Week ended January 18, 2013 WEEKLY ROUND UP Global update

The European Central Bank (ECB) held its main interest rate unchanged at a record low of 0.75%, in line with expectation. The ECB also left the interest rate on its deposit facility at 0% and the marginal lending facility at 1.50%. On growth, the ECB President noted that Euro area real GDP declined by 0.1% QoQ in Q3'2012 following a contraction of 0.2% QoQ in Q2'2012. He further noted that there are further weaknesses in economic activity, which is expected to extend in 2013. Chairman of the China Securities Regulatory Commission commented that China could increase quota for foreign investors investing in the country's stock markets by ten-folds, Shanghai Composite climbed 3.06% on that day.

Growth concerns resurfaced after World Bank cut its global growth forecast for 2013. The world economy is expected to grow at 2.4%, down from the prior forecast of 3.0% while US growth projection was cut by 0.5 pp to 1.9% and Euro area is expected to contract 0.1% as against earlier expectations of 0.7% growth. The World Bank also lowered projections for emerging markets led by Brazil, India and Mexico. India's 2013 growth forecast was lowered to 6.1% from 6.9% earlier. India Update IIP for November came in at -0.1% YoY, which was almost in line with expectations. October print was revised upward to 8.3% YoY from 8.2% YoY earlier India's trade deficit eases to USD 17.7 bn in December. Cumulative trade deficit for FY2013 (April-Dec.) now stands at USD 147.2 bn as against USD 137.3 bn in the same period last year. Recently announced exports incentives are likely to give a boost to the sector, which should help bridge the trade gap. Moreover, the Government is eyeing levying curbs on gold and technology imports, which should further help to ease the pressure. Headline inflation came in at 7.18% YoY in December, lower than previous month's print of 7.24% YoY. The October reading was also revised down to 7.32% YoY from provisional estimate of 7.45% YoY.

MARKET UPDATE Global Markets Overview US stocks rose amid optimism about fourth-quarter corporate earnings and better-than-estimated data on Chinese exports. Rally in retail and transportation companies overshadowed concern about discussions on raising the debt ceiling. US Treasury Secretary Timothy F. Geithner warned that failure to raise the debt ceiling by early March would "impose severe economic hardship". Meanwhile, Fed Chairman Bernanke in a speech painted a cautiously optimistic outlook for economic growth. Bernanke said the economy appeared to be responding to the Fed's stimulus, but not as fast as the Central Bank would like. Most Asian markets rose during initial 2-3 trading sessions, Japanese shares gained after Bank of Japan Governor Masaaki Shirakawa said the central bank will pursue powerful monetary easing. However most of the Asian stocks declined subsequently on account of profit-taking following gains. Domestic Equity Market Overview Indian stocks opened firm tracking gains in other Asian peers amidst better than expected inflation data for December sparked hopes of a policy rate cut by the RBI in its January 29, 2013 meeting. However Indian stocks declined after the central bank said concerns about inflation has reduced the scope to ease monetary policy. Indian stocks recovered after oil marketing firms were authorized to make small price correction in diesel from time to time and raised the LPG subsidy cap from 6 to 9 cylinders, to be effective from April 1, 2013. Meanwhile, the Cabinet approved a 50% cut in the auction reserve price for CDMA airwaves, leading to gains in telecom stocks.Q3FY13 results announced so far are mostly positive, Sensex is trading above 20000 supported by positive FII flow and improved sentiments among domestic investors.

Indices BSE Sensex Dow Jones FTSE 100 Nikkei 225 Hang Sang

Jan 11, 2013 19663.64 13471.22 6101.51 10801.57 23264.07

Jan 18, 2013 20039.04 13596.02 6158.8 10913.3 23601.78

Change 1.87% 0.92% 0.93% 1.02% 1.43%

Fixed Income Indias 10-year bonds advanced, pushing the yield to the lowest level in 27 months, on speculation the central bank could cut interest rates. Slowest inflation in three years added to speculation the central bank will reduce interest rates this month. However RBI Governor Mr. Subbarao said that inflation remains high despite decline and economic growth remains a concern. World Bank cuts global growth forecast yesterday, including trimming Indias 2013 GDP growth to 6.1% from 6.9%. Indias 10-year bond yield declined on optimism that government's move to allow refiners to increase diesel prices will help reduce fuel subsidies.

Indices 10 year G-Sec New Benchmark IIP (Novemeber) Inflation (WPI) 10 years US treasury yield

Jan 11, 2013 7.87%

Jan 18, 2013 7.84%

-0.10% 7.18% 1.88% 1.85%

USD INR The Indian Rupee opened week flat as investors remained on the sidelines ahead of the release of December WPI data. RBI introduced a special US Dollar-Rupee swap facility to provide exporters with Dollar credit. However, the Rupee came under pressure during the week tracking losses in the Euro and strong Dollar demand by oil importers. Rupee reversed its losses on news of partial deregulation of diesel prices, hike in import duty on crude edible oil also aided sentiment. Gains in domestic stocks coupled with rise in the Euro in later trade further pushed the currency to an over 1-month high of 54.23.

Oil Global crude oil prices opened week on a firm note after a comment by the Fed official Evans sparked hopes of continued monetary easing by the Fed. Prices remain buoyed by increased demand due to cold weather conditions in US East Coast and Midwest and marginally lower greenback. In a monthly report OPEC trimmed the demand outlook for its own crude by 0.1 mbpd, citing higher supply by rivals. Oil traded near the highest level in four months as a surprise drop in the US crude inventories. A report by the US Energy Department showed that US crude stockpiles reduced by 0.95 mn barrels last week, higher than market expectations along with weaker USD, lending support to oil prices. Gold Gold started week on a firm note, rose in New York, Indices Jan 11, 2013 Jan 18, 2013 Change extending its first weekly advance since November 2012, as speculation US stimulus could continue increased demand Gold spot ($/ounce) 1662.8 1688.7 1.53% for a protection of wealth. It continued advance towards a two-week high as expectations that global policy makers will Brent ($/bbl) 110.64 111.1 0.41% need to stimulate growth boosted demand for a store of value. However dropped with other commodities and stocks, WTI ($/bbl) 93.56 95.49 2.02% as concern about slowing growth outweighed expectations for more stimulus. Prices swung between gains and declines USD / INR 54.76 53.71 1.95% as the dollar weakened and ahead of the US reports that may DXY Index 79.74 79.65 -0.11% show the economic outlook is improving.Following a surge in September, gold prices came under pressure and haven't recovered from the lows yet. We believe the recent losses are short lived, prices are likely to head higher going ahead. Ample liquidity, historic low US interest rates, firm investment demand and Central Bank buying and expected weakness in the Dollar in H1 2013 to provide support. Disclaimer : This communication is meant solely for the selected recipients and does not carry any right of publication or disclosure to any third party. The information set out in this newsletter has been prepared by ICICI Bank based in good faith and collated from sources considered reliable by ICICI Bank. There can be no assurance that such information will prove to be accurate. Except for the historical information contained herein, statements in this newsletter which contain words or phrases such as 'will', 'would', etc., and similar expressions or variations of such expressions may constitute 'forward-looking statements'. These forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. The contents of this newsletter are solely meant to inform and are not a substitute for professional advice. Professional advice should be obtained based on the specific circumstances of each case, before relying on the contents of this newsletter or prior to taking any decision based on the information contained in this newsletter. ICICI Bank does not accept any responsibility for any errors whether caused by negligence or otherwise or for any loss or damage incurred by anyone in reliance on anything set out herein. Misuse of any intellectual property, or any other content displayed herein is strictly prohibited.