HDFC Mutual Fund

Weekly Market Update

(For the week ended January 29, 2010)

1
 Table of Contents

Retrospect

India: Foreign Exchange Reserves and Currency

Equity Markets Performance Review

India: Bond Yields and Spreads

Commodities and Dollar Index

Disclaimer

2
 Retrospect
(For the week Ended January 29, 2010)

India* under performed Emerging and World markets, while outperforming Asia Pacific (ex.
Japan) in last one week – refer slide 9 for details

Amongst global markets, Nigeria was the best performing market (for the 2nd week in a
row) in the last one week while Spain was the worst performing market – refer slide 10 for
details

All domestic sectoral indices ended the week in the red. The BSE Metal Index was the worst
performer, falling close to 8% over the course of the week

The INR depreciated against the USD to 46.18 while appreciating sharply against the Euro
in the last one week to 64.02

Commodities ended the week lower reflecting risk aversion due to sovereign risk and fears
of policy tightening. Both Crude Oil and Gold fell for the third straight week

Source: Bloomberg, www.sebi.gov.in

Asia Pacific (Ex Japan) Markets as represented by the MSCI Asia Pacific (Ex Japan) Index.
Emerging Markets as represented by the MSCI Emerging Markets Index.
World Market as represented by the MSCI World Index.
*MSCI India Index. All indices are dollar denominated..
DJIA: Dow Jones Industrial Average
3
 BSE SENSEX – Trailing P/E Ratio
Current P/E Ratio is 20.33 as on January 28, 2010.

58
P/E Ave rage

53

48

43

38

33

28

23

18

13

8
Jan-90

Jan-91

Jan-92

Jan-93

Jan-94

Jan-95

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09

Jan-10
Source: Bloomberg
PE is computed as the ratio of the overall market cap (based on current market prices) of the companies to the overall
earnings. With effect from 20th December 2004, this ratio is computed using the earnings of the past four rolling
quarters while previously it was based on the latest available annual figures. The Exchange has adopted the practice of
excluding loss making companies.
Average P/E Ratio since January 1, 1990 is 20.88 as on January 28, 2010.
4
 India: Foreign Exchange
Reserves & Currency

5
 India - Foreign Exchange Reserves
(As on January 22, 2010)
India’s foreign exchange reserves stood at $282.94 billion as on January 22, 2010 down $2.22 billion from last week.
340.00
320.00
300.00
280.00
260.00
240.00
220.00
200.00
180.00
160.00
140.00
120.00
100.00
80.00
60.00
40.00
20.00
0.00
Jan-00

May-00

Jan-01

May-01

Jan-02

May-02

Jan-03

May-03

Jan-04

May-04

Jan-05

May-05

Jan-06

May-06

Jan-07

May-07

Jan-08

May-08

Jan-09

May-09

Jan-10
Sep-00

Sep-01

Sep-02

Sep-03

Sep-04

Sep-05

Sep-06

Sep-07

Sep-08

Sep-09
Source: Bloomberg, RBI Bulletin – Weekly Statistical Supplement

6
 India: Currency – Last one week
(January 22, 2010 – January 29, 2010)
The INR depreciated by 0.05% against the USD to 46.18 and appreciated by 1.90% against the Euro to 64.02. It had its worst
performance against the South African Rand, depreciating by 0.18% and its best performance versus the Brazilian Real, appreciating
by 3.66%*.

Source: Bloomberg
*Performance against the currencies shown in the table above.
Green indicates the INR has depreciated by the amount shown. Red indicates the INR has appreciated by the amount
shown.
INR: Indian Rupee
7
 Equity Markets
Performance Review
As on January 29, 2010

8
 Market Performance – Region Wise
(As on January 29, 2010)
India* under performed Emerging and World markets, while outperforming Asia Pacific (ex. Japan) in last one week.

