April 13, 2012

EQU ITY | DEB T | ADVISORY

ECONOMIC INDICATORS Index of Industrial Production (IIP) India Economic Snapshot

Indicators Current 6.10 4.10 6.95 586.38 4.28 20.65 (15.16) 14.96 1M Prior 1.10 6.55 539.21 10.10 20.25 (14.76) 14.67 3M Prior 6.90 5.90 9.11 463.60 3.87 24.55 (13.60) 15.51 1Y Prior 8.30 3.60 8.31 528.66 49.70 21.20 (8.10) 13.59 GDP (in %) IIP (in %) Inflation (in %) Fiscal Deficit ( ` bn)

17 12

IIP for the month of Feb12 increased to 4.1 percent

7 2 -3 -8

Feb-11

Dec-10

Aug-10

Aug-11

Dec-11

Feb-12

Apr-10

Oct-10

Apr-11

Jun-10

Jun-11

Oct-11

Exports (%,YoY) Imports (%,Yo Y) Trad e Balanc e ($ bn) Forex R eserve ( ` trn)

IIP

Manufacturing

Mining

Electricity

Global Economic Snapshot

Indicators GDP Inflation IIP Leading index Trad e bal ance*(bn)
*In local currency, China & Brazil in USD

US 3.00 0.40 0.40 102.00 (46.00)

EU 0.70 2.70 (1.80) 98.30 5.90

UK 0.50 3.40 (2.30) 98.70 (3.39)

Japan (0.20) 0.20 (1.50) 101.90 (102.10)

China 8.10 3.60 11.90 99.30 (5.35)

Brazil 1.37 5.24 (3.90) 93.70 201.90

Global Money Market Rates

Countries US Germany UK Japan China Rate N ame Fed funds target Refinancing rat e Prime rat e Loan rat e Call rate Rate 0.25 1.00 0.50 0.10 6.56 2Y CDS 8.13 16.20 11.79 51.09 51.97 5Y CDS 29.50 70.50 63.50 99.64 115.33 2Y Swaps 0.57 1.02 1.23 0.35 4.20 6M IBOR 0.73 1.05 1.33 0.34 5.07

Global Yield Curve

Yield Curve US Germany UK Hong Kong Japan 3M 0.08 0.11 0.36 0.12 0.10 6M 0.13 0.09 0.41 0.14 0.10 1Y 0.17 0.08 0.43 0.16 0.11 4Y 0.68 0.41 0.70 0.42 0.20 5Y 0.94 0.68 0.93 0.55 0.30 10Y 2.01 1.75 2.05 1.22 0.95

Gold & Dollar Index

Commodities Snapshot
Indicators Gold ($/oz.) Current 1673.90 32.27 18500 8095 2008 2092 2073.00 103.21 1.98 5D (%) 2.70 1.86 3.61 (3.05) 1.41 (0.06) 3.01 (0.08) (5.27) 1M (%) (1.34) (3.76) (4.88) (5.41) (4.79) (7.38) (3.76) (3.74) (17.82) 3M (%) 2.29 9.30 (5.61) 1.19 2.53 (2.48) 3.06 3.84 (30.97)

1920 1840 1760 1680 1600 1520 1440

83
Silver ($/oz)

81
Nickel ($/T)

79
Copper ($/T)

77
Zinc ($/T)

75
Aluminum ($ /T)

73

12-Mar

14-Feb

28-Feb

23-Mar

1-Feb

9-Apr

Lead ($/T) Crude (USD/bbl) Natural Gas($/mmbtu)

Gold ($/oz.)

Dollar index

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INDIA MONEY MARKET INDICATORS 10Y G-Sec & 364D T-Bills

8.9 8.6 8.3 8 7.7 7.4 7.1 9.1 8.9 8.7 8.5 8.3 8.1 7.9 11 10 9 8 7

3M CD & 3 M CP Rates
12

Yield on 10Y G-Sec and 364D T-Bills decreased Yield on both 3M CD and 3M CP decreased

Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12

May-11

Feb-11 Mar-11

Nov-11

Sep-11

Dec-11

Feb-12
6.85 0.28 8.90 7.68 7.15 8.00
Apr-12

Mar-12

Jan-11

Jan-12

Apr-11

Aug-11

Jun-11

364 D T-Bills (LHS)

10 Y G-Sec Yield (RHS)

CD 3M Rates

Oct-11

CP 3M Rates

Call Rates and 3M T-Bills

12 11.3 10.6 9.9 9.2 8.5 7.8 7.1 6.4 5.7 5
Feb-11 Dec-11 Feb-12 Jun-11 Apr-11 Aug-11 Oct-11 Apr-12

