>MONTHLY PRIVATE EQUITY UPDATE (ANAND RATHI)

Indian Economy Snapshot

• For the week ending 16 May ‘09, inflation was at 0.61% as against 0.57% for the week ending 18 Apr ’09

• Industrial production for FY09 stood at 2.4% compared to 8.5% in FY08. In Mar ’09, industrial production contracted 2.3%

• May was a great month for the markets. The markets rallied due to important events like the declaration of the election results which saw the UPA getting a unanimous mandate. Realty, metal, capital goods and banking sectors witnessed huge buying interest. Indices hit
the 20% upper circuit on Monday, May 18, after the UPA (United Progressive Alliance) swept the Lok Sabha polls.

• With a clear mandate, the new government may look at certain FDI relaxations while a revival in public sector disinvestments is also expected

• The month of May saw FII inflows to the tune of INR 201,170 million (USD 4,100 million) which accounts for nearly 99% of the FII's total investment in the domestic stock exchanges during 2009.

• FII's have been net sellers in the debt market worth INR 27,110 million (USD 540 million) during the month of May which accounted for 40% of the total FII outflow during 2009 in the debt market.

• India’s GDP grew 5.8% during Q4FY09 taking the GDP growth during FY09 to 6.7%. During FY09, services grew by 9.7%, agriculture grew by 1.6% while industry/manufacturing grew by 3.9%. The core growth outlook for FY10 and FY11 remains subdued, around 5.5% although
one off events may prop-up growth significantly in FY10.

• Exports during Apr ’09 contracted 33.2% year-on-year to USD 10,700 million. With this, India’s exports have contracted for the seventh successive month (since Oct ’08).

• RBI has directed banks to refrain from guaranteeing bond issues of corporate entities. In the absence of bank guarantees, the bond’s will have lower rating due to higher risk profile making them more expensive for the companies

• On Friday (29th May), the Indian rupee climbed to a 3-day high of 47.2 against the U.S. dollar

• Globally, OPEC kept output unchanged which resulted in a surge in crude oil prices above USD 66 a barrel.

To see full report: MONTHLY PE UPDATE