instruments with investments generally in S & P CNX Nifty stocks and the secondary objective is to generate consistent returns by investing in debt and money market securities.Reliance NRI Equity Fund (An Open-ended Diversified Equity Scheme): The primary investment objective of the scheme is to generate optimal returns by investing in equity and equity related instruments primarily drawn from the Companies in the BSE 200 Index.Reliance Regular Savings Fund (An open ended Scheme) Debt Option: The primary investment objective of this Option is to generate optimal returns consistent with moderate level of risk. This income may be complemented by capital appreciation of the portfolio. Accordingly investments shall predominantly be made in Debt & Money Market Instruments. Equity Option: The primary investment objective of this Option is to seek capital appreciation and/or to generate consistent returns by actively investing in equity / equity related securities. Balanced Option: The primary investment objective of this Option is to generate consistent return and appreciation of capital by investing in mix of securities comprising of Equity, Equity realated Instruments & Fixed income instruments. Reliance Equity Fund (An open-ended Diversified Equity Scheme): The primary investment objective of the scheme is to seek to generate capital appreciation & provide long-term growth opportunities by investing in a portfolio constituted of equity & equity related securities of top 100 companies by market capitalization & of companies which are available in the derivatives segment from time to time and the secondary objective is to generate consistent returns by investing in debt and money market securities.Reliance Long Term Equity Fund(A 36 months close ended diversified equity fund with an automatic conversion into an open ended scheme on expiry of 36 months from the date of allotment): The primary investment objective of the scheme is to seek to generate long term capital appreciation & provide long-term growth opportunities by investing in a portfolio constituted of equity & equity related securities and Derivatives and the secondary objective is to generate consistent returns by investing in debt and money market securities.

The Sponsor: Reliance Capital Limited. The Trustee: Reliance Capital Trustee Company Limited. The Investment Manager: Reliance Capital Asset Management Limited. Statutory Details: The Sponsor, the Trustee and the Investment Manager are incorporated under the Companies Act 1956

Mutual Funds and securities investments are subject to market risks and there is no assurance and no guarantee that the Schemes objectives will be achieved. As with investments in any securities, the NAVs of the units issued under the Scheme can go up or down depending on the factors and forces affecting the securities market. Reliance Growth Fund, Reliance Vision Fund, Reliance Equity Opportunities Fund, Reliance Tax Saver (ELSS) Fund, Reliance Banking Fund, Reliance Pharma Fund, Reliance Media & Entertainment Fund, Reliance Diversified Power Sector Fund, Reliance Equity Advantage Fund, Reliance NRI Equity Fund, Reliance Regular Savings Fund, Reliance Equity Fund, Reliance Long Term Equity Fund, Reliance Floating Rate Fund, Reliance Gilt Securities Fund, Reliance Income Fund, Reliance Money Manager Fund, Reliance Monthly Income Plan (An Open-ended Fund-Monthly Income is not assured & is subject to the availability of distributable surplus), Reliance Medium Term Fund, Reliance Short Term Fund, Reliance NRI Income Fund, Reliance Liquid Fund & Reliance Liquidity Fund are only the name of the Schemes and does not in any manner indicate either the quality of the Schemes, their future prospects or returns. Past performance of the Sponsor/AMC/Mutual Fund is not indicative of future performance of the Scheme. The NAV of the Scheme may be affected, interalia, by changes in the market conditions, interest rates, trading volumes, settlement periods and transfer procedures. The Sponsor is not responsible or liable for any loss resulting from the operation of the Scheme beyond their initial contribution of Rs.1 lac towards the setting up of the Mutual Fund and such other accretions and additions to the corpus. The NAV of the Scheme may be affected, interalia, by changes in the market conditions, interest rates, trading volumes, settlement periods and transfer procedures. The Mutual Fund is not assuring that it will make periodical dividend distributions, though it has every intention of doing so. All dividend distributions are subject to the availability of distributable surplus in the Scheme. Please read the Scheme Information Document of the respective Schemes carefully before investing.

The views expressed herein are the personal views of the Author. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. The News are meant for general reading purpose only and is not meant to serve as a professional guide for the readers. This document has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. The Sponsor, The Investment Manager, The Trustee or any of their respective directors, employees, affiliates or representatives do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and opinions given fair and reasonable. This information is not intended to be an offer or solicitation for the purchase or sale of any financial product or instrument. Recipients of this information should rely on information/data arising out of their own investigations. Readers are advised to seek independent professional advice and arrive at an informed investment decision before making any investments. None of The Sponsor, The Investment Manager, The Trustee, their respective directors, employees, affiliates or representatives shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profits arising in any way from the information contained in this material.

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