as on 27th April, 2012

Financial Market & Economy Update

1. In a long-awaited boost for the banking sector, the Indian cabinet approved raising voting rights of stakeholders in private banks to 26% from 10%. 2. India's foreign exchange reserves stood at $294.602 billion as of April 20, higher than $293.141 billion recorded in the previous week, as per the latest weekly statistical supplement available on RBIs website. 3. Global GSM operators body GSMA said that the recommendations of telecom regulator Telecom Regulatory Authority of India (Trai), if implemented, will curtail investments in mobile broadband infrastructure and increase prices for consumers. 4. India is unlikely to be hit by a drought or heavy downpours that lead to floods during this year's monsoon, D.S. Pai, head of the country's long-range weather forecaster, said on Friday. 5. According to SEBI circular, henceforth auction of debt limits shall be conducted on 20th instead of 15th of every month.

Domestic Markets

Index BSE Sensex S&P CNX Nifty CNX Midcap CNX 500 BSE Smallcap
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27-04-2012 17,134 5,191 7,369.00 4,131 6,698.00

20-04-2012 17,374 5,291 7,626.00 4,226 6,901.00

% Change -1.38 -1.89 -3.37 -2.25 -2.94

Global Markets Equity Market Update

1. The key benchmark indices today ended higher mere by 4 points, helped by smart rise in share of ICICI Bank on better than expected financial results. The markets also got some support following the statement from Indian Meteorological Department that rains during the June-September season are likely to be 99 percent of the longterm average. 2. After a positive start following US markets, the stock markets in the Asian region ended in the negative zone on the back of weak cues from European counters. Moreover, Spains long-term credit rating has been downgraded from A to BBB+ by Standard and Poors also dampened the sentiments. The European markets were trading in green, as France's CAC 40, Britains FTSE 100 surged marginally while Germany's DAX fell less than 1%. Index Dow Jones Nasdaq S&P 500 FTSE 100 Shanghai Composite Hang Sang
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27-04-2012 20-04-2012 % Change 13,205.00 3,051.00 1,400.00 5,777.10 2,396.32 20,983.19 12,964.00 3,008.00 1,377.00 5,768.00 2,406.86 21,010.64 1.86 1.43 1.67 0.16 -0.44 -0.13

Equity Market Outlook

The long term outlook continues to remain positive for Indian equities as the economic growth momentum remains healthy with real GDP growth remaining at around 7%. We expect earnings and the earnings growth to translate on positive outlook remaining intact, the near term challenges can influence markets as it gets impacted by events / newsflows that can have a near term negative implications. The data from the US and Europe was not encouraging, however the US central bank commented that it remained on standby and was ready to act in case conditions worsened, rallying markets. We remain in a stop-and-go economy and it is unlikely that world over and in India any strong policy decisions will be taken as it is election time in 42 countries worldwide. We do not see any strong direction in markets in the near term.

Institutional Flows (Equity)

Description (INR Cr) FII Flows* MF Flows*

Purchases 7742 1807

Sales 9057.1 2051.1

Net -1315.3 -244.1

Source: NSE & SEBI website. *FII Cash and MF Flows are for last 3 days.

F&O FII Trends (Rs. Crs)

Debt Market Update

1. Bond yields ended marginally lower after a volatile trading session as positive sentiment following strong demand at debt auction was offset by worries over a persistent liquidity crunch. 2. The 10 year benchmark bond settled 1 bps lower at 8.65% after trading in a band of 8.60% to 8.68% during the day. 3. The RBI conducted the auction of four dated securities 8.24% Government Stock 2018, 8.79% Government Stock 2021, 8.28% Government Stock 2027 and 8.33% Government Stock 2036 worth Rs.16,000 crore, for which the cut-off yield stood at 8.64%, 8.63%, 8.82% and 8.96% respectively. 4. Liquidity condition remain tight in the banking system as Banks borrowing under RBIs repo window stood at Rs.1,24,925 crore, higher than the RBIs comfort level of Rs.1,00,000 crore and higher from the Thursdays borrowing of Rs.1,18,700 crore. 5. India's foreign exchange reserves stood at $294.602 billion as of April 20, higher than $293.141 billion recorded in the previous week, as per the latest weekly statistical supplement available on RBIs website.

