Rains continued its downpour, particularly in the Central and Western part of the country, after a short break in the beginning of the month. Equity markets seem to have followed the trend and rose after a breather by almost 1000 points during the month. In the last issue, we had mentioned about the capabilities of the Indian companies to sustain growth and create value for shareholders. The same confidence is being reposed by Foreign Financial Institutions. Since the start of this financial year, the Indian stock market has received positive inflows by FIIs to the tune of Rs.1864 crores. The domestic mutual funds have also invested substantially. The primary market is witnessing renewed activity. However, this time around investors have shown appetite only for quality and reasonably priced stocks. The Global economy recorded strong growth of 4.8% in 2005 compared to three-decade highest growth of 5.3% recorded in 2004. This year the growth was mainly driven by strong growth achieved by emerging economies like China and India. Indian economy has continued to show strong performance and exports deserve a special mention. During April - June 2006, exports were valued at US$ 27.6 billion compared to US$ 20.9 billion during the same quarter in 2005, posting an impressive growth of 32.4%. Government's export target of US$ 120 billion for 2006-07 seems to be easily achievable. Agriculture sector has been lagging behind the projected annual growth of 4% in Tenth Plan period. While industry and services sectors recorded above 7% annual growth, agriculture sector grew at 3.9% in 2005-06 as compared to 0.7% in 2004-05. To sustain India's long term growth, agriculture sector need to attain growth of over 4% p.a. We feel that normal monsoons in the third consecutive year and the government's initiative to launch second Green Revolution will give the required boost in the medium term. Going forward, high crude oil prices and rising inflation would continue to be concern areas. The overseas borrowings by Indian companies increased by 91% in April-June 2006 quarter as compared to same period in 2005. Out of this External Commercial Borrowings (ECB) accounted for US$ 2.22 billion and Foreign Currency Convertible Bonds (FCCBs) accounted for $ 2.21 billion respectively. These funds are likely to be used for modernisation of existing facilities, setting up new projects and import of capital goods. This indicates two important things, one the belief of global investors in Indian economy and other that the growth of Indian economy would not falter for want of resources. Despite lean season, the basic infrastructure needs (like cement, steel, etc.) are witnessing good demand. The infrastructure growth has started to have its rub off effect on the Indian industrial production. The Reserve Bank of India in its recent statement has shown confidence in achieving over 7.5% growth in our economy this year. The fundamentals of our capital market are in good shape. The corporate performance has been consistently good and has a positive reflection on the valuation of the Indian stocks. It makes imminent sense to regularly invest in Indian Equities. Systematic investment is an excellent way of growing one's savings into long term wealth and our products offer exciting opportunities to our valued investors. Debt Market Debt Market Debt Market Debt Market Debt Market The month of August came as a harbinger of good times for the debt market. The yields in the G-Sec market, which had been on a one-way up-ward journey, took a halt and infact somewhat reacted downward to give a much needed momentum swing to the bond market. There was a pause in the rate hikes in the Fed rate after a period of two years of continuous hikes. The Fed gave an indication of data driven moves in future. The auction of 7.59% 2016(ten year) and 9.39% 2011(five year) for Rs. 9000 cr, in the first fortnight, saw a cut-off yield of 8.27% and 7.94% respectively. There was good participation by the large investors in this auction. The market witnessed one of the biggest rallies in the recent times due to the pause in Fed rate and subsequent value buying by investors. The yields fell by almost 20bps across maturities. The yields on five-year and ten-year G-Sec touched a low of 7.70% and 8.07% respectively immediately thereafter. The market continued its bullish trend for the entire month with few pauses in between on account of profit booking and auction supply. With good support at 8.10% levels, the yield on ten-year rallied to close the month at 7.88%. The five-year Overnight Indexed Swaps (OIS) also followed the same path of five-year G-Sec. It opened the month at 7.37% levels and gradually came down to 7.12% on 30th August. The difference between the five-year OIS and five-year G-Sec touched a high of around 60bps on 1st Aug on account of auction supply of five-year G-sec. However the unabated rally in G-Secs accounted for the spread to come down to 48 bps on 30th Aug. The comfortable liquidity condition and the improved sentiments were also reflected in the Treasury bill yields. The two auctions conducted during the month for 364 Day T-Bill saw a yield of 6.99% and 6.96% against a cut-off yield of over 7% the previous month. The cut-off yield in 182 day T-bill and 91 day T-Bill also went down by 5bps. The Indian