FICC TIMES //

THE WEEK GONE BY AND THE WEEK AHEAD

April 27, 2013

Equities continued to do well last week, despite some slowing economic data. High Yield spreads have declined to their lowest levels in two years signalling a healthy appetite for risk. While weekly jobless claims fell, new Q1 GDP came in at +2.5% instead of the expected +3.0%. Euro zone saw an improvement in bond yields with many peripheral countries' spreads against German Bunds at their several month lows. Data from China was weak too, with flash PMI coming in at 50.50 instead of 51.50. While risk appetite for equities and bonds remained strong, there is definitely a risk that upcoming macro data defies market's expectations of a robust 2nd half leading to some profit-taking in equities. Trade Deficit numbers for the last quarter were a lot better than the previous quarters and hence, the INR should remain well supported.

The key events of last week:

Total existing home sales in US declined 0.6% to a seasonally adjusted annual rate of 4.92 million in March from a downwardly revised 4.95 million in February. Wall Street had been expecting sales to rise in the month, and the miss is a sign that it's been "overestimating the strength on the housing market recovery" The International Council of Shopping Centers and Goldman Sachs Retail Chain Store Sales Index edged up 0.8% in the week ended Saturday from the week before on a seasonally adjusted, comparable-store basis. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 0.2 percent in the week ended April 19 as rates fell for the fifth week in a row. Claims for unemployment benefits fell more than expected last week, pointing to slight improvement in the US job market

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THE WEEK GONE BY AND THE WEEK AHEAD.

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 2.5 percent in the first quarter of 2013, below expectations for 3.0% growth , according to the "advance" estimate released by the Bureau of Economic Analysis. The Bank of Japan maintained its unprecedented plan to boost money supply at a policy meeting held on 26th of April, and predicted inflation will almost match its target in two years even after a report highlighted deflations grip. There is "limited but growing" evidence that Syrian government troops have used chemical weapons, U.S. intelligence and UK Prime Minister David Cameron says which cause crude oil price to spike sharply from 88 to 93 levels during the week ended on 27th of April.

And closer home.

Indian central bank says yield on 91-day treasury bills at 7.6435 pct vs. 7.7268 pct last week. Yield on 182-day treasury bills at 7.6406 pct vs. 7.7920 pct two weeks ago. India attracted INR 348.40 billion worth of bids for FII debt auction limits today against INR 291.08 billion on offer. These limits give foreign investors the right to invest in debt up to the limit bought. This is the first auction to be conducted after Sebi rationalized the various debt categories for FIIs.
Category / Amount (INR Cr.) Government Debt Total Limit for Auction 29108 Total Bids Received 34840 Highest Bid (bps) 4 Cut off (bps) 1.50 Previous cut off(bps)

1st auction after government debt old and long term where combined this month

India's foreign exchange reserves including gold and Special Drawing Rights were down by $485.9 million to $294.761 billion in week to Apr 19, Reserve Bank of India's Weekly Statistical Supplement showed Friday. Foreign exchange reserves were down by $158.4 million from a year ago. Reserves held in the form of gold were at $25.692 billion, unchanged from previous week.
USD(Billion) Total reserves Forex assets* Gold SDRs Reserve position In IMF** Apr 19 294.761 262.410 25.692 434.7 2.311 week -0.485 -0.489 --0.002 0.001 end-Mar 2013 2.715 2.684 --0.019 0.010 year 0.158 2.192 -1.331 -0.110 -0.593

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Source : Tickerplant Dollar/rupee ended at two-week high Friday on month-end demand for the greenback from oil importers and tracking a fall in euro as repayment of European banks to the European Central Bank is set to fall sharply next week, dealers said.
SPOT Last Open High Low 54.3750-54.3850 54.1400-54.1500 54.4100-54.4200 54.1400-54.1500 1-YEAR FWD PREMIUM 6.49-6.54% 6.54-6.59% 6.56-6.61% 6.48-6.53% 1-MONTH FUTURES 54.5775-54.5800 54.3875-54.3900 54.6275-54.6300 54.3375-54.3400