Absolute Returns (%)

MSCI Indices (USD Denominated) 1 day 1 week 1 month 3 months 6 months 9 months 1 Year CYTD
MSCI India 0.66 -3.44 -4.84 6.07 15.85 61.83 98.09 -5.34
MSCI Emerging Markets -0.69 -3.14 -4.79 1.33 13.51 44.62 75.43 -5.65
MSCI Latin America -0.88 -3.51 -8.92 -3.06 19.12 47.89 77.41 -8.92
MSCI Europe, Australasia and Fareast -0.43 -3.53 -5.09 -2.47 8.91 29.64 32.53 -4.44
MSCI GCC -0.06 -2.40 -1.02 -7.24 0.80 14.41 28.18 -0.81
MSCI EM Eastern Europe 1.10 -0.80 1.16 2.91 36.89 58.73 113.40 1.75
MSCI North America -1.08 -1.84 -4.85 0.84 9.83 23.60 28.75 -3.97
MSCI Asia Pacific Index -1.89 -4.54 -3.17 1.87 7.03 32.63 37.90 -3.01
MSCI Asia Pacific Index (Ex Japan) -1.62 -4.23 -5.20 0.27 10.42 44.38 70.26 -6.36
MSCI Europe 0.38 -3.09 -6.12 -4.66 10.31 29.67 37.46 -5.92
MSCI World -0.78 -2.64 -4.96 -0.73 9.39 26.35 30.49 -4.19

Source: Bloomberg. All indices values used in the calculations are dollar denominated values.
All returns are calculated by HDFC Asset Management Company Limited.
All Returns are absolute Returns.
GCC – Gulf Cooperation Council
*MSCI India Index EM: Emerging Market
9
 Market Performance – Country Wise
(As on January 29, 2010)
Nigeria was the best performing market while Spain was the worst performing market in the last one week.
Absolute Returns (%)
World Equity Indices (USD Denom inate d) 1 day 1 w e ek 1 m onth 3 m onths 6 m onths 9 m onths 1 Ye ar CYTD
Japan - Nikkei 225 Stock Average -2.89 -4.22 -2.45 4.31 6.03 #N/A 22.39 -1.28
United States - S&P 500 Index -0.98 -1.64 -4.65 0.73 10.12 22.92 27.06 -3.70
United States - Dow Jones Industrial Average -0.52 -1.04 -4.53 1.05 10.99 22.99 23.54 -3.46
United States - NASDAQ Composite Index -1.45 -2.63 -6.16 2.37 9.13 25.43 42.41 -5.37
Russia - Micex Index 0.94 -1.08 3.05 5.62 49.84 67.59 164.80 2.53
South Korea Equity Index - KOSPI -2.97 -5.53 -3.54 3.36 12.94 35.85 63.79 -4.36
China CSI 300 Equity Index -0.07 -4.81 -8.44 -1.30 -9.90 22.93 #N/A -10.39
UK - FTSE 100 Index 0.06 -2.89 -4.03 -2.31 11.41 34.04 38.87 -4.95
Germany - DAX Index 0.63 -3.37 -9.68 -6.01 5.33 24.27 35.68 -8.81
France - CAC 40 Index 0.76 -3.97 -8.59 -5.72 9.97 25.06 33.09 -7.93
Brazil - Bovespa Stock Index -1.10 -4.94 -11.49 -5.83 22.67 58.90 100.87 -11.89
Mexico - Bolsa Index -1.06 -2.15 -6.55 3.86 16.80 43.73 69.93 -4.97
Canada - S&P/TSX Composite Index -1.67 -3.09 -7.39 0.28 8.49 32.77 45.10 -7.36
Australia - S&P / ASX 200 Index -2.93 -5.51 -6.47 -3.21 20.04 50.95 76.20 -7.14
Indonesia - Jakarta Composite Index -0.44 -0.46 4.58 14.24 24.88 83.84 138.52 3.88
Hong Kong Hang Seng Index -1.13 -2.85 -6.52 -5.55 -0.26 34.28 52.81 -8.14
Kuala Lumpur Composite Index -0.45 -3.10 -0.61 1.71 12.14 35.91 50.49 -0.29
South Af rica - Top 40 Index 0.33 -0.71 -5.69 2.75 17.60 46.89 72.67 -5.84
Europe DJ Euro Stoxx Index 0.65 -3.59 -8.35 -6.92 8.14 25.80 34.19 -7.63
Taiw an Taiex Index -0.59 -3.55 -4.15 5.91 10.89 43.36 #N/A -6.57
New Zealand - NZX 50 FF Gross Index -0.75 -1.92 -3.78 -5.14 13.74 43.27 56.12 -4.89
Thailand - Stock Exch of Thaiindex 0.78 -2.88 -5.69 1.65 16.17 53.42 68.40 -4.61
Vietnam - Ho Chi Minh Stock Index 0.04 0.93 -0.50 -19.87 1.48 44.22 #N/A -2.54
Philippines - PSEi Philippine SE IDX 0.34 -2.77 -3.71 5.90 9.11 50.32 61.46 -3.71
Spain - IBEX 35 Index 0.49 -5.55 -11.94 -12.26 1.63 28.35 38.33 -11.19
Nigeria - Nigeria Stock Exchange 0.09 2.14 9.13 3.16 -9.44 3.76 0.93 7.46

