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8/6/2019 UniconMonthly-(ThePathfinder)May2011
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May 2011 A Monthly Wealth Journal
The Path To WealthWEALTH MANAGEMENT
ASSOCIAFOR LI
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Contents
Editor Vijay Agrawal
Assistant E ditor Yatish Pandey
Wealth Management
Unicon Financial Intermediaries. Pvt. Ltd.
H ead Office:
P-45/ 90, Connaught Place
New Delhi- 110001, India.
Tel: 011 -43529500
Fax: 011 -43581216
Corporate Office:
2nd F loor, Vilco Center,
8th Subhash Road, Ville
Parle (East), Mumbai 400057.
SMS UNICON TO 54646 - TOLL FREE: 1800 10333 88
Printed and Published on behalf ofVijay AgrawalUnicon Wealth Management285, Princess street, Jhawar House, Ground Floor,Marine lines, Mumbai- [email protected]
Design & PrintKozmic Style OffsetD 137, Okhla I ndu strial Area, Phase- 1,New Delhi - 110020Ph .: +91 11 46251190, Email: [email protected]
DISCLAIMER :This document has b een issued by Unicon Financial Intermediaries. Pvt. Ltd. (UNICON ) for the information of its cust omers only. UNICON is governed by the Securities and Exchange Board of India. This documen t for public distribution and has been furnished to you solely for your information and must not be reproduced or redistributed to any other person. Persons into whose possession this document may come are required to observe these restrictionsinformation and opinions contained herein h ave been compiled or arrived at based upon information obtained in good faith from public sources believed to be reliable. Such information has not been independently verified and no guararepresentation or warranty, express or implied is made a s to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. This documen t has been produced independently of any compacompanies mentioned herein, and forward looking statements; opinions and expectations contained herein are su bject to change without notice. This document is for information purposes only and is provided on an as is basis. Descriptions ocompany or companies or their securities mentioned herein a re not intended to be complete and t his document is n ot, and should not be construed as an offer, or solicitation of an offer, to buy or sell or subscribe to any securities or other finainstruments. We are not soliciting any action based on this document. UN ICON, its associate and group companies it s directors or employees do not take any responsibility, financial or otherwise, of the losses or the da mages sustained d ue tinvestments made or any action taken on basis of this d ocument, including but not restricted to, fluctuation in th e prices of the sha res and bonds, reduction in the dividend or income, etc. This docum ent is not directed to or intended for disdownloading, printing, reproducing or for distribution to or use by any person or entity who is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, reproduction, availability owould be contrary to law or regulation or would subject UNICON or its associates or group companies to any registration or licensing requirement within such jurisdiction. If this document is inadvertently sent or has reached any individual incountry, the same may be ignored and brought to the attention of the sender. This document m ay not be reproduced, distributed or published for any purpose without prior written approval of UN ICON. T his document is for the general informand does not take into account t he particular investment objectives, financial situation or needs of any individual customer, and it does not constitute a personalized recommendation of any particular security or investment strateg y. Before actinany advice or recommendation in this document, a customer should consider whether it is suitable given the customers particular circumstances an d, if n ecessary, seek professional advice. Certain transactions, including those involving futoptions, and high yield securities, give rise to substantial risk and a re not suitable for all investors. UNICON , its associates or group companies do not represent or endorse the accuracy or reliability of any of the information or content odocument and reliance upon it is at your own risk.
UNICON , its associates or group companies, expressly disclaims any and all warranties, express or implied, including without limitation warranties of merchantability and fitness for a particular purpose with respect to the document aninformation in it. UNICON , its associates or group companies, shall not be liable for any direct, indirect, incidental, punitive or consequential damages of a ny kind with respect to the document . No part of this publication may be reproduced, sin a retrieval system, or transmitted, on a ny form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of Unicon Financial Interm ediaries. Pvt. Ltd.
The last couple of months have been remarkable for the Indian society a
witnessed a widespread change with the rise of the civil society's fight agai
corruption. The government, giving in to the pressure, has already agreed
jointly drafting the Lokpal bill, which when passed, can help in check
corruption. Investigations are also going on into other scams like the
allocation process and irregularities in CWG projects and many high prof
people from government and industry are being questioned. The
widespread changes will have a long lasting impact on the government and
industry and these changes will bring in much more accountability a
transparency in their functioning.
The unearthing of various scams have put the ruling UPA government is in
uncomfortable position. The government is also cautious ahead of the stelections in West Bengal, Tamil Nadu, Assam and Kerala. These electi
results can have a long term impact on the political environment in t
country. The pace of reforms have slowed down in the last few months
many parliament sessions got lost due to issues related to scams.
The inflation, which stood at 8.98% in March 2011 continues to be high a
pose serious challenge to the Indian economy. RBI has already increased t
key policy rates eight times since March 2010. The high interest r
environment would negatively impact the growth. The industrial growth h
already started slowing down as it stood at 3.6% in Feb as compared to 15.1
for the same period a year back and the IMF has projected that India's grow
rate will moderate to 8.2% in 2011. On the positive side, the exports, whi
grew by 43.9% in March has seen a strong revival in the past few mon
largely due to a sustained global recovery. The rainfall has been projected to
normal this monsoon season and if that turns out to be true, we could hav
strong agricultural growth this year.
