MONTHLY NEWSLETTER January, 2016 1 Market Review RBI maintained ‘status quo’ on key policy rates in its December policy review. Correspondingly, Reverse repo and Marginal Standing Facility rates stand unchanged at 5.75% and 7.75% respectively. Interestingly, RBI continued to maintain ‘accommodative’ stance, assuring of further monetary easing as and when further room for monetary easing is available within the bounds of inflation goal post of 5% by Mar-17. India’s real GDP for Q2 FY16 noted a sharp rebound, coming in at 7.4% vis-à-vis 7% in Q1 FY16. Gross Value Addition too, stood at 7.4%, gaining 30 bps quarter-on- quarter. It was primarily manufacturing, followed by agriculture that pushed the overall headline GDP. INR ended the month and year by closing at 66.29 against the USD. Taking a cue from the Global market, Indian broader indices remained volatile for most part of the month. Sensex ended the month down by 0.11% and Nifty went up marginally by 0.14%. In the corresponding period, FIIs were net sellers in Equity segment worth around 2360 Crores and net buyers in Debt segment worth 6327 Crores respectively. Mutual Funds were net buyers in both Equity and Debt to the tune of 4233 Crores and 33178 Crores respectively. 1.Foreign Trade: The country’s merchandise exports contracted by 24.46% (Y-o-Y) to USD 20.01 billion in Nov’15 as against USD 26.49 billion recorded in Nov’14. Cumulative exports for Apr-Sep’15 also decreased by 18.46% to USD 174.31 billion. The country’s merchandise imports bills eased to USD 29.80 billion in Nov’15 from USD 42.72 billion recorded a year ago. COil imports eased further falling by 45% (Y-o-Y) to USD 6.44 billion in Nov’15. The non-oil imports dipped by 24.70% in Nov’15 to USD 24.70 billion vis-à-vis imports of USD 31.02 billion recorded in the previous fiscal. 2.Inflation: Wholesale Price Index- based infation for Nov’15 stood at -1.99% compared to -3.81% in Oct’15. Food article inflation, which was 0.45% in the month of Oct’15 rose to 0.69% in Oct’15. The fuel inflation doubled to 0.66% in Nov’15 from 0.33% in the month of Oct’15. CPI in Nov’15 was at 5.41% against 5% in Oct’15. 3.Index of Industrial Production (IIP): Index of Industrial Production (IIP) for Oct’15 rose by 9.8% against 3.8% in Sep’15. Manufacturing output showed growth of 0.5% in Oct’15 against 1.3% in Sep’15. Basic Goods expanded further by 4% in Oct’15 against -0.9% in Sep’15. Capital goods contracted by 3.5% in Oct’15 against 7.4% in Sep’15. Among the BSE sectoral indices, Metal, Health and Power were the major gainers ending the month in Positive closing higher by 3.93%, 3.72% and 2.74% respectively. The Major losers were Consumer Durables, Capital Goods and Bankex ending the month in negative losing by 3.76%, 3.15% and 2.95% respectively. Among the NSE sectoral indices, Media, Metal and Energy were the major gainers ending the month in positive, higher by 8.23%, 5.25% and 4.14% respectively. The Major losers for the month were PSU, Bank and Auto losing by 11.47%, 2.92% and 2.68% respectively. Among the major Asian Indices, it was a positive month for Straits and Taiwan which ended up by 0.94% and 0.21% respectively. Nikkei and Hang Seng ended negative by 3.61% and 0.37% respectively. It was mostly a negative month for all major European indices with CAC 40, DAX, FTSE 100 and BEL-20 ending the month lower by 6.47%, 5.62%, 1.79% and 1.61% respectively. Major American Indices too ended the month in negative with NYSE, S&P 500, Dow Jones and Nasdaq ending the month lower by 2.56%, 1.75%, 1.66% and 0.21% respectively. Among the major indices across the world, Bovespa, Brazilian index ended up by 1.63%. Apart from FII and MF activity, Key domestic data released in the month of December were: Year at a Glance: Much was spoken at the start of 2015 as many were expecting double digit returns from Equities but the year which unfolded with Greece debt crisis, China’s growth halt and lower than expected corporate earnings has not helped the positive momentum built around