Last week the Indian equity markets closed up by 0.75%. Reliance AGM discussed how the company will be debt-free by the end of this fiscal. The focus will be increasingly on retail business. Our view on Reliance remains cautious and we expect annual returns in the range of 10%-15%.

The Q4 GDP growth came in at 7.8%. A slowdown was observed in the manufacturing output. The farm output growth was a positive surprise which was up 7.5% on y-o-y basis which is the highest in the last several quarters. . IIP data for the month of April would be out this week. The consensus viewremains that the IIP data has bottomed out in February at 3.6% and from now onwards we will see a bounce back. We expect industrial growth to average 7.5% for FY12

In US the unemployment rate increased from 9% to 9.1% which was a negative. The factory output and the payroll data also were also disappointing. This added to the fears of a pullback in the US economy’s recovery.

In Europe, the EU and IMF have finished the financial analysis of the Greek economy and they are expected to come out with a new bail out package by 30 June 2011.

On the overall equity view, we continue to expect a robust 15-20% returns for next few years. The markets are trading at a very reasonable valuation of 14 times FY12 earnings. Despite the expectation of an economic slowdown, the economy is still expected to grow at 7.5-8% for FY12. We expect corporate earnings to grow at 17-18% for next year. There are short term concerns like inflation &interest rates but a large part of that is already discounted by the market. We look forward to quarter 1 earnings for FY12 starting in July to give more clarity on full Fy12 earnings. The monsoon session of Parliament, also starting in July, could see some reform measures being announced