The financial numbers for India Inc for the Q4 FY11 have started coming o
While the growth in revenues in the previous quarters of the FY11 have be
good, the growth and profitability in Q4 would moderate due to increasi
commodity prices and high interest rate environment. Despite the tou
macroeconomic environment, the domestic consumption based sectors ha
done well and would continue lead the revenue growth.
Regards,
Gajendra Nagpal
Founder & CEO
Unicon Financial Intermediaries Pvt. Ltd.
The Road Ahead
Alternative Investment Ideas 16-17
Commodity round up 15
Real Estate Opportunities 13-14
Currency Market Outlook 12
Bond Market Outlook 12
Insurance 11
Mutual Fund round up 10
Derivative Market Outlook 9
Technical Market Outlook 8
Stock pick of the month 7
Sector of the month 6
Model Portfolios 4
Market Round Up -Equity 3
Wealth Overview 2
The Road Ahead 1
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Global Diversification: Need of the hour
What a spectacular beginning of month? On the very first day we got the news of end ofOsama Bin Laden, the deadly terrorist who hbrought the might USA on its knees. He was killed by the US Army after a long chase of 11 years. You would be thinking why I am puttingmuch emphasis on the Osama event instead of touching upon wealth management aspects. The precise reason behind touching upon tincident is that this would not change the geopolitical dynamics of the world but the financial markets as well. More so the financial markwon't be affected unidirectional but various asset classes would tend to behave differently over a period of time.
This is evident from the way in which the various assets behaved in the international markets. Dollar index rose from 72 to 74*. US stock indfutures extended gains on the back of media reports that Osama was dead. But at the same time, US crude has slid more than 12% till date pothis event to $100 a barrel*. In fact the precious metals like gold & silver have also taken huge beating after this incidence took place. Gold hfallen from $1560 to $1480* & Silver has fallen from $ 50 to $ 34* in the last 5 days period.
The key takeaway from these price movements for us is that all financial assets don't move in a single direction but reacts differently to a sinevent. Further, these all assets are traded in the international markets & influence the portfolios of investors cutting across the borders. Thathe precise reason that we have to have a well defined asset allocation strategy in place. Not only we have to diversify our investment across tasset classes but we should, infact, look for countrywide diversification.
Diversification not only reduces risk of losses but also reduces portfolio volatility as well. An age old saying also goes very well here which saDon' t put all your eggs in the same basket. In fact, Global diversification reduces both security specific and market risks to even lowlevels. But a word of caution is appropriate here that Diversification will not guarantee a profit or assure against losses during bear markehowever it provides considerable protection of gains earned by the investors.
An Illustration given below would be helpful in getting some insights in due to international diversification:
On having a closer look at the above table, you may see clearly that while standalone equity indices have given negative returns to ttune of -25% but Managed futures segment has given positive returns during the course of 5 bear market series defined above.
The reasons are not very difficult to understand. The managed futures products simply diversify their assets across various asset classes lequity indices, commodities, precious metals, energy etc. & manage the funds purely on quant basis without any human intervention. Best pof the above study is that they have demonstrated this over a long period of time and during 5 bear market series.
To provide the benefit of global diversification, we have been suggesting a fantastic product Superfunds, the best performing fund in managed futures category to our customers since last 5 months & the returns have been phenomenal. It has managed to give returns 15%++ against -10% returns given by the NIFT Y/ SEN SEX. I would suggest you to go for global diversification to improvise yoportfolio performance in the ever fluctuating financial markets.
Consult your wealth manager today to understand the benefits of global diversification & makemanaged futures an integral part of your asallocation strategy.
Happy Investing !!!
Rajev B Sharma
Country Head Wealth Management & Investment Banking
Unicon Financial Intermediaries Pvt. Ltd
2
Wealth Overview
Equity Drawdown UK EquitiesGlobal ex UK
EquitiesGlobal Bonds Global Properties Commodities Hedge Funds Managed Futures
Aug 2000 to Jan 2003 -43% -42% 26% 10% 7% 1% 31%
Sep 1987 to Nov 1987 -34% -18% 6% -24% 2% -9% 12%
Dec 1989 to Sep 1990 -17% -22% 6% -35% 58% 20% 30%
May 1998 to Sep 1998 -16% -9% 7% -13% -7% -11% 9%
May 1992 to Aug 1992 -15% 2% 5% -7% 0% 3% 20%
Average -25% -18% 10% -14% 12% 1% 21%
UK Equity Bear Market (Jan 1987 to March 2007)
Source: Frontier Capital Management LLP
*Prices A s On 6th M ay.2
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Market Round Up -Equity
3
Sectoral Indices Performance?
?
Among the BSE sectoral indices, FMCG (+4.42%), H
(+3.47%), Auto (+2.90%), CD (+2.46%) ended positive.
Realty (-6.71%), IT (-6.17%), Teck (-3.83%) ended negati
Among other indices, BSE MidCap (+3.21%), SmallC
(+6.60%) ended positive, while BSE100 (-1.03%) ended negati
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FIIs were net buyers of ` 4.4 cr (In Mar net buyers of 8395.9 cDIIs were net sellers of` 558 cr (In Mar net buyers of ` 57.71in cash market.IPOs open in Apr 2011: Muthoot Finance Ltd., ParamoPrintpackaging Ltd., Future Ventures India Ltd., InnoventIndustries Ltd., Servalakshmi Paper Ltd., Vaswani Industries Ltd.