Repo, Reverse Repo, Net Borrowing

10.1 9.8 9.5 9.2 8.9 8.6 8.3 8 7.7 7.4 7.1 6.8
10.0 9.0 8.0 7.0 6.0 5.0
Jun-11 Oct-11 Dec-11 Aug-11 Feb-12 Apr-11

Call rate stabilized yield on 3M T-Bills decreased Net Borrowings have increased

1500 1000 500 0 -500 -1000 -1500 -2000 -2500

Call Rates

3 M T-Bills

Net Borrowings (Rs bln) Revesre Repo Rate

Repo Rate

Money Market Rates

Key Rates
Call Rate Indi cative LIBOR 3M MIBOR 3M MIFOR 3M 3M T-Bills 10Y G-Sec Yield

Current
8.85 0.47 10.27 8.34 9.19 8.57

5D Prior
8.95 0.47 10.82 8.17 8.79 8.78

1M Prior
8.80 0.47 10.90 8.97 8.93 8.33

3M Prior
9.50 0.57 9.74 8.27 8.47 8.21

6M Prior
8.30 0.40 9.38 4.95 8.45 8.72

1Y Prior

INDIA CURRENCY MARKET INDICATORS INR Relative Performance

50 40 30 20 10 0 -10 -20

Currency Rates
Major Currencies
USD/INR EUR/INR JPY/INR GBP/INR EUR/U SD USD/JPY

LTP
51.4950 67.7550 0.6359 82.0229 1.3159 80.9700 1.5928 0.9133 1.0400 0.9941

5D (%)
(0.72) (0.78) (1.51) (1.22) 0.48 0.86 0.40 0.46 0.91 0.31

1M (%)
(2.99) (3.34) (5.46) (4.70) 0.57 2.47 1.46 1.10 (1.44) (0.55)

May-10

May-11

Mar-10

Mar-11

Nov-10

Nov-11

Sep-10

Sep-11

Mar-12

Jan-10

Jan-11

Jan-12

Jul-10

Jul-11

GBP/USD USD/CHF AUD/USD USD/CAD

USDINR

EURINR

GBPINR

JPYINR

Resurgent India Limited 3

Apr-12

Jul-11

EQU ITY | DEB T | ADVISORY

INDIA BANKING IN DICATORS Deposit And Deposit Growth

Deposit increased to `59.05 trillion along with the yearly deposit growth to 10.94% CASA ratio stood at 12.11 registering a growth of 32.85 % on a y-o-y basis
59 56 53 50 47 44 41 38
Jul-09 Jul-10 Jan-10 Jan-11 Jul-11 Jan-12 Apr-09 Apr-10 Oct-09 Oct-10 Apr-11 Oct-11

CASA And CASA Growth

15 22 20 18 16 14 12 10 8 14 13 12 11 10 9 30 25 20 15 10 5 0 -5 -10 -15 -20

in trillions (Rs.)

Mar-10

Mar-11

Sep-09

Sep-10

Sep-11

Dec-09

Dec-10

Deposits

Growth %

CASA Ratio

Growth %

Credit And Credit Growth

Credit increased to o-y growth rate at 17.57% Food credit has decreased to `80 billion while non-food credit increased to `46.25 trillion
in trillions (Rs.)

Food And Non-Food Credit

26 23 0.85 0.80 0.75 0.70 0.65 0.60 0.55 0.50 0.45 0.40 0.35
Jun-09 Jun-10 Sep-09 Sep-10 Jun-11 Sep-11 Mar-10 Mar-11 Dec-09 Dec-10 Dec-11 Mar-12

`47.05 trillion with a y-

47 45 43 41 39 37 35 33 31 29 27
Jun-09 Jun-10 Sep-09 Sep-10 Jun-11 Dec-09 Dec-10 Sep-11 Dec-11 Mar-10 Mar-11 Mar-12

Dec-11

in trillions (Rs.)

17 14 11 8

Bank Credit

Growth %

Food Credit

Non Food Credit

Cash-Deposit Ratio
8.0 7.5

Inv-Deposit Ratio
34 33 32 31 30 29

Cash-deposit ratio increased to 6.32% Investment-deposit ratio decreased to 28.55%

7.0 6.5 6.0 5.5 5.0

May-11

Nov-11

Mar-11

Aug-11

Sep-11

Feb-11

Dec-11

Feb-12

Mar-12

Jan-11

Jun-11

Jan-12

Apr-11

Oct-11

28

Jul-11

May-11

Nov-11

Mar-11

Aug-11

Sep-11

Feb-11

Dec-11

Cash-Deposit Ratio

Investment-Deposit ratio

Banking Snapshot
Indicators
M 3 (` trn) Total D eposits (`trn) Demand D eposits (` trn) Time Deposits (` trn) Total C redit (` trn) Non-Food Credit (` trn) Credit-Deposit R atio Cash-Deposit Ratio Investment-Deposit R atio