Date 24-Apr-12 25-Apr-12 26-Apr-12

Source: NSE & SEBI Website

Index -40.82 54.28 -259.55

Stocks 130.70 236.35 76.57

Policy Rates

Key Rates (%) Reverse Repo Repo

27-04-2012 7 8.00 4.75 24

1 Week Ago 7.5 8.50 4.75 24

1 Month Ago 7.5 8.5 4.75 24

Debt Market Outlook

Liquidity for the previous week was tight as compared to the previous week on account of first week of reporting. Banks borrowed an average Rs. 113000crs as compared to Rs. 94600crs in the previous week. The 10yr GSEC Yields rose as fears of the current 10yr GSEC becoming off the run security, absence of clarity on the GAAR issues and no positive triggers in the market. We expect the 10yr to remain in the band of 8.55% - 8.70%.

CRR SLR
Source: Bloomberg

Key Rates

Key Rates (%) Mibor Overnight

27-04-2012 8.38 8.40 8.05 8.25 8.64

20-04-2012 8.27 8.29 7.54 8.12 8.49

% Change 1.33 1.33 6.76 1.60 1.77

Kotak Mutual Fund Update

Kotak Mutual Fund has launched-Kotak FMP Series 87, a close ended debt scheme with the duration of 370 days from the date of allotment of units. The new issue opens for subscription from 4th May and will close on 9th May 2012.

CALL (O/N) CBLO T Bills Index (12M) 10 Yr GOI (8.79 GS 2021)

Source: Bloomberg

Commodity Market
Disclaimer:Disclaimer: Mutual Fund and securities investments are subject to market risks. Please read the Scheme Information Document (SID) and Statement of Additional Information (SAI) of the scheme carefully before investing. SID & SAI available on mutualfund.kotak.com.

Commodity (INR)

27-04-2012 Gain+/Loss- % Change 29002 55,830 119.94 28576 -620 1.24 1.49 -1.10 1.04

Commodity Market Update

1. Spot gold inched down 1.49% to $1,652.60 an ounce as the concerns regarding debt laden euro zone heightened after the downgrading of Spain's credit rating. The fall was also supported by boost in dollar after the announcement of new easing measure by Bank of Japan to help Japans economy. 2. Brent crude was down 1.04% to $119.42 on account of weaker euro, after the downgrading of Spain's credit rating, which helped in fall in demand for dollar-priced crude.

Gold (10 gm) Silver (10 gm) Crude Oil ($/barrel)

Source: Bloomberg

Currency Market

Currency

27-04-2012 52.68 69.38 85.12 65.18

Gain+/Loss0.68 0.98 1.58 1.48

% Change 1.31 1.43 1.89 2.32

Currency Market Update

1. INR closed flat on Friday but posted its fourth consecutive week of fall against the dollar as investors add more bearish bets by pricing deep uncertainties about the country's economic and fiscal challenges. INR was flat at 52.54/55 to the dollar against 52.55/56 on Thursday. 2. Euro recovered losses against the dollar after a smooth sale of Italian bond auction calmed renewed fear over the downgrade of Spain's sovereign debt and dismal economic data. Euro touched a high of $1.3243 after the bond sale.

USD/INR EURO/INR GBP/INR JPY/INR

Source: Bloomberg

Disclaimer The information contained in this material are extracted from different public sources and does not represent views/opinions of Kotak Mahindra Asset Management Company Limited or its associated companies. Kotak Mahindra Asset Management Co Ltd does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. All reasonable care has been taken to ensure that the information contained herein is not misleading or untrue at the time of publication. This is not a sales literature and all the information is for the information of the person to whom it is provided without any liability whatsoever on the part of Kotak Mahindra Asset Management Co Ltd or any associated companies or any employee thereof. Risk Factors Mutual Funds investments are subject to market risks and there is no assurance or guarantee that the objectives of the Schemes will be achieved. As with any securities investment, the NAV of the Units issued under the Schemes can go up or down depending on the factors and forces affecting the capital and money markets. Past performance of the Sponsor/AMC/Fund or that of existing Schemes of the Fund does not indicate the future performance of the Schemes. Statutory Details: Kotak Mahindra Mutual Fund is a Trust (Indian Trust Act, 1882).Investment Manager: Kotak Mahindra Asset Management Company Ltd. Sponsor: Kotak Mahindra Bank Ltd. (liability Rs. Nil). Trustee: Kotak Mahindra Trustee Company Ltd. Kotak Mahindra Bank Limited is not liable or responsible for any loss or shortfall resulting from the operations of the Scheme. Please read the Scheme Information Document (SID) and Statement of Additional Information (SAI) carefully before investing. SID and SAI are available on mutualfund.kotak.com.

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