reforms and development. The 30 stock BSE Sensex has given a negative return of 5.03% in the year 2015. Though the year hasn’t been great, long term returns in equities have always outperformed those of peers by a comfortable margin. Investors with longer time frames should persevere with this asset class. The mantra for 2016 should be – ‘’Keep Calm and SIP your way to long term wealth’’ FII Activity: (Month Between 01-Dec-2015 to 29-Dec-2015) Equity Date Gross Purchase (Cr.) Gross Sale (Cr.) Net (Cr.) 1-Dec-15 655.00 489.60 165.40 8-Dec-15 590.20 465.10 125.10 14-Dec-15 557.30 485.80 71.50 21-Dec-15 732.40 694.00 38.40 29-Dec-15 1,124.70 891.40 233.30 Dec-15 18,805.70 14,572.10 4,233.60 Debt Date Gross Purchase (Cr.) Gross Sale (Cr.) Net (Cr.) 1-Dec-15 6,688.80 3,105.70 3,583.10 8-Dec-15 5,387.50 4,241.00 1,146.50 14-Dec-15 3,903.10 2,210.80 1,692.30 21-Dec-15 7,718.40 19,275.30 -11,556.90 29-Dec-15 10,447.20 7,107.00 3,340.20 Dec-15 128,595.80 95,416.90 33,178.90
Transcript
MONTHLY NEWSLETTERJanuary, 2016
1
Market Review
RBI maintained ‘status quo’ on key policy rates in its December policy review. Correspondingly, Reverse repo and Marginal Standing Facility rates stand unchanged at 5.75% and 7.75% respectively. Interestingly, RBI continued to maintain ‘accommodative’ stance, assuring of further monetary easing as and when further room for monetary easing is available within the bounds of inflation goal post of 5% by Mar-17.
India’s real GDP for Q2 FY16 noted a sharp rebound, coming in at 7.4% vis-à-vis 7% in Q1 FY16. Gross Value Addition too, stood at 7.4%, gaining 30 bps quarter-on-quarter. It was primarily manufacturing, followed by agriculture that pushed the overall headline GDP.
INR ended the month and year by closing at 66.29 against the USD.
Taking a cue from the Global market, Indian broader indices remained volatile for most part of the month. Sensex ended the month down by 0.11% and Nifty went up marginally by 0.14%.
In the corresponding period, FIIs were net sellers in Equity segment worth around 2360 Crores and net buyers in Debt segment worth 6327 Crores respectively.
Mutual Funds were net buyers in both Equity and Debt to the tune of 4233 Crores and 33178 Crores respectively.
1.Foreign Trade: The country’s merchandise exports contracted by 24.46% (Y-o-Y) to USD 20.01 billion in Nov’15 as against USD 26.49 billion recorded in Nov’14. Cumulative exports for Apr-Sep’15 also decreased by 18.46% to USD 174.31 billion.
The country’s merchandise imports bills eased to USD 29.80 billion in Nov’15 from USD 42.72 billion recorded a year ago.
COil imports eased further falling by 45% (Y-o-Y) to USD 6.44 billion in Nov’15.
The non-oil imports dipped by 24.70% in Nov’15 to USD 24.70 billion vis-à-vis imports of USD 31.02 billion recorded in the previous fiscal.
2.Inflation:
Wholesale Price Index- based infation for Nov’15 stood at -1.99% compared to -3.81% in Oct’15.
Food article inflation, which was 0.45% in the month of Oct’15 rose to 0.69% in Oct’15.
The fuel inflation doubled to 0.66% in Nov’15 from 0.33% in the month of Oct’15.
CPI in Nov’15 was at 5.41% against 5% in Oct’15.
3.Index of Industrial Production (IIP):
Index of Industrial Production (IIP) for Oct’15 rose by 9.8% against 3.8% in Sep’15.
Manufacturing output showed growth of 0.5% in Oct’15 against 1.3% in Sep’15.
Basic Goods expanded further by 4% in Oct’15 against -0.9% in Sep’15.
Capital goods contracted by 3.5% in Oct’15 against 7.4% in Sep’15.
Among the BSE sectoral indices, Metal, Health and Power were the major gainers ending the month in Positive closing higher by 3.93%, 3.72% and 2.74% respectively. The Major losers were Consumer Durables, Capital Goods and Bankex ending the month in negative losing by 3.76%, 3.15% and 2.95% respectively.
Among the NSE sectoral indices, Media, Metal and Energy were the major gainers ending the month in positive, higher by 8.23%, 5.25% and 4.14% respectively. The Major losers for the month were PSU, Bank and Auto losing by 11.47%, 2.92% and 2.68% respectively.
