Indian Market Chartbook: June 2010

Sanjeev Mohta

These are my personal views and not the organizations

that I work for.
The Investment Indicators
Growth: Just Above long term average: the 12 mma IIP growth has moved marginally
above the long term average. The momentum is positive.

Yield Curve: The yield curve continues to be very steep augurs well for future growth.

Excess Money: The excess money has all been used up (probably invested in the market)
as real economic growth has caught up with growth in broad money

Sentiment : Sentiment continues to be average, although in the last few months, the mid
caps have outperformed the larger names. Thus locals remain more bullish than the
global players

Valuation: Mildly below average because of recent market correction

OVERALL : Long term India story is intact. Although the

Investment Indicators continue to suggest bottom up stock
picking rather than a great entry point.
IIP Growth
IIP growth slowed
down in the latest
month but on a 12
mma basis it
continues to go up
showing positive
momentum.
Now the 12mma
growth is above the
long term average.

Source: Bloomberg
Yield Curve
The 10 yr to 3
month govt bond
yield continues to
remain high . Partly
it is do with the
monetary
conditions, but as an
indicator augurs
well or long term
growth prospects

Source: Bloomberg
Excess Money
The Excess money (M3
Growth less M1
growth) which had
become very high 12
months ago has come
off. This was partly
responsible for the
stock market returns.
However as the real
economy catches up
with money supply
growth less money is
available to invest into
the stock market.
Negative indicator

Source: Bloomberg
Sentiment
Sentiment continues
to be average,
although in the last
few months, the mid
caps have
outperformed the
larger names. Thus
locals remain more
bullish than the
global players

Source: Bloomberg
Valuation
Valuations as
measured by
Nifty/M1 are mildly
below average
because of recent
market correction

Source: Bloomberg