IPO s listed in Apr 2011: Shilpi Cable Technologies Ltd.India's Reserve Bank of India raised its short term lending (reprate by 50 basis points to 7.25%, while lowering the economgrowth projection to 8% for the current fiscal. The RBI has aincreased the saving bank rate by 50 basis points to 4% to ghigher returns to depositors in the wake of high inflation. Treverse repo, the rate at which bank park funds with RBI, hbeen raised by 50 basis points to 6.25%.Infosys announced a 13.6% growth in net profit to ` 1,818 crfor the quarter to March 2011 as compared to net profit ` 1,600 crore in the previous corresponding quarter.Reliance's Q4 net profit was up 14% at ` 5376 crore versus ` 47crore, year-on-year (YoY). While its Q4 net sales were up 26.23` 72,674 crore versus ` 57,570 crore, YoY.
TCS reported its fourth quarter net profit at ` 2402 crore, a growof 3% from its previous quarter net profit of ` 2,330.2 crore (GAAP). For the financial year 2010-11, TCS reported net profit ` 9,068 crore versus expectations of` 8,621 crore.ACC reported 41% growth in its first quarter of CY11 net proof ` 350 crore as against ` 248 crore in previous quartConsolidated net profit declined nearly 10.9% as compared` 392.9 crore in first quarter of CY10.NTPC results profit after tax (PAT) for FY11 was up 1.12%` 8826 crore compared to ` 8,728 crore reported in FY10. For tfourth quarter ended March 2011, the company's net sales shup 17.7% to ` 14,488 crore and PAT rose 24.2% to ` 2,505 cras compared to the fourth quarter of FY10. For full year of fis2011, NTPC reported its gross revenue at ` 56,331 crore.
Market News
Highlights?
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Major global indices firm with positive bias.In the US markets, Dow (+3.98%), Nasdaq (+3.32%),S&P500 (+2.85%) ended positive.
In the Asian Markets, Nikkei (+0.97%) ended positive.In the European markets CAC (+2.95%), FTSE (+2.73%)ended firm on strong global cues.On the domestic front, Nifty lost 84.25 points (-1.44%) andSensex lost 309.26 points (-1.59%) in the month of April.NSE Cash Turnover: ` 228,348 cr, down 10.70% as comparedto previous month ( 255,711 cr).Total Derivative Turnover: 2351300 cr, down 18.30% ascompared to previous month ( 2,877,900 cr).Turnover in index futures decreased 29.35% over the previousmonth.Turnover in index options decreased 19.66% over the previousmonth
```
Index Apr-11 Change Change % High Low
Sensex 19,445.22 19,135.96 -309.26 -1.59% 19,811.14 18,976.19
Nifty 5833.75 5749.5 -84.25 -1.44% 5,944.45 5,693.25
Mar-11
Domestic Markets
Sectoral Indices
Nifty Index PCR
Turnover Mar
(` crs.)Index Futures 399595 282302 279572 -29.35%
Stock Futures 363404 353159 409844 -2.82%
Index Options 2048597 1645880 905472 -19.66%
Stock Options 66302 69957 76731 5.51%
Total 2877900 2351300 1671620 -18.30%
-11 Apr-11 Apr-11 MoM
Change%
Global Markets
Index Mar-11 Apr-11 Change Change % High Low
Dow Jones 12,319.73 12,810.54 490.81 3.98% 12,885.92 12,093.89
Nasdaq 2,781.07 2,873.54 92.47 3.32% 2,876.83 2,706.50
S&P 500 1,325.83 1,363.61 37.78 2.85% 1,364.56 1,294.70
Nikkei 9,755.10 9,849.74 94.64 0.97% 9,849.74 9,405.19
CAC 3,989.18 4,106.92 117.74 2.95% 4,110.41 3,862.40
FTSE 5,908.80 6,069.90 161.1 2.73% 6,091.80 5,858.30
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1-Apr-11
4-Apr-11
5-Apr-11
6-Apr-11
7-Apr-11
8-Apr-11
11-Apr-11
13-Apr-11
15-Apr-11
18-Apr-11
19-Apr-11
20-Apr-11
21-Apr-11
25-Apr-11
26-Apr-11
27-Apr-11
28-Apr-11
29-Apr-11
PCR
-8 -6 -4 -2 0 2 4
TECk
REALTY
PSU
POWER
OIL&GAS
METAL
IT
HC
FMCG
CG
CD
BANKEX
AUTO
Change (%)
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Model PortfoliosAfter the sudden upsurge in the markets in the last week of March,
the rally entered a consolidation phase with the markets getting
stuck in a narrow band. However, post the results of the IT majors,
the markets have entered into a slow decline. With inflation
continuing to be a constant worry, oil prices on the boil and the
Reserve Bank of India making it clear that they will prioritize
controlling inflation over growth, the markets don't have much tocheer about in the current scenario. The RBI could also increase
rates by a another 25-50 bps in the coming months. All of these
issues however have not affected our portfolio performance. In
their bid to catch up with the markets, our model portfolios have
outperformed their respective benchmark indices.
Performance Highlights?
?
?
The portfolio has underperformed the Nifty by 8.4% since
inception and outperformed by 1.2% in the month of April 2011.