Current
65.04 61.12 7.40 53.73 47.05 46.25 76.97 6.32 28.55

15D Prior
72.83 58.53 5.99 52.54 44.87 44.03 76.65 5.95 30.16

1M Prior
72.44 58.15 5.96 52.19 44.08 43.24 75.79 5.99 30.01

3M Prior
71.99 58.28 6.38 51.89 43.66 42.81 74.91 6.66 29.06

6M Prior
68.59 55.30 5.59 49.71 40.93 40.25 74.01 6.98 30.74

1Y Prior
65.00 52.05 6.39 45.66 39.39 38.74 75.68 6.71 28.82

Resurgent India Limited 4

Feb-12

Mar-12

Apr-11

Jan-11

Jun-11

Oct-11

Jan-12

Jul-11

(in trillions (Rs.)

20

45.0 42.5 40.0 37.5 35.0 32.5 30.0 27.5 25.0

Mar-12

Jun-09

Jun-10

Jun-11

EQU ITY | DEB T | ADVISORY

INDIA BANKING MONITOR Banking News

Oriental Bank of Commerce cuts base rate by 10 bps Taking the lead, Oriental Bank of Commerce has cut its base rate by 10 basis points to 10.65 per cent. This move is expected to translate into lower interest rate for borrowers, and comes a week ahead of the Reserve Bank of India's annual credit policy announcement on April 17. We have taken a bold decision ahead of the RBI policy. There are some events in the last few months that have enabled us to take this decision and pass on the cost benefit to our customers, Mr S. L.Bansal, Chairman and Managing Director, said. Nationalised banks to speed up processing of corporate loans Indian companies can hope for a faster turnaround when they submit loan proposals to nationalised banks. Nationalised banks have set up credit approval committees (CACs) at their respective head-offices to speed up decisions on loan requests from companies. Realising that private sector and foreign banks have a competitive edge when it comes to decision making on loans, the Finance Ministry has pushed for a CAC in each of the 20 nationalised banks . IOB eyes 1618% credit growth in FY13 Public sector lender, India Overseas Bank, on Wednesday said it is aiming a credit growth rate of 16 to 18 per cent and a deposit growth rate of 18 to 20 per cent in the current financial year. Total deposit of banks grew by 13.4 percent to ` 60.72 trillion as of March 23, which is below the RBIs projection of 17 percent for the last fiscal. Net profit of the bank fell by 53 per cent to ` 108 crore during the third quarter owing to higher provisioning and rise in restructured assets. New strategy for loss-making branches likely Operations of loss-making branches of public sector banks and insurance companies may be scaled down, Mr D. K. Mittal, Financial Services Secretary, has indicated. This is part of an ongoing dialogue with not only banks, but also insurance companies. If there are loss -making branches, then we have to re-look them. Ultimately, branches have been set up to earn, Mr Mittal told newspersons at a Confederation of Indian Industry event in the Capital. He said that the Government was open to the idea of working out a new business strategy, relocating branches and maybe even scaling down staff. Dhanlaxmi Bank to grow gold loan business Banks are likely to gain from the restrictions imposed on gold loan companies by the Reserve Bank of India. In fact, old generation private sector bank, Dhanlaxmi Bank is looking to increase its gold loan portfolio from 8 per cent of total loans to 20-25 per cent in the current financial year, said Mr P. G. Jayakumar, Chief Executive Officer. The bank's gold loan portfolio is expected to increase from ` 750 crore as at March-end 2012 to ` 2,500 crore by March-end 2013. PNB targets ` 13,000-cr business turnover in Kerala The public sector Punjab National Bank is targeting a business turnover of ` 13,000 crore in Kerala during the financial year of 2012-13. Mr K.V. Rajesh, deputy general manager and circle head told that during last financial year the bank had garnered a business volume of ` 10,000 crore in the State.