Among the major Asian Indices, it was a positive month for Straits and Taiwan which ended up by 0.94% and 0.21% respectively. Nikkei and Hang Seng ended negative by 3.61% and 0.37% respectively.
It was mostly a negative month for all major European indices with CAC 40, DAX, FTSE 100 and BEL-20 ending the month lower by 6.47%, 5.62%, 1.79% and 1.61% respectively.
Major American Indices too ended the month in negative with NYSE, S&P 500, Dow Jones and Nasdaq ending the month lower by 2.56%, 1.75%, 1.66% and 0.21% respectively.
Among the major indices across the world, Bovespa, Brazilian index ended up by 1.63%.
Apart from FII and MF activity, Key domestic data released in the month of
December were:
Year at a Glance:
Much was spoken at the start of 2015 as many were expecting double digit returns from Equities but the year which unfolded with Greece debt crisis, China’s growth halt and lower than expected corporate earnings has not helped the positive momentum built around reforms and development. The 30 stock BSE Sensex has given a negative return of 5.03% in the year 2015. Though the year hasn’t been great, long term returns in equities have always outperformed those of peers by a comfortable margin. Investors with longer time frames should persevere with this asset class. The mantra for 2016 should be – ‘’Keep Calm and SIP your way to long term wealth’’
FII Activity: (Month Between 01-Dec-2015 to 29-Dec-2015)
EquityDate Gross Purchase (Cr.) Gross Sale (Cr.) Net (Cr.)
1-Dec-15 655.00 489.60 165.40
8-Dec-15 590.20 465.10 125.10
14-Dec-15 557.30 485.80 71.50
21-Dec-15 732.40 694.00 38.40
29-Dec-15 1,124.70 891.40 233.30
Dec-15 18,805.70 14,572.10 4,233.60
DebtDate Gross Purchase (Cr.) Gross Sale (Cr.) Net (Cr.)
1-Dec-15 6,688.80 3,105.70 3,583.10
8-Dec-15 5,387.50 4,241.00 1,146.50
14-Dec-15 3,903.10 2,210.80 1,692.30
21-Dec-15 7,718.40 19,275.30 -11,556.90
29-Dec-15 10,447.20 7,107.00 3,340.20
Dec-15 128,595.80 95,416.90 33,178.90
MONTHLY NEWSLETTERJanuary, 2016
2
S&P BSE SENSEXDate Close Price Points Diff %age Change
11/30/2015 26145.67
12/2/2015 26117.85 -27.82 -0.11%
12/9/2015 25,036.05 -1081.80 -4.14%
12/16/2015 25494.37 458.32 1.83%
12/23/2015 25850.3 355.93 1.40%
12/31/2015 26117.54 267.24 1.03%
-0.11%
CNX Nifty IndexDate Close Price Points Diff %age Change
11/30/2015 7935.25
12/2/2015 7931.35 -3.90 -0.05%
12/9/2015 7,612.50 -318.85 -4.02%
12/16/2015 7750.9 138.40 1.82%
12/23/2015 7865.95 115.05 1.48%
12/31/2015 7946.35 80.40 1.02%
0.14%
Sensex & Nifty:
MF Activity: (Month Between 01-Dec-2015 to 29-Dec-2015)
EquityDate Gross Purchase (Cr.) Gross Sale (Cr.) Net (Cr.)
1-Dec-15 5,755.06 5,900.41 -145.35
8-Dec-15 3,117.58 3,560.07 -442.49
15-Dec-15 3,280.51 3,325.74 -45.23
21-Dec-15 2,597.85 2,310.78 287.07
30-Dec-15 2,093.56 2,111.39 -17.83
Dec-15 68,213.08 69,112.15 -899.07
DebtDate Gross Purchase (Cr.) Gross Sale (Cr.) Net (Cr.)