Prev

54.2200-54.2300

6.51-6.56%

54.4050-54.4075

Important upcoming International events to be tracked:

Date 29-04-2013 29-04-2013 30-04-2013 30-04-2013 30-04-2013 30-04-2013 30-04-2013 30-04-2013 30-04-2013 30-04-2013 30-04-2013 1/5/2013 1/5/2013 1/5/2013 Time 14:30 IST 19:30 IST 05:00 IST 05:20 IST 05:20 IST 14:30 IST 14:30 IST 17:15 IST 18:25 IST 19:15 IST 19:30 IST 00:30 IST 05:30 IST 13:30 IST Country European Monetary US Japan Japan Japan European Monetary European Monetary US US US US US US European Monetary Union Event EC Economic Sentiment Pending Home Sales Index Unemployment Rate Industrial Production Retail Sales (Year over Year) Unemployment Rate HICP Flash ICSC-Goldman Store Sales Redbook Chicago PMI Consumer Confidence Farm Prices (Farm Prices - m/m % change) Motor Vehicle Sales (Domestic Vehicle Sales) PMI Manufacturing Index

Union Union

Union

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THE WEEK GONE BY AND THE WEEK AHEAD.

1/5/2013 1/5/2013 1/5/2013 2/5/2013 2/5/2013 2/5/2013 2/5/2013 2/5/2013 2/5/2013 3/5/2013 3/5/2013 3/5/2013 3/5/2013 3/5/2013

16:30 IST 20:00 IST 23:30 IST 05:20 17:15 18:00 18:00 19:15 19:15 02:00 02:00 18:00 IST IST IST IST IST IST IST IST IST

US US US Japan European Monetary Union US US US US US US US US US

19:30 IST 19:30 IST

MBA Purchase Applications EIA Petroleum Status Report FOMC Meeting Announcement (Federal Funds Rate - Target Level) BoJ MPB Minutes ECB Announcement (Change) Jobless Claims International Trade (Trade Balance Level) Bloomberg Consumer Comfort Index (Level) Bloomberg Consumer Comfort Index Money Supply Fed Balance Sheet Employment Situation (Nonfarm Payrolls M/M change) ISM Non-Mfg Index (Composite Index Level) Factory Orders (Factory Orders - M/M change)

Important upcoming Domestic Events

Date 26-04-2013 30-04-2013 30-04-2013 30-04-2013 30-04-2013 1/5/2013 1/5/2013 2/5/2013 2/5/2013 3/5/2013 3/5/2013 3/5/2013 3/5/2013 3/5/2013 3/5/2013 3/5/2013 3/5/2013 3/5/2013 3/5/2013 3/5/2013 3/5/2013 Time Country India India India India India India India India India India India India India India India India India India India India India Event IIP Core (YoY Chg) 91 day T- Bills auction of Rs 50 bn (cut-off yld) Government finances -fiscal deficit (pct of Budget Estimate) 364 day T- Bills auction of Rs 50 bn (cut-off yld) CPI-Industrial Workers Power generation HSBC India manufacturing PMI Reserve Money (change on wk) M3 (YoY Chg) HSBC India Services PMI HSBC India composite PMI Monetary Policy Statement WMA (ways and means advance) - to central govt WMA (ways and means advance) - to state govts FX reserve (change on wk) Bank Deposit (YoY Chg) Bank Credit (YoY Chg) Bank Investment (YoY Chg) Bank Cash Deposit Ratio Bank Investment Deposit Ratio Bank Credit Deposit Ratio

12:00 IST 10:30 IST

10:30 10:30 11:00 17:00 17:00 17:00 17:00 17:00 17:00 17:00 17:00 17:00

IST IST IST IST IST IST IST IST IST IST IST IST

TECHNICAL VIEW
USD/INR looks to be range bound between 54 and 55 and has not shown a large momentum on either side for a breakout On the daily chart USD/INR momentum indicators remain bearish while the short term technicals remain well supportive at around 54 levels

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r rupee bullish for the time being, also deriving our comfort from falling We remain commodity t prices internationally

USD/INR Daily Technicals

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