Source: Bloomberg. All indices values used in the calculations are dollar denominated values.
All returns are calculated by HDFC Asset Management Company Limited.
All Returns are absolute Returns. All details regarding relative performance pertains to only the countries in the list
above.

10
 Market Performance – Index Wise
(As on January 29, 2010)
The BSE Sensex was the best performer in the last one week while the BSE Small Cap Index was the worst performing index in the
last one week. However, over the last 1 year, the small and mid cap indices have been significant outperformers as compared to the
BSE Sensex and the S&P CNX Nifty.

Absolute Returns (%)

Domestic Indices (INR Denominated) 1 day 1 week 1 month 3 months 6 months 9 months 1 Year CYTD
BSE Sensex 0.31 -2.98 -6.00 1.90 7.81 43.45 77.11 -6.34
S&P CNX Nif ty 0.30 -3.06 -5.90 2.77 8.17 40.53 72.88 -6.13
S&P CNX 500 0.45 -3.59 -3.58 7.04 12.76 56.07 91.36 -4.00
BSE 100 Index 0.38 -3.13 -5.39 3.68 9.38 50.03 85.39 -5.65
BSE 200 Index 0.47 -3.19 -5.01 4.44 10.93 54.19 90.16 -5.28
BSE 500 Index 0.50 -3.28 -4.49 5.21 12.30 57.23 93.51 -4.86
BSE Mid Cap Index 1.01 -4.04 -2.47 7.66 18.86 85.26 124.21 -3.10
BSE Small Cap Index 1.20 -4.95 0.22 15.73 33.76 108.90 149.22 -1.49
CNX Mid Cap 0.89 -3.65 -2.86 9.49 23.00 86.54 116.23 -3.11

Source: Prowess. All indices values used in the calculations are INR denominated values.
All returns are calculated by HDFC Asset Management Company Limited.
All Returns are absolute Returns.