Rupee remained range bound for most part of the month between Rs.46.45 and Rs.46.55 against a US Dollar. The WPI inflation numbers remained well within the RBI target range during the month. Inflation for the week ended 12th August stood at 4.92%. However, the inflation may witness an upward bias in the next couple of months. The market appears to enter a bullish mode after a long spell of bearish trend. The current bullish momentum appears to continue, as there seems to be absence of any major negative trigger in the near term. The ample liquidity condition and the positive sentiment in the market will continue to fuel the rally in the short-term. The first half of September does not seems to unfold any negative trigger for the market. However in the second half, we expect strained liquidity on account of tax outflows and auction supply to put a check on the rally. While maintaining a bullish view in the medium to long term, we expect the rally to take a pause at the current level. There might be a slight hardening of yields in the short-term from the current level of ten-year yield of 7.90%. We expect the ten-year yield to cross 8% in the short-term and trade in the range of 8.00% to 8.20%. The month of September had traditionally been a month of liquidity squeeze due to advance tax outflows. Further, the primary market issuances of short-term papers by the banks during the month will continue to keep the short-term rates high. We expect the short - term yields to harden by 20bps to 30bps from the current levels. The debt funds continued to gather attention of the investors. The current interest rate scenario makes the Income Funds and Gilt Funds attractive for the investors. With a positive outlook on the market in the medium to long-term, the debt funds are expected to give improved returns. Market Speaks ..... Market Speaks ..... Market Speaks ..... Market Speaks ..... Market Speaks ..... www.saharamutual.com Equity Markets Equity Markets Equity Markets Equity Markets Equity Markets
Transcript
Rains continued its downpour, particularly in the Central and Western part of the country, after a short break in thebeginning of the month. Equity markets seem to have followed the trend and rose after a breather by almost 1000points during the month.
In the last issue, we had mentioned about the capabilities of the Indian companies to sustain growth and createvalue for shareholders. The same confidence is being reposed by Foreign Financial Institutions. Since the startof this financial year, the Indian stock market has received positive inflows by FIIs to the tune of Rs.1864 crores.The domestic mutual funds have also invested substantially. The primary market is witnessing renewed activity.However, this time around investors have shown appetite only for quality and reasonably priced stocks.
The Global economy recorded strong growth of 4.8% in 2005 compared to three-decade highest growth of 5.3%recorded in 2004. This year the growth was mainly driven by strong growth achieved by emerging economies likeChina and India.
Indian economy has continued to show strong performance and exports deserve a special mention. During April- June 2006, exports were valued at US$ 27.6 billion compared to US$ 20.9 billion during the same quarter in 2005, posting an impressive growth of 32.4%. Government's exporttarget of US$ 120 billion for 2006-07 seems to be easily achievable. Agriculture sector has been lagging behind the projected annual growth of 4% in Tenth Plan period. Whileindustry and services sectors recorded above 7% annual growth, agriculture sector grew at 3.9% in 2005-06 as compared to 0.7% in 2004-05. To sustain India's long term growth,agriculture sector need to attain growth of over 4% p.a. We feel that normal monsoons in the third consecutive year and the government's initiative to launch second GreenRevolution will give the required boost in the medium term. Going forward, high crude oil prices and rising inflation would continue to be concern areas.
The overseas borrowings by Indian companies increased by 91% in April-June 2006 quarter as compared to same period in 2005. Out of this External Commercial Borrowings (ECB)accounted for US$ 2.22 billion and Foreign Currency Convertible Bonds (FCCBs) accounted for $ 2.21 billion respectively. These funds are likely to be used for modernisationof existing facilities, setting up new projects and import of capital goods. This indicates two important things, one the belief of global investors in Indian economy and other thatthe growth of Indian economy would not falter for want of resources.
Despite lean season, the basic infrastructure needs (like cement, steel, etc.) are witnessing good demand. The infrastructure growth has started to have its rub off effect on theIndian industrial production. The Reserve Bank of India in its recent statement has shown confidence in achieving over 7.5% growth in our economy this year.
The fundamentals of our capital market are in good shape. The corporate performance has been consistently good and has a positive reflection on the valuation of the Indianstocks. It makes imminent sense to regularly invest in Indian Equities. Systematic investment is an excellent way of growing one's savings into long term wealth and our productsoffer exciting opportunities to our valued investors.