BGR Energy, UTV Software, and Deepak Fertilizers were the
top gaining stocks during the month all gaining more than 6%.
MSP Steel, Union Bank, Crompton Greaves and Reliance
Industries were the laggards during the month all losing more
than 5%.
Performance Highlights
?The Optimiser Portfolio has outperformed the Nifty index
nearly 23% since its inception.
Strategy
Stock movement
?
?
?
?
We have not made any changes in the portfolio during t
month, as we feel the stocks represent best picks in the th
respective sectors and hold further potential for upside fro
current levels.
We believe in the absence of any positive triggers, the marmay remain in a range and may consolidate at the current level
Stock Entered
No Changes during the month
Stock E xited
No Changes during the month
4
% Returns Growth Nifty
Since inception 48.0% 25.2%
Performance + 22.8%
For month of Apr. 1.3% - 1.4%
Performance + 2.7%
Top 5 Sectors Wtg
IT Software 19.9Pharmaceuticals 13.6Banking & Finance 10.8Chemicals 10.5Oil and Gas 8.2
Moderate Capital appreciation with substantial capital safeSkewed towards Growth, value and large caps
Optimizer Portfolio
Objective
1 Hero Honda 4.0% 1544.30 1709.65 10.7% 7.8%
2 Bank of Baroda 7.2% 425.65 912.15 114.3% -5.3%
3 ICICI Bank 3.0% 1205.00 1114.25 -7.5% 0.1%
4 Syndicate Bank 0.6% 156.00 116.90 -25.1% -4.1%5 Larsen & Toubro 3.7% 1516.00 1597.90 5.4% -3.3%
6 Crompton Greaves 3.5% 261.10 252.35 -3.4% -7.5%
7 Castrol India 10.5% 240.93 468.00 94.3% 5.9%
8 Oil India 8.2% 1140.55 1385.45 21.5% 5.5%
9 Dabur India 8.1% 70.65 101.20 43.3% 5.4%
10 TCS 11.8% 532.95 1163.60 118.3% -1.6%
11 Infosys Tech 3.1% 2615.10 2905.95 11.1% -10.2%
12 HCL Tech 4.9% 358.85 520.40 45.0% 9.2%
13 Glaxosmith Pharma 7.6% 1454.40 2256.15 55.1% 7.7%
14 Aurobindo Pharma 6.0% 191.76 194.50 1.4% -0.7%
15 Bharti Airtel 3.2% 405.35 378.80 -6.5% 6.0%
Cash 14.6%
Total 100.0% 48.0% 1.3%
Sr. Stock Name % Wtg Rec.PriceNo April-2011 (Since Inception) April-20
Price 29th % re turn %retur
Growth PortfolioObjective
High Capital appreciation with moderate capital safety.
Fertiliser & Chemicals 15.5%Power 12.4%Oil and Gas 10.9%Auto & Auto Ancillary 9.8%Banking & Finance 9.4%
Since inception 16.8% 25.2%
Performance - 8.4%
For month of Apr. - 0.2% - 1.4%
Performance + 1.2%
1 Union Bank 3.6% 326.75 319.55 -2.2% -8.0%2 Yes Bank 5.8% 270.50 305.10 12.8% -1.5%3 Crompton Greaves 4.9% 177.35 252.35 42.3% -7.5%4 Shree Cement 6.9% 1725.59 2006.80 16.3% -3.4%5 IVRCL Infra 4.7% 171.55 79.15 -53.9% -3.0%6 HCC 2.9% 61.50 35.35 -42.5% -2.8%7 UTV software 5.9% 465.40 647.35 39.1% 12.8%8 Aurobindo Pharma 5.0% 192.10 194.50 1.2% -0.7%9 Apollo Tyre 4.0% 58.80 69.35 17.9% -0.3%10 Tata Motor 5.7% 1113.00 1229.10 10.4% -1.5%11 MSP Steel 3.4% 72.00 56.55 -21.5% -12.6%12 GAIL 5.7% 356.25 475.70 33.5% 2.3%13 Reliance Ind 5.2% 973.00 981.95 0.9% -6.3%14 Navbharat Venture 6.3% 397.80 245.35 -38.3% -2.8%15 BGR Energy 6.1% 612.00 549.95 -10.1% 15.3%
16 Deepak Fertliser 7.2% 162.00 169.70 4.8% 6.9%17 United Phosphorus 4.1% 135.80 151.90 11.9% 1.0%18 Jain Irrigation 4.2% 188.40 182.85 -2.9% 2.4%
Cash 8.3%Total 100.0% 16.8% -0.2%
Sr. Stock Name % Wtg Rec.Price Price 29th % return
N o April-2011(Since Inception)
April-2011
%return
Top 5 Sectors Wtg% Returns Growth Nifty
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Model Portfolios
5
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For the month of April, the portfolio has marginally
outperformed the Nifty by 2.7%.
The portfolio gained on the back of outperformance in the
Pharmaceuticals, FMCG and Automobiles.
Hero Honda, Castrol India, Oil India, Dabur India, HCL Tech,
Glaxosmith Pharma and Bharti Airtel each registered gains of
more than 5% for the month of April.
Infosys Technologies and Crompton Greaves were the top
laggards in the portfolio.