11
 Market Performance – Sector Wise
(As on January 29, 2010)
The BSE Power Index was the best performer in the last one week while the BSE Metal Index was the worst performing index in the
last one week. Over the last 1 year, the BSE Metal Index is the best performer (rising 225.66%) while the BSE FMCG is the worst
performer (rising 36.81%.)
Absolute Returns (%)
Domestic Sectoral Indices (INR Denominated) 1 day 1 week 1 month 3 months 6 months 9 months 1 Year CYTD
BSE Auto Index 0.37 -6.06 -5.50 11.28 24.26 98.76 181.14 -6.49
BSE Bankex 2.99 -1.59 -3.51 3.92 18.78 69.81 100.94 -3.76
BSE Capital Goods Index 1.26 -1.48 -6.65 1.49 5.51 65.96 113.48 -7.02
BSE Consumer Durables Index 0.34 -1.97 2.92 13.59 23.92 116.17 115.76 0.37
BSE FMCG Index -1.86 -1.68 -3.65 -3.56 5.45 30.09 36.81 -2.37
BSE Healthcare Index 0.28 -1.90 -5.45 7.89 25.83 55.32 74.71 -5.05
BSE Information Technology Index -0.76 -4.08 -3.19 11.92 31.48 86.90 123.33 -4.02
BSE Metal Index -1.56 -7.76 -8.76 14.80 30.65 131.81 225.66 -8.26
BSE Oil & Gas Index 0.43 -1.37 -4.61 2.41 7.42 22.21 64.64 -5.08
BSE PSU Index 1.05 -3.02 -0.17 12.28 15.62 61.57 87.55 -0.61
BSE Teck Index -0.88 -4.32 -3.23 8.25 9.81 45.71 74.90 -3.82
BSE Pow er Index 1.12 -1.04 -2.93 3.47 3.52 44.91 71.19 -3.98
BSE Realty Index 2.60 -6.81 -8.80 -8.38 -10.52 64.30 118.90 -9.22

Source: Prowess. All indices values used in the calculations are INR denominated values.
All returns are calculated by HDFC Asset Management Company Limited.
All Returns are absolute Returns.

12
 India: Bond Yields
and Spreads
As on January 29, 2010

13
 10 Year GOI Bond Yield
(As on January 29, 2010)
The 10 year Govt. bond yield rose 1 bp during the last one week to 7.58 as on January 29, 2010.
13.00

12.00

11.00

10.00

9.00

8.00

7.00

6.00

5.00

4.00
Nov-98
Mar-99
Jul-99
Nov-99
Mar-00
Jul-00
Nov-00
Mar-01
Jul-01
Nov-01
Mar-02
Jul-02
Nov-02
Mar-03
Jul-03
Nov-03
Mar-04
Jul-04
Nov-04
Mar-05
Jul-05
Nov-05
Mar-06
Jul-06
Nov-06
Mar-07
Jul-07
Nov-07
Mar-08
Jul-08
Nov-08
Mar-09
Jul-09
Nov-09
Source: Bloomberg.
GOI: Government of India

14
 10 Year AAA Corporate &
Government of India Bond Spread
The yield spread widened by 1 bp to 1.11%. The relative yield spread* also widened by 0.13% to 14.65%. The 10yr AAA yield rose 3
bps during the week to 8.69%.
4.50
Spre ad Ave rage
4.00

3.50

3.00

2.50

2.00

1.50

1.00

0.50

0.00

-0.50
Dec-01

Dec-02

Dec-03

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08

Dec-09
Apr-02

Aug-02

Apr-03

Aug-03

Apr-04

Aug-04

Apr-05

Aug-05

Apr-06

Aug-06

Apr-07

Aug-07

Apr-08

Aug-08

Apr-09

Aug-09
Source: Bloomberg
As on January 29, 2010
*Relative Yield Spread is calculated as the ratio of the Yield spread and the 10 Yr Govt. Bond Yield.
Average of the Relative Yield Spread (December 5, 2001 to January 29, 2010) is 16.53.
Average of the corporate bond spread for the same period is 1.18%.
15
 10 and 2 Year GOI Bond Spread
(As on January 29, 2010)
The yield spread widened by 8 bps to 2.47%. The relative yield spread* also widened by 2.17% to 48.33%. The 2yr Govt. Bond yield
fell 7 bps during the week to end at 5.11%.
2.75
Spre ad Ave rage
2.50