The month of August came as a harbinger of good times for the debt market. The yields in the G-Sec market, which had been on a one-way up-ward journey, took a halt and infactsomewhat reacted downward to give a much needed momentum swing to the bond market. There was a pause in the rate hikes in the Fed rate after a period of two years ofcontinuous hikes. The Fed gave an indication of data driven moves in future.
The auction of 7.59% 2016(ten year) and 9.39% 2011(five year) for Rs. 9000 cr, in the first fortnight, saw a cut-off yield of 8.27% and 7.94% respectively. There was goodparticipation by the large investors in this auction. The market witnessed one of the biggest rallies in the recent times due to the pause in Fed rate and subsequent value buyingby investors. The yields fell by almost 20bps across maturities. The yields on five-year and ten-year G-Sec touched a low of 7.70% and 8.07% respectively immediately thereafter.The market continued its bullish trend for the entire month with few pauses in between on account of profit booking and auction supply. With good support at 8.10% levels, theyield on ten-year rallied to close the month at 7.88%.
The five-year Overnight Indexed Swaps (OIS) also followed the same path of five-year G-Sec. It opened the month at 7.37% levels and gradually came down to 7.12% on 30thAugust. The difference between the five-year OIS and five-year G-Sec touched a high of around 60bps on 1st Aug on account of auction supply of five-year G-sec. However theunabated rally in G-Secs accounted for the spread to come down to 48 bps on 30th Aug.
The comfortable liquidity condition and the improved sentiments were also reflected in the Treasury bill yields. The two auctions conducted during the month for 364 Day T-Billsaw a yield of 6.99% and 6.96% against a cut-off yield of over 7% the previous month. The cut-off yield in 182 day T-bill and 91 day T-Bill also went down by 5bps.
The Indian Rupee remained range bound for most part of the month between Rs.46.45 and Rs.46.55 against a US Dollar.
The WPI inflation numbers remained well within the RBI target range during the month. Inflation for the week ended 12th August stood at 4.92%. However, the inflation may witnessan upward bias in the next couple of months.
The market appears to enter a bullish mode after a long spell of bearish trend. The current bullish momentum appears to continue, as there seems to be absence of any majornegative trigger in the near term. The ample liquidity condition and the positive sentiment in the market will continue to fuel the rally in the short-term. The first half of Septemberdoes not seems to unfold any negative trigger for the market. However in the second half, we expect strained liquidity on account of tax outflows and auction supply to put a checkon the rally. While maintaining a bullish view in the medium to long term, we expect the rally to take a pause at the current level. There might be a slight hardening of yieldsin the short-term from the current level of ten-year yield of 7.90%. We expect the ten-year yield to cross 8% in the short-term and trade in the range of 8.00% to 8.20%.
The month of September had traditionally been a month of liquidity squeeze due to advance tax outflows. Further, the primary market issuances of short-term papers by the banksduring the month will continue to keep the short-term rates high. We expect the short - term yields to harden by 20bps to 30bps from the current levels.
The debt funds continued to gather attention of the investors. The current interest rate scenario makes the Income Funds and Gilt Funds attractive for the investors. With a positiveoutlook on the market in the medium to long-term, the debt funds are expected to give improved returns.
The objective of the scheme…. Ideal for…. Minimum applicationinvestors seeking high returns at relatively medium riskacross long-term horizon by investing in equity andequity related instruments.
Rs. 500/- and additional investments in multiples ofRs. 500/-.
Systematic Investment Plan Monthly SIP Quarterly SIPEntry Load : 2.25% - for SIP/STP investmentsExit Load : 1 % if redeemed on or before 1 yearfrom date of allotment of SIP/STP investments.
6 postdated cheques forminimum of Rs. 500/- eachand in multiples of Rs. 500/-.
4 postdated cheques for aminimum of Rs. 500/- eachand in multiples of Rs. 500/-.