The stocks in our portfolio represent the best possible picks intheir respective sectors and we continue to believe that there isfurther potential upside from its current levels.Inflation remains a concern for the Indian markets. With theRBI increasing the interest rates to reign in inflation, India'sGDP growth is expected to slowdown. Higher cost ofborrowing will hurt companies profitability and we will have to
wait and watch as to how the companies manage their margins.We will continue to look out for value picks for the portfolio.
Stocks EnteredNo changes during the month
Stocks ExitedBank of Baroda (Reduced 50%)
Strategy
Stock movement
?
?
Sr. Stock N am e % Wtg Rec.P riceNo April-2011 (Since Inception) April-2011
Price 29th % return %return
Concentrating on stable large cap, blue-chip companies aimed atclients with moderate to low risk appetite.
Defensive Portfolio
Objective
1 Punjab National Bank 2.6% 678.45 1185.85 74.8% -2.8%
2 Bank of Baroda 7.3% 425.65 912.15 114.3% -5.3%
3 ICICI Bank 0.9% 950.00 1114.25 17.3% 0.1%
4 BHEL 8.5% 2082.96 2000.75 -3.9% -2.9%
5 Crompton Greaves 2.0% 261.10 252.35 -3.4% -7.5%
6 Dabur India 2.2% 69.20 101.20 46.2% 5.4%
7 Godrej Cons. Product 7.8% 235.15 376.30 60.0% 3.0%
8 Gillette India 2.7% 1414.25 1834.05 29.7% 3.8%
9 Britannia Ind 1.5% 440.00 369.55 -16.0% -0.3%
10 Castrol India 10.8% 240.93 468.00 94.3% 5.9%
11 Larsen & Toubro 6.0% 1510.70 1597.90 5.8% -3.3%
12 Dr. Reddy's Lab 3.2% 765.45 1662.35 117.2% 1.5%
13 Glaxosmith Pharma 7.5% 1454.40 2256.15 55.1% 7.7%
14 NTPC 6.1% 205.55 181.95 -11.5% -5.7%
15 Oil India 8.4% 1140.55 1385.45 21.5% 5.5%
Cash 22.5%
Total 100.0% 44.1% 1.0%
% Returns Growth Nifty
Since inception 44.1%% 25.2%
Performance + 18.9%
For month of Apr 1.0% - 1.4%
Performance + 2.4%
Top 5 Sectors Wtg
FMCG 14.2%Banking & Finance 10.8%Chemicals 10.8%Pharmaceuticals 10.7%Capital Goods 10.5%
Performance Highlights
Strategy
Stock movement
?
?
?
?
The portfolio has outperformed the Nifty Index by 18.9
since inception, 2.4% for the month.
The outperformance was led by Glaxo, Oil India, Dabur a
Castrol. This outperformance was partly off set by decline
NTPC, Crompton Greaves followed by Bank of Baroda
RBI has further hiked Repo rate by 50 bps and has al
introduced many regulatory changes affecting operatprocedures of Banks. Higher inflation, higher interest r
regime has carried nervousness in market and led to sha
correction in index stocks. Our strategy to keep high cash
hand since beginning of year has paid off well during bad tim
and has infact enabled us to increase our exposure to fe
blue-chip stocks during market corrections.
Depending on opportunity, our focus from hereon now wou
be to reduce the cash level and liquidate positions from stoc
that have remain laggard since start of the fund and last year.
Stocks Entered
No changes during the month
Stocks E xited
Petronet LNG (Sold All)
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Sector of the month- Mining Sector
6
Mining Sector
India's mining industry comprises a large number of small operational mines, primarily involved in the mining of iron ore, coal and baux
India is rich in mineral resources and has large reserves of primary metal ores such as iron ore, bauxite, chromium, manganese and titaniu
India has untapped metal reserves worth 82 billion tonnes and nearly 13% of the world's recoverable reserves of coal, estimated 267.2 billi
tonnes. Bauxite and iron ore deposits in India rank among the best in the world in terms of their quality and mineability. India's iron ore acoal production represent about 10% and 13% of total world production respectively.
STRENGTHS
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Wide Range of government concessions to mining players.
- Mining in backward districts eligible for tax concessions
- Environment protection equipments eligible for 100%
depreciation.
- Export profits from specified minerals & ores are eligible
for certain concessions under the Income tax Act.
- Capital goods imported for mining under EPCG schemequalify for concessional customs duty subject to certain
export obligation.
Strategic location: Proximity to the developed European
markets and fast-developing Asian markets for exports.
Low labor and conversion costs
Large quantity of high quality reserves
OPPORTUNITIES
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?
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Technology: Open cast mining accounts for 81% of the
total domestic production of coal in India. Considerable
opportunities exist for future discoveries of sub-surface
deposits with the application of modern techniques.
Logistics: A huge scope exists in improvements in the
logistical infrastructure of the country such as ports and
railways which are overburdened & costly, acting as
bottlenecks
Strong long-term demand from the booming infrastructur
automobile and power industry is expected to boost
demand for iron ore and coal going forward.
WEAKNESSES
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The mining industry is riddled with infrastructure issues and
outdated technology resulting in very low productivity. For
ex: Output per miner per annum in India varies from 150 to2,650 tonnes compared to an average of around 12,000
tonnes in the U.S.
Labor force is highly un-skilled and inexperienced due to
lack of R&D programs and training & development.
Mining operations are not environment friendly with very
little thrust in environment concerns.