1-Dec-15 579.48 305.11 274.37
8-Dec-15 345.20 304.33 40.87
15-Dec-15 810.53 1,432.61 -622.08
21-Dec-15 165.06 467.63 -302.57
30-Dec-15 845.24 376.06 469.18
Dec-15 12,001.54 17,319.08 -5,317.54
Fund of The Month
SBI BLUECHIP FUND-REG(G)
Investment Objective:
The objective of the scheme would be to provide investors with opportunities for long-term growth in capital through an active management of investments in a diversified basket of equity stocks of companies whose market capitalization is at least equal to or more than the least market capitalized stock of BSE 100 Index.Portfolio:
Top 10 Companies HoldingsName %age
CBLO 14.9
HDFC Bank Ltd. 6.8
Reliance Industries Ltd. 5.7
Infosys Ltd. 4.7
Sun Pharmaceutical Industries Ltd. 4.4
Maruti Suzuki India Ltd. 4.0
Tata Consultancy Services Ltd. 3.2
The Ramco Cements Ltd. 2.5
Divis Laboratories Ltd. 2.3
FAG Bearings India Ltd. 2.3
Top 10 Sector Wise Holding Industry Name (%)
Other 14.7
Bank - Private 11.5
Pharmaceuticals & Drugs 10.6
IT - Software 7.9
Refineries 6.3
Automobiles - Passenger Cars 6.3
Finance - NBFC 4.6
Cement & Construction Materials 4.5
Engineering - Construction 3.4
Bank - Public 3.1
To read the full Information, Click here
About Performance of the Scheme:
The fund is managed by Ms. Sohini Andani, who has over 15 years of industry expertise and currently manages over Rs. 4000 crore of AUM. This fund is suitable for investors with moderately aggressive risk tolerance. It can be attributed to goals which are at least 5 years away. It has been a leader in its category and is expected to show similar performance in the near future too.
FINANCIAL ASSETSARE GAINING AN EDGE OVER PHYSICAL ASSETS
INDIA WEALTH REPORT - 2015Key Highlights from Karvy’s India Wealth Report
» With a staggering growth of 29%, Direct Equity has overtaken Fixed Deposits and Bonds in FY15.
» One of the key positive changes in FY15 has been the trend reversal of new fresh investments of household savings getting invested more in financial assets (54%) than physical assets (46%).
There were two twin brothers, Ram and Mohan, who had to walk
a long way every day to their farm. So they begged their father to
give them a horse or a bullock cart to travel comfortably.
After much deliberation, the father gave Ram an elephant and
Mohan a donkey. Both boys were happy with their respective gifts.
But there was a problem.
The road to the farm was narrow. Ram, on the elephant, demanded
first right of passage. Mohan refused to give it, so Ram got his
elephant to simply nudge the donkey aside and claim the road.
Mohan and the donkey tumbled to the side and watched Ram move
majestically ahead with a sneer on his face.
That evening, Mohan complained about Ram to his father. The
SELF BELIEF
Believe in yourself and all that you are. Know that there is something inside you that is greater than any obstacle.
father said, “Tomorrow, Mohan will take the elephant and Ram will take the donkey.”
So the next day the two brothers set out for the farm. This time Mohan on his elephant claimed the
narrow road and walked ahead, nudging away his brother, forcing him to follow. He was happy.
That evening, on learning the day’s events, the father said, “I am disappointed in both you boys. Your
personality depends on what you have. When either of you had the elephant, you tried to dominate
the other. When either of you had the donkey, you whined and complained. Clearly you have no inner
character; your behaviour is a function of what you possess. That is the sign of a weak man.”
MORAL OF THE STORY:
Courtesy : Karvy Learning Center
Direct Dil Se…
MONTHLY NEWSLETTERJanuary, 2016
6
Readers Corner
FIVE MUST KNOW TERMS OF TAX FREE BONDS
TAX free bonds are not an unknown option in the investment space. However,
these seem to be more in the news of late, the reason for this being large scale interest rate cuts by RBI to bolster growth. How well do you know about tax free bonds? Here are ten most important terms associated with them:
Credit Rating
This is one of the most important aspects when it comes to analyzing the credibility of any financial product. In India, ratings are assigned to financial products by CRISIL, ICRA and Fitch. The best rating that is assigned is AAA, followed by AA+, AA and so on. Highest
rating indicates lesser risk in terms of default as well as delay in interest payment. Interest rates could be more for lower rated bonds.
Coupon Rate
It is the annual interest rate offered by the bonds to their subscribers. As mentioned earlier, higher rated bonds could have lesser coupon rate compared with others. Also, the coupon rates are marked against the 10 year G-Sec rates. As and when this rate goes down, the respective bond prices are also affected.
Effective Yield
Yields are to bonds as returns are to other financial products. Effective yield is the yield after taking taxation into consideration. Since tax free bonds offer tax free interest, effective yield would indicate better returns compared with products like Fixed Deposits. Formula to calculate it is coupon rate/ (1-tax rate).
