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THE WEEK GONE BY AND THE WEEK AHEAD .

20 July, 2013

This week saw some positive data coming out of the US on the back of the Fed chairman Ben Bernankes comments the previous week the eased concerns of immediate tapering of the federal reserves bond buying program. As a result, US stocks moved further into record territory and US treasury prices rose and the yields fell for the second consecutive week. Emerging market assets also enjoyed a positive week and continued to recover from its week performance in June and much of July. The Reserve Bank of India hiked short term borrowing cost, its boldest attempt yet to stem the decline in the rupee delivered only a modest support to the currency but sent bond prices tumbling. 10 year government bond yields closed the week up 38 basis points. 28 Dec 2012

The key events of last week:

Fewer people filed new claims for US unemployment insurance benefits last week as the job market slowly improves, government data released on Thursday showed. US retail sales grew in June, but at a slower rate than was expected by many analysts. Sales were up by a seasonally-adjusted 0.4%, half the 0.8% rate expected by the markets. Business inventories rose 0.1% in May to a seasonally adjusted $1.66 trillion, the Commerce Department said Monday. The International Council of Shopping Centers and Goldman Sachs Retail Chain Store Sales Index declined 1.1% in the week ended Saturday from the week before on a seasonally adjusted, comparable-store basis. The cost of living in the U.S. rose in June by the most in four months as gasoline prices increased, a sign inflation is advancing toward the Federal Reserves goal. The consumer-price index increased 0.5 percent after a 0.1 percent gain the prior month, according to Labor Department figures. 108, Madhava, Bandra Family Court Lane, BKC, Bandra (E), Mumbai 51 Page 1

THE WEEK GONE BY AND THE WEEK AHEAD.

According to Redbook Research Inc., the Johnson Redbook index advanced 0.8% on a monthly basis and 4.0% over the last twelve months in the week ended on July 7. Builder confidence in the market for newly built, single-family homes rose six points to 57 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) for July, released today. This is the indexs third consecutive monthly gain and its strongest reading since January of 2006. Construction of new homes in US fell sharply in June, highlighting risks to the sector's recovery from rising mortgage rates and supply constraints. Housing starts declined 9.9% in June from a month earlier to a seasonally adjusted annual rate of 836,000 units, the Commerce Department said Wednesday.

Consumer sentiment declined last week from a five-year high as Americans grew more pessimistic about the prospects for the worlds largest economy. The Bloomberg Consumer Comfort Index fell to minus 28.4 in the period ended July 14, its first drop in five weeks, from minus 27.3 a week earlier. The Fed's balance sheet liabilities, which are a broad gauge of its lending to the financial system, stood at $3.462 trillion on July 10, compared with $3.450 trillion on July 3.

And closer home.

Wholesale prices, Indias key inflation measure, rose an annual 4.9% last month. Wholesale inflation edged up to a three-month high in June on higher food prices, a development that would appear to dash the already slender hopes of a reduction in interest rates in the monetary review on July 30. Dollar/rupee snapped two-day gain on intervention by the Reserve Bank of India to support the local currency amid selling by exporters, dealers said.

Forward premia for dollar across maturities rose tracking firm trend in spot market and rising interest rates amid thin trades, dealers said Dollar/rupee is expected to fall next week on likely increase in dollar inflows amid month-end demand for the greenback from importers, the dealer said. India's foreign exchange reserves including gold and Special Drawing Rights were up by $ 0.021 billion to $280.188 billion in week to Jun 12, Reserve Bank of India's Weekly Statistical Supplement showed Friday.

Important upcoming International events to be tracked:

Date Time Country Event

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22-07-2013 22-07-2013 23-07-2013 23-07-2013 23-07-2013 24-07-2013 24-07-2013 24-07-2013 25-07-2013 25-07-2013 26-07-2013 26-07-2013 26-07-2013 26-07-2013 18:00 IST 19:30 IST 17:15 IST 18:25 IST 18:30 IST 05:20 IST 16:30 IST 19:30 IST 18:00 IST 19:15 IST 02:00 IST 02:00 IST 05:00 IST 19:25 IST US US US US US Japan US US US US US US Japan US Chicago Fed National Activity Index Existing Home Sales ICSC-Goldman Store Sales Redbook FHFA House Price Index Merchandise Trade MBA Purchase Applications New Home Sales Jobless Claims Bloomberg Consumer Comfort Index Money Supply Fed Balance Sheet CPI Consumer Sentiment (Sentiment Index - Level)

Important upcoming Domestic Events:

Date 24-07-2013 24-07-2013 26-07-2013 26-07-2013 17:00 IST 17:00 IST Time Country India India India India Event 91 day T- Bills auction of Rs 70 bln (cut-off yld) Reserve Money (change on year) WMA (ways and means advance) - to central govt FX reserve deposite, credit

TECHNICAL VIEW
After opening up around 59.66, rupee was fairly range-bound in no-trade zone during the last week which finally closed around 59.39 Both short term (Hourly) and medium term (daily) indicators have started turning bearish for USDINR, rupee strength seems to be on the board and likely to continue until RBI doesnt rollback liquidity measures. We expect USDINR to touch short term support of 58.90 in coming weeks and continue to trade in a range-bound manner in the next week.

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Source : Reuter Eikon

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