High rate of illegal mining which results in litigations and
issues such as the Karnataka Ban.
THREATS
?
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High levels of corruption within the sector such as dubiou
and duplicate records, under reporting of production, non
payment of full wages to labourers, violations of minesafety laws, etc
Environmental regulations are becoming increasingly
complex restricting mining activities
Large integrated international metal manufacturers
including POSCO, Mittal Steel and Alcan have announced
plans for acquiring mines in the country
Mining companies and equipment suppliers are under the
constant threat of being taken over by foreign companies.
Outlook
The prices of iron ore and coal have increased and we expect them to remain at higher levels which augurs positive for the mining compani
Demand for these minerals also remains robust on the back of strong growth of the infrastructure & construction, automobiles and pow
sector. Improvements in technology will result in environment friendly mining with high productivity which will provide a boost to t
industry. We feel the mining companies would continue to show strong growth over the next few years and the sector outlook looks positi
Our top picks in the sector would be Coal India, Gujarat NRE coke and MOIL.
8/6/2019 UniconMonthly-(ThePathfinder)May2011
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Stock of the month
Investment Rationale
Regulated business provides steady cash flows
Growth plans in the power generation space to propel CESC into the big League
Retail business losses to reduce in coming years
Real Estate business to tap unutilized land bank of the company
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CESC currently operates four power generation plants in Kolkata that cater to the company's Kolkata distribution circle which serves ~2.5 mcustomers. The T&D business comprises of 567 sq.km area with 16,500 ckt km of T&D network. The regulated equity base at the end FY10 stood at ` 21,500 mn and is expected to grow to ` 31,838 mn by FY12. This generates ` 4 bn+ net profit to the company on a guarantebasis every year, thereby providing sufficient cash flows to the company to pursue its growth plans and support its retail business.
The company has various projects under execution & planning stage. The company aims to reach a generating capacity of 8285 MW by 20from its current 1225 MW of generation. This will take the company from being a regional player to a national player. (Refer Pg 8 for detaigrowth plans). Once Haldia & Chandrapur comes online post FY14, they will give a big boost to the company's topline (33% jump ovFY13E) & subsequently improve its return profile.
The retail business of CESC (Spencer's) has been running with losses for last 5 years. These losses are being funded by the cash generated froits utility business. However, over the last 18-20 months the management has been able to reduce the losses, achieve store level break even aimprove its gross margins to ~ 19% (up from 18% in FY10).We expect retail business to breakeven at EBITDA level by FY14.
CESC has a large unexploited land bank which it plans to use to generate additional source of income. The company is developing 3 acre
land in central Kolkata, where it is setting up a shopping mall with 4 lac sq feet of retail area with 900+ car parking space. Work has started athe mall is expected to start operations in 2012-13. The project is expected to cost ~ INR 2 bn financed with60%debt and40%equity.
CESC Ltd
7
CESC is a fully integrated power utility with its operation spanning the entire value chain: right from mining coal, generating power
distribution of power. It is the flagship company of RPG Enterprises. The company also has interests in retail & real estate business wheroperates through fully owned subsidiaries (Spencer's & CESC Properties). The company with its regulated power generation & distributi
business and retail business is an interesting mid-cap company, with high powered growth plans and expected turnaround in its retail busines
CMP: ` 286* Target: ` 4
Valuation
We initiate coverage on the stock with a Buy rating and a target price of` 411 (SOTP valuation), considering the high potential offered by power sector. The turnaround in retail business will be the key catalyst for the company's growth fortunes. At CMP the stock trades at 0.6xFY12E book value.
*Prices A s On 6th M ay.2011
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Technical Markets Outlook
Economic Data
Nifty Monthly Technical Outlook
Nifty ended the month down 84 pts and closed negative (Bearpattern) at 5749.50 levels, after making a high of 5945. TechnicaNifty on monthly chart has formed bearish candle stick formati(small real body), which indicates selling pressure below at 2DMAat 5750 levels. On monthly charts Nifty finds resistanaround previous top of 5810-5900 and supports are placed5400-5300 levels. Stochastics and the RSI are overbought bremain neutral to bearish signaling that sideways to lower pricare possible near-term. Nifty closed bearish candle pattern wsmall real body, so Nifty would continue till 5400-5300 levelsNifty breaks above 5700, it would take next area of resistan5820-5900 levels. Nifty has been trading in a rising bullish chanand falling towards supports at 5450-5400 levels. In wide ranNifty has good supports at 5400 and resistance at 5820. For shterm trading long potions, stop loss of 5525 is advisable on closbasis. If Nifty crosses higher levels above 5910, it can target 61and 6250.Source : Iris