2.25

2.00

1.75

1.50

1.25

1.00

0.75

0.50

0.25

0.00

-0.25

-0.50

-0.75

-1.00
Jan-01

May-01

Jan-02

May-02

Jan-03

May-03

Jan-04

May-04

Jan-05

May-05

Jan-06

May-06

Jan-07

May-07

Jan-08

May-08

Jan-09

May-09

Jan-10
Sep-01

Sep-02

Sep-03

Sep-04

Sep-05

Sep-06

Sep-07

Sep-08

Sep-09
Source: Bloomberg
GOI: Government of India
*Relative Yield Spread is calculated as the ratio of the Yield spread and the 2 Yr Govt. Bond Yield.
Average of the Relative Yield Spread (January 1, 2001 to January 29, 2010) is 12.49%.
Average of the bond spread for the same period is 0.73%.
16
 2 Year AAA Corporate &
Government of India Bond Spread
The yield spread tightened by 34 bps to 1.74%. The relative yield spread* also tightened 6.95% to 34.03% in the same period. The
2yr AAA yield rose 27 bps during the last one week to end at 6.85%.
5.00
Spre ad Average

4.00

3.00

2.00

1.00

0.00

-1.00
Jul-02

Oct-02
Jan-03

Jul-03
Oct-03

Jan-04

Jul-04

Oct-04
Jan-05

Jul-05

Oct-05
Jan-06

Jul-06
Oct-06
Jan-07

Jul-07
Oct-07

Jan-08

Jul-08

Oct-08
Jan-09

Jul-09

Oct-09
Jan-10
Apr-02

Apr-03

Apr-04

Apr-05

Apr-06

Apr-07

Apr-08

Apr-09
Source: Bloomberg
As on January 29, 2010
*Relative Yield Spread is calculated as the ratio of the Yield spread and the 2 Yr Govt. Bond Yield.
Average of the Relative Yield Spread (April 23, 2002 to January 29, 2010) is 18.13%.
Average of the corporate bond spread for the same period is 1.15%.
17
 10 – Year Government
(India & United States) Bond Spread
The 10 year spread widened by 4 bps to 3.99%. The relative yield spread* also widened by 1.69% to 111.33% during the same
period. The US 10 year yield fell 2 bps to 3.58% during the week.
8.00
Spre ad Ave rage

7.00

6.00

5.00

4.00

3.00

2.00

1.00

0.00
Nov-98

May-99

Nov-99

May-00

Nov-00

May-01

Nov-01

May-02

Nov-02

May-03

Nov-03

May-04

Nov-04

May-05

Nov-05

May-06

Nov-06

May-07

Nov-07

May-08

Nov-08

May-09

Nov-09
Source: Bloomberg
As on January 29, 2010
*Relative Yield Spread is calculated as the ratio of the Yield spread and the 10 Yr US Govt. Bond Yield.
Average of the Relative Yield Spread (November 25, 1998 to January 29, 2010) is 78.64%.
Average of the bond spread for the same period is 3.56%.
18
 Commodities
& Dollar Index
For the week ended January 29, 2010

19
 U.S. Dollar Index
(For the week ended January 29, 2010)
The U.S. dollar index rose (for the second week in a row) 1.51% to 79.46 in the week ended January 29, 2010 following a rise of
1.23% in the previous week. On a YTD basis, the dollar index is up 2.06%.
125

120

115

110

105

100

95

90

85

80

75

70

65
Jan-00

Jul-00

Jan-01

Jul-01

Jan-02

Jul-02

Jan-03

Jul-03

Jan-04

Jul-04

Jan-05

Jul-05

Jan-06

Jul-06

Jan-07

Jul-07

Jan-08

Jul-08

Jan-09

Jul-09

Jan-10
Source: Bloomberg
The U.S. Dollar (USDX) indicates the general international value of the USD. The USDX does this by averaging the
exchange rates between the USD and 6 major world currencies (Euro, Japanese Yen, British Pound, Canadian Dollar,
Swedish Krona and Swiss Franc)
YTD: Year to Date
20
 UBS Bloomberg Constant
Maturity Commodity Index
(For the week ended January 29, 2010)
UBS Bloomberg CMCI fell (for the 3rd week in row) 3.71% to 1,235.76 in the week ended January 29, 2010 following a fall of 2.40%
in the previous week. On a YTD basis, the CMCI is down 6.98%.
1,800

