1. The World This Week August 18 August 23, 2014

2. Equity View: The result for this quarter is extremely promising. Sensex earnings growth is around 18.5%-19% which is best among last nine quarters. Sensex revenue growth is at 15% which is quite high compared to last several quarters. In terms of corporate earnings we have seen very good quarter after a very long time. In terms of three broad parameters i.e revenue growth, EBITDA margins & profitability all three were extremely promising. For a year as a whole, we continue to maintain projections of around 15% growth in corporate earnings. The top performing sectors are IT, Pharma, Auto & some private sector banks. IT & Pharma continue to be strong due to rupee depreciation last year. In the short to medium term rupee might stabilize around 60 levels which is healthy levels in terms of corporate earnings for IT & Pharma. There are signs of cyclical turnaround as far as auto industry is concerned. Auto sector earnings were extremely promising, Maruti Suzuki came up with a very healthy 25% y-o-y growth in volumes, if this trend continues auto sector should end up delivering a very good volume growth. A change in appetite across the country in terms of shift from bikes to scooters is being witnessed, so battery operated scooters, automatic scooters are already big hits & companies which have big presence in those areas like Honda & TVS are doing well in two wheeler segments. There are no big signs in commercial vehicles space but in next two quarters there can be some improvements as we have seen EBITDA margins going up due to price hikes undertaken by these companies. In terms of global events, we saw Federal Reserve Governor making a statement that how employment in US still remains fragile , there is speculation in the market that the US would increase interest rates sooner than later, however we heard the Federal Reserve Governor hinting that the first rate hike is still sometime away. We expect the first rate hike to kick in early next year and the QE to fully wound down in the next couple of months. India continues to be in a much better situation in terms of current account and fiscal account is concerned, we have forex reserves of ~$ 320 bn which is ~8 months import cover. As far as current account deficit is concerned, the full year current account deficit should be ~2%. Indian stock markets are up 23% YTD which is best in terms of major emerging markets and developed markets across the globe. Emerging Market index is up ~7% and hence Indias outperformance is huge. In terms of FII inflows we have seen $ 12.5 bn inflow in equity so far and for the whole year we expect it to be around $ 22-25 bn. We continue to maintain a very positive bias towards Indian equities in the month and quarters to come, we maintain our year end target on Sensex 29,300 which is a good 10-15% away from current levels.

3. News: DOMESTIC MACRO: RBI pegs Indias growth at 5.5% for the current fiscal in its annual report for 2013-14. RBI revises liquidity management framework for banks; says it will conduct 14 day term repo auctions four times in a reporting fortnight every Tuesday and Friday starting from September 5 Government raises the import duty on sugar to 25% from 15% as part of efforts to help regional mills struggling with lower prices and higher stocks. GLOBAL MACRO United States US Federal Reserve Chief Janet Yellen says the economy is improving but the central bank is awaiting more evidence about the health of labour markets before deciding when to start raising interest rates. U.S. housing, jobs data bolster economic outlook - Nonfarm payrolls increased by 209,000 in July, marking the sixth consecutive month that job growth topped 200,000, a sign of strength last seen in 1997. China China economy fears deepen as August HSBC flash PMI at three-month low Indices: Date Sensex Midcap Auto Bankex CD CG FMCG HC IT Metals O&G Power Realty Teck 18/08/14 26,391 9,170 16,608 17,658 8,796 14,667 7,234 12,684 9,834 12,963 11,142 2,093 1,834 5,510 19/08/14 26,421 9,271 16,982 17,759 8,843 14,830 7,243 12,765 9,779 13,041 11,180 2,119 1,864 5,490 20/08/14 26,314 9,276 16,887 17,707 8,814 14,754 7,192 13,139 9,801 13,007 11,032 2,135 1,873 5,495 21/08/14 26,360 9,321 17,021 17,916 9,148 14,851 7,206 13,173 9,788 12,832 11,089 2,113 1,838 5,485 22/08/14 26,420 9,341 17,034 18,100 9,132 14,874 7,170 13,190 9,948 12,849 11,081 2,106 1,822 5,539 0.11% 1.86% 2.57% 2.50% 3.82% 1.41% -0.88% 3.99% 1.16% -0.88% -0.55% 0.61% -0.61% 0.53%

4. Commodities and Currency: Date USD GBP EURO YEN Crude (Rs. per BBL) Gold (Rs. Per 10gms) 18/08/14 - - - - 6321 28117 19/08/14 60.73 101.48 81.04 59.19 6204 28104 20/08/14 60.67 100.81 80.73 58.80 6167 27996 21/08/14 60.77 100.72 80.56 58.53 6205 27795 22/08/14 60.44 100.24 80.35 58.29 6947 27691 0.48% Rupee Appreciated 1.24% Rupee Appreciated 0.86% Rupee Appreciated 1.54% Rupee Appreciated -1.33% -1.52% Debt: Tenor Gilt Yield in % (Friday) Change in bps (Week) 1-Year 8.67 -8 2-Year 8.46 -30 5-Year 8.57 -5 10-Year 8.52 -20

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