Technical Market Outlook
8
USA, May 2011
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May 07 - Consumer Credit, MAR, Survey $5.000B, Prior $7.617B
May 10 - Import Price Index (MoM), APR, Survey 1.80%, Prior 2.70%
May 10 - Wholesale Inventories, MAR, Survey 1.00%, Prior 1.00%
May 11 - Trade Balance, MAR, -$45.9B, Prior -$45.8B
May 11 - Monthly Budget Statement, APR, Prior -$188.2B
May 12 - Producer Price Index (MoM), APR, Survey 0.60%, Prior 0.70%
May 12 - Advance Retail Sales, APR, 0.50%, Prior 0.40%
May 12 - Business Inventories, MAR, Survey 0.90%, Prior 0.50%
May 13 - Consumer Price Index (MoM), APR, Survey 0.30%, Prior 0.50%
May 17 - Building Permits MOM%,APR, Prior 11.20%
May 17 - Housing Starts MOM%, APR, Prior 7.20%
May 17 - Capacity Utilization, APR, Prior 77.40%
May 17 - Industrial Production, APR, Prior 0.80%
May 19 - Existing Home Sales MoM, APR, Prior 3.70%May 19 - Leading Indicators, APR, Prior 0.40%
May 24 - New Home Sales MoM, APR, Prior 11.10%
May 25 - Durable Goods Orders, APR, Prior 2.50%
May 25 - House Price Purchase Index QoQ, 1Q, Prior -0.80%
May 25 - House Price Index MoM, MAR, Prior -1.60%
May 26 - GDP QoQ (Annualized), 1Q S, Prior 1.80%
May 26 - GDP Price Index, 1Q S, Prior 1.90%
May 26 - Core PCE QoQ, 1Q S, Prior 1.50%
May 26 - Personal Consumption, 1Q S, Prior 2.70%
May 27 - Personal Spending, APR, Prior 0.60%
May 27 - PCE Core (YoY), APR, Prior 0.90%May 27 - Personal Income, APR, 0.50%
May 27 - Pending Home Sales MoM, APR, Prior 5.10%
May 31 - Consumer Confidence, MAY, Prior 65.4
India, May 2011
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May 05 - Food Articles WPI YoY, Apr-23, Prior 8.76%
May 05 -Fuel Power Light WPI YoY, Apr-23, Prior 13.53%
May 05 - Primary Articles WPI YoY, Apr-23, Prior 12.08%
May 12 - Industrial Production YoY, MAR, Prior 3.60%
May 12 - Food Articles WPI YoY, Apr-30,
May 12 - Fuel Power Light WPI YoY, Apr-30
May 12 - Primary Articles WPI YoY, Apr-30
May 16 - Monthly Wholesale Prices YoY%, APR, Prior 8.98%
May 19 - Food Articles WPI YoY, May-07
May 19 - Fuel Power Light WPI YoY, May-07
May 19 - Primary Articles WPI YoY, May-07
May 26 - Food Articles WPI YoY, May-14
May 26 - Fuel Power Light WPI YoY, May-14
May 26 - Primary Articles WPI YoY, May-14
May 31 - Qtrly GDP YoY%, 1Q, Prior 8.20%
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OutlookNifty remained rangebound in the month. From expiry to expir
lost 48.3 points to close at 5785.45 in cash market. The activitythe market was muted ahead of corporate results and economdata. In the cash market, Nifty touched high of 5944.45 and low5693.25. Across all expiries, Put writing is seen at 5600-5700 strprices and Call writing is seen at 5900-6000 strike pricsuggesting 5600-6000 to be the broad zone in Nifty for short terFor the month of May, 5300-5400 looks good support, wh5700-5800 will act as resistance. Realty, Auto sectors look negatifor the month. Pharma, Oil&Gas stocks look good faccumulation. Midcap and Smallcap stocks need to be avoidedshort term. Selling pressure is likely in index stocks after the recerate hike by RBI.
Derivative Market Outlook
9
Index Future Analysis
Change in OI
Index Option Analysis
Sector Wise Roll Over And Volume Change
Change inPrice - Future
Top Five Gainers- Price
Nifty 5833.75 5785.45 -0.83%
VIX 22.18% 20.92% -5.68%
PCR 1.04 0.79 -24.04%
28th-Apr Change31-Mar
Market Statistics
CE PE
Lowest Roll Over
PATNI 49.60% IT
ADANIENT 53.20% Misc
SUNTV 53.90% Media
ONMOBILE 54.50% Telecom
BOSCHLTD 56.70% Auto
Roll Over Sector
H ighest Roll Over
GTL 98.00% Telecom
INDIACEM 95.50% CementRUCHISOYA 95.40% Misc
GODREJIND 95.10% Misc
GTLINFRA 95.00% Telecom
Roll Over SectorTop Five Losers- Price
Change inPrice - Future
DLF -14.76%IRB -13.44%
ORBITCORP -9.72%
PFC -9.68%
INFOSYSTCH -9.58%
DCB 35.52%
JINDALSWHL 26.52%
SKUMARSYNF 25.37%
SUZLON 24.89%
ALOKTEXT 20.99%
Roll Over Change in GDQ
Change in OI Change in Volume
CE PE
ChangeinOIandVo
lume
Index
OpenInterest
Strike
OpenInterest
Strike
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
Auto
Bank
CapitalGoods
Cement
Chem&Fert
Hotel
Infra IT
Logistics
Media
Metal&Mining
Misc
Oil&Gas
Pharma
Power
Realty
Sugar
Telecom
Textiles -4000000
-3500000
-3000000
-2500000
-2000000
-1500000
-1000000
-500000
500000
0
CNXIT
BANKNIFTY
MIN
INIFTY
NIFTYM
CAP50
NIFTY
0
2000000
4000000
6000000
8000000
10000000
12000000
14000000
16000000
5000
5100
5200
5300
5400
5500
5600
5700
5800
5900
6000
6100
6200
6300
(10,000,000)
(8,000,000)
(6,000,000)
(4,000,000)
(2,000,000)
-
2,000,000
4,000,000
6,000,000
8,000,000
5000
5100
5200
5300
5400
5500
5600
5700
5800
5900
6000
6100
6200
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Source: Accord Fintech for All MF Data
Pick of the month
IDFC Premier Equity Fund (A)
Birla Sunlife Midcap Fund
IDFC Premier Equity Fund (A) is an open end equity diversifischeme, it is to generate long-term capital growth from an activmanaged portfolio of predominantly equity and equity relatinstruments. The last 1 year return stands at 13.80% (Absoluand 23.02% (CAGR).Since inception. Major investments of nea5.20% are in Banking/ finance and 5% in Paints.