1,600

1,400

1,200

1,000

800

600

400

200
Oct-97

Oct-98

Oct-99

Oct-00

Oct-01

Oct-02

Oct-03

Oct-04

Oct-05

Oct-06

Oct-07

Oct-08

Oct-09
Apr-98

Apr-99

Apr-00

Apr-01

Apr-02

Apr-03

Apr-04

Apr-05

Apr-06

Apr-07

Apr-08

Apr-09
Source: Bloomberg
The UBS Bloomberg Constant Maturity Commodity Index (CMCI) is a diversified commodity index family made up of 26
components. CMCI provides a broad exposure to the commodity markets, specific sectors including energy, industrial
metals, precious metals, agriculture and livestock as well as individual components.
YTD: Year to Date.
21
 Gold
(For the week ended January 29, 2010)
Gold fell (for the third week in a row) 1.13%, on the back of continued USD strength, to $1080.85 an ounce in the week ended
January 29, 2010 following a fall of 3.34% in the previous week. On a YTD basis, Gold is down 1.47%.
1,400

1,200

1,000

800

600

400

200
Jan-00

Jul-00

Jan-01

Jul-01

Jan-02

Jul-02

Jan-03

Jul-03

Jan-04

Jul-04

Jan-05

Jul-05

Jan-06

Jul-06

Jan-07

Jul-07

Jan-08

Jul-08

Jan-09

Jul-09

Jan-10
Source: Bloomberg
YTD: Year to Date.

22
 Crude Oil
Bloomberg West Texas Intermediate (WTI) Cushing Crude Oil Spot –
For the week ended January 29, 2010
Crude oil fell (for the 3rd week in a row) 1.82% to $72.89 a barrel in the week ended January 29, 2010 following a fall of 4.82% in
the previous week. On a YTD basis, crude oil is down 8.15%.
160

140

120

100

80

60

40

20

0
Jan-00

Jul-00

Jan-01

Jul-01

Jan-02

Jul-02

Jan-03

Jul-03

Jan-04

Jul-04

Jan-05

Jul-05

Jan-06

Jul-06

Jan-07

Jul-07

Jan-08

Jul-08

Jan-09

Jul-09

Jan-10
Source: Bloomberg
YTD: Year to Date.

23
 Disclaimer: This presentation on ‘Weekly Market Update’ is for information purposes only. All opinions, if any included in this
presentation constitutes the views of HDFC Asset Management Company Limited (‘HDFC AMC’) as of this date and are subject to
change without notice. These views alone are not sufficient and should not be used for the development or implementation of
an investment strategy. It should not be construed as investment advice to any party. All opinions, figures and estimates
included in this presentation are as of the latest available date and are subject to change without notice. The opinions, figures
and other charts, etc. are sourced from publicly available information, other sources like Bloomberg, in house research and/or
are just internal interpretation/analysis of reports/data sourced from the aforesaid sources. Neither HDFC Asset Management
Company Limited (HDFC AMC), nor any person connected with it, accepts any liability arising from the use or in respect of
anything done in reliance of the contents of this information /data. While utmost care has been exercised while preparing the
presentation, HDFC AMC does not warrant the completeness or accuracy of the information provided in the presentation and
disclaims all liabilities, losses and damages arising out of the use of this information or in respect of anything done in reliance of
the contents of this information/data. The recipient of this material should rely on their investigations and take their own
professional advice.

Statutory Details: HDFC Mutual Fund has been set up as a trust sponsored by Housing Development Finance Corporation
Limited and Standard Life Investments Limited (liability restricted to their contribution of Rs. 1 lakh each to the corpus) with
HDFC Trustee Company Limited as the Trustee (Trustee under the Indian Trusts Act, 1882) and with HDFC Asset Management
Company Limited as the Investment Manager.

24
 Thank You

25