Base Rates & Deposit Rates

Banks Base Rate Deposit Rate (in %) 3 Years 5 Years

Public Sector
Allah abad Ban k Andhra B ank Bank Of B aroda Bank of India Bank of Mah arastra Canara Bank Central Bank of India Corporation Ban k Dena Ban k IDBI Bank Indian Ban k Indian Ov erseas Bank OBC Punjab & Sind B ank Punjab National Bank Stat e Bank Of Indi a Syndicat e Bank UCO Bank Union Bank of India United Ban k Of Indi a Vijay a B ank 10.75 10.75 10.75 10.75 10.60 10.75 10.75 10.65 10.70 10.75 10.75 10.75 10.65 10.75 10.75 10.00 10.75 10.75 10.65 10.60 10.65 8.75 9.40 9.25 9.25 9.35 9.25 9.25 9.25 9.30 9.50 9.00 9.25 9.25 9.25 9.25 9.25 9.25 9.25 9.25 9.35 9.30 8.50 9.00 9.00 9.25 9.00 9.25 9.09 9.25 8.75 9.50 9.00 9.00 9.25 9.25 9.00 9.25 9.25 9.25 9.40 9.35 9.25

Private Sector
Axis Bank Kotak Bank ICICI B ank HDFC Bank Karnat aka B ank Dhanlaxmi B ank Federal Bank IndusInd Bank Yes B ank Foreign RBS DBS India 10.00 10.00 7.75 8.75 7.75 9.00 10.00 10.00 10.00 10.00 11.00 11.25 10.65 10.75 10.50 9.25 9.25 9.25 9.25 9.50 8.75 9.25 8.75 8.75 8.75 9.00 8.75 9.25 9.50 10.10 9.25 8.75 8.75

* Figures in bold indicates a change in the previous week with bps change in parent hesis

Government Auctions Completed

Date of Issuance Apr 11 Apr 11 Security 91 D T-Bills 182 D T-Bills Amoun t ` 9000 cr ` 5000 cr Yield (in %) 8.7712 8.5741

Forthcoming Government Auctions

Date of Issuance Apr 18 Apr 18 Security 91 D T-Bills 364 D T-Bills Amoun t ` 9000 cr ` 5000 cr Yield (in %) -

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EQU ITY | DEB T | ADVISORY

ARTICLES WORTH A READ

Italian politics: Jittery Italy Source: economist.com

COLD winds blew through Italy this week, and clouds obscured the unseasonably blue skies under which the country had long been basking. Politically and economically, too, the outlook has changed. On April 10th the Milan bourses index dived by 5%. Markets fell elsewhere in Europe, but the drop in Milan was the biggest, reflecting among other things fears that Italys banks, which bought more than 50 billion ($65 billion) of government bonds during the winter, are perilously exposed to renewed panic in the debt markets. The same day saw the yield spread between Italian and German benchmark bonds exceed four percentage points for the first time since January That is not all bad news for Mario Monti, Italys prime minister. Last year, fear of a crisis that could force Italy to default on its vast public debts (worth more than 120% of GDP) cemented an unlikely alliance between the three big parties, giving Mr Montis government a solid parliamentary majority. Of late, that alliance has needed extra glue. The centrepiece of Mr Montis legislative programme is a reform of Italys notoriously restrictive labour laws, which help to produce a woefully low employment rate (see chart). The bill, which began its parliamentary journey this week, has been rejected outright by Italys biggest trade-union federation, the CGIL. That stance has put the leaders of the centre -left Democratic Party (PD) between the rock of their historic ties to organised labour and the hard place of support for the government. To ease their pain, the government said on April 4th that one of the most fiercely contested parts of the bill would be watered down: judges will retain the power to order reinstatement (and not just compensation) for workers . That prompted bitter criticism from the employers leader, Emma Marcegaglia. Mr Monti in turn criticised her for adding to the fear in the markets. That was unfair. If anything in Italy had fostered alarm, it was Mr Montis concession on labour reform. But the change may nevertheless have been worth making. If tensions between the PD and its main rival, the People of Freedom party, can be kept within limits and their unnatural alliance extended, Mr Monti will have bought his government time; it may even survive until next years election. Amid macroeconomic uncertainty, political stability is no small prize. That has been even truer since April 5th, when Umberto Bossi resigned as head of the Northern League, the regionalist -cumseparatist movement he founded in 1991, which held the balance of power until the fall of Silvio Berlusconis government last year. The end of Mr Bossis autocratic reign came amid claims by prosecutors that taxpayers money allotted to his party had been spent on its leader, his family and his closest associates (none of whom is under investigation, and all of whom deny wrongdoing). The Leagues treasurer is being investigated (on suspicion of fraud, embezzlement and money-laundering); he also denies wrongdoing. The scandal is unlikely to go away. Among other things, prosecutors are looking into alleged links between League officials and mobsters from southern Italy, and a string of puzzling overseas investments, including one in Tanzania. This is acutely embarrassing to a party that has always prided itself on its decency, and which aspires to cut northern Italy off from the crime and corruption in the south. The Leagues troubles, which could yet escalate into a party split, might help Mr Monti, as the party is his fiercest critic. But tremors that shake Italys political landscape seldom come singly. This one could be an isolated jolt. Or it could be the prelude to an earthquake on the right.

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