Industry Security Name % of Grand % of IndustryTotal Total
EQUITY SHARES
Industrial Capital Goods Larsen and Toubro Ltd. 4.48 22.14Bharat Electronics Ltd. 4.05Bharat Heavy Electricals Ltd. 3.69Crompton Greaves Ltd. 3.41Engineers India Ltd. 2.37EMCO Limited 2.09Manugraph India Ltd. 2.05
Cement Century Textiles & Industries Ltd. 4.02 11.94Shri Digvijay Cement Co. Ltd. 3.38Orient Paper And Inds Ltd. 1.99Shree Cements Ltd. 1.56Madras Cements Ltd. 0.99
is to provide immediate tax relief and long-term growthof capital to investors. Unit holders can avail of deductionunder Section 80C of the Income Tax Act 1961 forinvestment up to Rs.1 lakh p.a.
Relative Performance Chart of Growth Optionof Sahara Taxgain Fund since Inception
Inception Date: April 1, 1997
Load Structure Entry Load: 2.25% Exit Load: Nil
Systematic Investment Plan (SIP) ReturnsSahara Taxgain Fund
XIRR 3 Years 5 Years
Taxgain 39.91% 41.12%
BSE 200 37.34% 38.41%Note: 1) Considering Rs. 1,000/- investment done on the 1st of the month.
2) Load has not be considered for the purpose of calculation.
Relative Performance Chart of Growth Optionof Sahara Growth Fund since Inception
NAV as on August 31, 2006Dividend - Rs. 21.312Growth - Rs. 42.1245
Investment Option:a) Growth b) Dividend Payout &Dividend Reinvestment Option.
Record Date Rate % of Div Cum DivNAV (Rs)
13.03.2006 Rupees 7.50 paise per unit 75.00% 28.2228.01.2005 Rupees 3 per unit 30.00% 19.5725.09.2003 Rupees 3 per unit 30.00% 14.95
Dividend since September 2003
Dividend DeclaredDividend declared on the face value of Rs. 10/-
Past performance may or may not be sustained in future
Portfolio as on 31.08.2006
Systematic Investment Plan Monthly SIP Quarterly SIPEntry Load : 2.25% - for SIP/STP investmentsExit Load : 1 % if redeemed on or before 1 yearfrom date of allotment of SIP/STP investments.
6 postdated cheques for minimumof Rs. 1000/ - each.
4 postdated cheques for minimum ofRs. 2000/- each.
< Rs. 1 cr ; Nil, >= Rs. 1 cr: 1%if redeemed on or before 3 months
LoadStructure
2.25%: for investments < Rs. 1 cr ;NIL: for investment >= Rs. 1 crEntry Load Exit Load
Systematic Investment Plan (SIP) ReturnsSahara Growth Fund
XIRR 1 Yr 2 Yrs 3 Yrs
Growth Fund 39.62% 45.13% 42.12%
Nifty 42.87% 44.23% 38.27%
Note: 1) Considering Rs. 1,000/- investment done on the 1st of the month.2) Load has not be considered for the purpose of calculation.
w w w . s a h a r a m u t u a l . c o m
Sahara MIDCAP FUNDAn Open-Ended Growth Fund
The objective of the scheme…. Ideal for…. Minimum applicationis to achieve long-term capital growth at medium levelof risks by investing primarily in mid-cap stocks.
investors seeking high returns at relatively medium riskacross long-term horizon.
Rs. 1000/- and additional investments of Rs. 500/- andmultiples of Re. 1/-.
Dividend DeclaredDividend declared on the face value of Rs. 10/-
Past performance may or may not be sustained in future
Portfolio as on 31.08.2006
Relative Performance Chart of Growth Optionof Sahara Midcap Fund since Inception
w w w . s a h a r a m u t u a l . c o m
Load Structure Entry Load < Rs. 1 cr : 2.25% ; >= Rs. 1 cr : Nil Exit Load < Rs. 1 cr ; Nil, >= Rs. 1 cr: 1% if redeemed on or before 3 months
Portfolio ROE25.12%
Sahara WEALTH PLUS FUNDAn Open-Ended Growth Fund
The objective of the scheme…. Ideal for…. Minimum applicationis to invest in equity and equity related instruments ofcompanies that would be wealth builders in the longterm.
investors seeking consistent and growing returns over along period of time.