Liquidity
Liquidity is not a great concern if you wish to hold the bonds till maturity. However, in case you are planning to cash out on the gains by selling the bonds prior to maturity, you should know about the possibilities. Liquidity could be lesser if they are listed only on single exchange. For retail investors, liquidity is on the lower side and it gets tougher if the interest rates are on the rise when the prices go down. If interest rates go down, the demand could go up.
Tenure
It is the maturity period of the bonds offered. Companies offer tax free bonds of tenures 10, 15 and 20 years. Coupon rates are usually higher for bonds of higher tenure.
Ultra Short Term Plan 0.1355 0.4743 1.7680 3.7067 8.0189 8.5880 8.7312 7.8171
Returns are as on 28th December’15
MONTHLY NEWSLETTERJanuary, 2016
9
Fixed Deposits Schemes
FD Name Rating IndustryInterest Rate
* (Up to)
Bajaj Finance Ltd.FAAA by CRISILICRA MAAA
Bajaj Finserv is the most diversifed non-bank in the country, the largest financier of consumer durables in India and one of the most profitable firms in the category.
9.15%
DHFL Aashray DepositPlus
CARE AAA FD, BWR FAAA
Dewan Housing Finance Ltd (DHFL) is the second housing finance company to be set up in the private sector in India.
9.35%
Gruh Finance Ltd.MAAA by ICRA, FAAAby CRISIL
GRUH Finance Ltd is subsidiary of HDFC Ltd is housing finance company (HFC) recognized by National Housing Bank.
8.50%
HDFC Ltd.FAAA by CRISIL, MAAA by ICRA
A pioneer and leader in housing finance in India, since inception, HDFC has assisted more than 4.9 million customers to own a home of their own. HDFC is the Largest mobiliser of public deposits outside the banking system and the HDFC Group has a strong asset base of over Rs.2.97 trillion and a customer base of over 42.5 million.
8.65%
HUDCO‘tAA+(ind)’ by FITCH, ‘CARE AA+(FD)’ by CARE
HUDCO is a premier techno-financing company set up in 1970 by the Government of India to accelerate the pace of housing and urban development in the country.
8.40%
ICICI Home Finance Ltd
CARE FAAA, ICRA MAAA
ICICI Home Finance Company Limited is one of the leaders in the Indian mortgage finance and realty space.
9.05%
KTDFCKTDFC is a Non Banking Financial Company fully owned by the Government of Kerala.
9.00%
LIC Housing Finance Ltd.
FAAA / STABLE by CRISIL
One of India’s largest housing finance companies, having nation-wide network. Consistent record of dividend payments.
8.75%
Mahindra & Mahindra Financial Services Ltd
CRISIL FAAAMahindra and Mahindra Financial Services Limited (MMFSL) commenced its journey two decades back in the rural non-banking finance industry.
8.70%
PNB Housing Finance Ltd.
FAAA by CRISILPNB Housing Finance (PNBHF) is a subsidiary of Punjab National Bank and a partner of Destimoney Enterprises Pvt. Ltd. PNBHF was incorporated in 1988 and is based in New Delhi.
8.50%
Shriram City Union Finance Ltd.
IND +AA- CARE AA FD
As a deposit-accepting non-banking financial company (NBFC), Shriram City is today India’s premier financial services company specializing in retail finance.
9.25%
Shriram Unnati Deposits
MAA+ by ICRA, FAA+ by CRISIL
With a track record of about 30 years in this business, STFC is among the leading organized finance provider for the commercial vehicle industry
9.25%
Sundaram BNP Paribas Home Finance Ltd.
ICRA MAA+Sundaram BNP Paribas Home Finance combines its expertise in Home Finance with the Service Orientiation of its promoter Sundaram Finance.
9.50%
* highest rate including additional interest for Senior citizens, employees etc. wherever applicable
MONTHLY NEWSLETTERJanuary, 2016
10
Equity Funds Performance
Scheme NameLatest
NAV (`)
Absolute CAGR
1 Year 3 Year 5 YearSINCE
INCEPTION
Diversified
SBI Small & Midcap Fund-Reg(G) 34.6508 20.5635 39.9182 22.2757 21.7592
Reliance Small Cap Fund(G) 27.7312 15.1069 36.5289 22.0241 21.2517
DisclaimerThe information and views presented in this report are prepared by Karvy Stock Broking Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Stock Broking nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document.
This report is intended for a restricted audience and we are not soliciting any action based on it.
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