Rs. 1000/- and additional investments of Rs. 500/- andmultiples of Re. 1/-
Industry Security Name % of Grand % of IndustryTotal Total
EQUITY SHARES
Industrial Capital Goods Siemens Ltd. 4.24 25.23
Bharat Heavy Electricals Ltd. 4.12
Larsen and Toubro Ltd. 3.89
Asea Brown Boveri Ltd. 3.39
Crompton Greaves Ltd. 2.96
Bharat Electronics Ltd. 2.81
EMCO Ltd. 2.12
Thermax Ltd. 1.70
Software Tata Consultancy Services Ltd. 4.44 8.83
Infosys Technologies Ltd. 4.39
Non Ferrous Metals Hindalco Industries Ltd. * 3.66 7.02
is to provide income distribution and / or medium tolong term capital gains by investing predominantly inequity/ equity related instruments of companies in theInfrastructure sector.
NAV as on August 31, 2006Fixed Pricing (Div.) - Rs. 9.2463 Variable Pricing (Div.) - Rs. 9.2679Fixed Pricing (Gr.) - Rs. 9.2463 Variable Pricing (Gr.) - Rs. 9.2679
Entry Load : 2.25% - for SIP/STP investmentsExit Load : 1 % if redeemed on or before 1 year fromdate of allotment of SIP/STP investments.
6 postdated cheques for minimum of Rs. 1000/ - each. 4 postdated cheques for minimum of Rs. 2000/- each.
< Rs. 1 cr ; Nil, >= Rs. 1 cr: 1%if redeemed on or before 3 monthsLoad Structure 2.25%: for investments < Rs. 1 cr ;
NIL: for investment >= Rs. 1 crEntry Load Exit Load
THE CUTTING EDGE.....
w w w . s a h a r a m u t u a l . c o m
Sahara GILT FUNDAn Open-Ended Gilt Fund
The objective of the scheme…. Ideal for…. Minimum applicationis to long term capital gains with income distributionalong with capital gains to its unit holders, at all timesemphasizing the importance of capital preservation.
investors with low-moderate risk appetite, PF trusts,Financial Institutions/Banks & Corporates.
Rs. 5000/- and additional investments in multiples ofRs. 1000/-.
Entry Load : Nil - for SIP/STP investmentsExit Load : As per normal Exit Load
5 postdated cheques for minimum of Rs. 1000/- each. 4 postdated cheques for minimum of Rs. 1250/- each.
Portfolio Rating % of Portfolio
Net Current Assets/Reverse Repo 100.00 100.00
TOTAL 100.00
Performance (%)Sahara Gilt Fund Scheme Returns I Sec Composite
Index1 year 4.34% 3.42%3 Years 1.93% 3.02%Inception (30.8.2002) 4.26% NA*
* Base date of index being 31/03/2002 Note: Annualised Returns
NAV as on August 31, 2006Dividend - Rs. 11.0104 Growth - Rs. 12.0399
Investment Option:a) Growth b) Dividend Option & Dividend Reinvestment Option.
Portfolio as on 31.08.2006
AVERAGE MATURITY TENOR : 0.0027 years
Sahara INCOME FUNDAn open-ended Income Fund
The objective of the scheme…. Ideal for…. Minimum applicationis to generate regular income and the secondary objective isgrowth of capital through investments in debt instruments,money market and related securities, while at all timesemphasizing the importance of capital preservation.
investors seeking reasonable returns at relatively lowrisk across a medium to long-term investment horizon.
Rs. 3000/- and additional investments in multiples ofRs. 1000/-
The objective of the scheme…. Ideal for…. Minimum applicationis to create a highly liquid portfolio of good quality debtas well as money market instruments with a view toprovide high liquidity and reasonable returns to the Unitholders.
investors who wish to park their short term surpluses atrelatively low risk. Corporate and High Net Worthinvestors and individual investors who have temporarysurpluses can benefit from this scheme.
Rs. 10000/- and additional investments in multiples ofRs. 5000/-.
The face value of the units have been changed from Rs. 10/- per unit toRs. 1000/- per unit by consolidation of units w.e.f. 27th October,2005.Also, the Variable Pricing Option has been introduced under the scheme w.e.f.27th October, 2005.Rating indicates that the fund portfolio holdings provide very strong protectionagainst losses from credit defaults.Disclaimer clause: The rating of CRISIL is not an opinion of the Asset ManagementCompany's willingness or ability to make timely payments to the Investors. Therating is also not an opinion on the stability of the NAV of the fund, which could varywith market developments.
5 postdated cheques for minimum of Rs. 2000/- each. 4 postdated cheques for minimum of Rs. 2500/- each.