Birla Sunlife Midcap Fund is open end equity Midcap Schemelong term growth of capital at controlled level of risk by investprimarily in 'Mid-Cap' Stocks. The level of risk is somewhat high
than a fund focused on large and liquid stocks. Concomitantly, aim is to generate higher returns than a fund focused on large aliquid stocks. The last 1 year return stands at (1.63) % (Absoluand 32.02% (CAGR).Since inception. Major investments of nea9.69% are in Pharmaceuticals & Drugs and 5.86% in FinancNBFC
Mutual Fund round up
10
NAV01-May-2011
Return(%)
Scheme Nam e
IDFC Strategic Sector (50-50) Eq-A(G) 14.71 -2.22
JM Basic(G) 13.37 -2.05
JM Equity(G) 35.87 -1.77
JM Multi Strategy(G) 13.76 -1.73
Fidelity India Growth(G) 12.4 -1.52
Top Laggards : Equity Diversified Category
NAV01-May-2011
Return(%)
Scheme Nam e
SBI Magnum Global'94(D) 31.49 6.80
SBI Magnum Emerging Businesses(G) 41.27 5.12
HSBC Small Cap(G) 11.42 4.46DSPBR Micro-Cap(G) 15.53 4.35
HSBC Midcap Equity(G) 20.73 4.32
Top Movers : E quity Diversified Category
Top Performer across category
NAV01-May-2011
Return(%)
Scheme N ame
SBI Magnum Global'94(D) 31.49 6.80
Reliance Gold Savings Fund(G) 10.82 6.42
Kotak GOLD ETF 2145.20 6.16
SBI Gold ETF 2186.24 6.16
Kotak Gold Fund(G) 10.76 6.09
FII Nifty
Equity Debt5600
5650
5700
5750
5800
5850
5900
5950
2000.0000
1000.0000
0.0000
1000.0000
2000.0000
3000.0000
4000.0000
5000.0000
1-Apr
3-Apr
5-Apr
7-Apr
9-Apr
11-Apr
13-Apr
15-Apr
17-Apr
19-Apr
21-Apr
23-Apr
25-Apr
27-Apr
29-Apr
NIFTYNifty Vs FII Equity inflows
-50
0
50
100
150
200
250
1-Apr
2-Apr
3-Apr
4-Apr
5-Apr
6-Apr
7-Apr
8-Apr
9-Apr
10-A
pr
11-A
pr
12-A
pr
13-A
pr
14-A
pr
15-A
pr
16-A
pr
17-A
pr
18-A
pr
19-A
pr
20-A
pr
21-A
pr
22-A
pr
23-A
pr
24-A
pr
25-A
pr
26-A
pr
27-A
pr
28-A
pr
Billions
MF Activity
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Insurance
1
Birla Sun Life Vision Plan
Policy Terms?Upto Age - 100 yrs
Guaranteed Maturity Benefit
Monthly Additions
Enhancements to Monthly Additions
Fund Access Loan
PremiumPremium Payment
In the event that the life insured survives to the end of the polterm, you will receive the Sum Assured as the Guaranteed MaturBenefit.
At the beginning of each policy year, your policy will be assignthe latest Monthly Addition Rate declared by us, provided all dpremiums have been paid in full. Once this Monthly Addition Ris assigned to your policy, it will be guaranteed for the next months, and used to calculate your Monthly Additions during
upcoming policy year. We will be declaring new Monthly AdditiRates on April 1st of every calendar year. Please ask you financadvisor for the Monthly Addition Rate currently applicable your policy. The currently declared Monthly Addition Rates arefollows (annual rate per 1000 of Sum Assured):
If your GSB term is more than 21 years and if Monthly Additiohave been accrued for more than 21 policy years, the accru
Monthly Additions payable as a Death Benefit or a SurviBenefit shall be enhanced by the following percentage:
Surrender your policy and the minimum loan amount is Rs.5,0and the maximum is 90% of your policy's Surrender Value.
Annual, Half-yearly, Quarterly or Monthly.
Entry Age
Minimum MaximumEntry Age 01 yrs 65 yrsMaturity Age 100 yrs
Objective
BSLI Vision is a Whole Life traditional life insurance plancombining Whole Life and Endowment features that offers WholeLife cover to Age 100 plus a Guaranteed Survival Benefit payable atthe end of the term selected by you.
Benefits
Guaranteed Survival BenefitAt the end of the GSB Term, you will receive a fixed payout knownas the Guaranteed Survival Benefit. Along with the GuaranteedSurvival Benefit, you will receive Monthly Additions andEnhancement to monthly additions.
Guaranteed Death Benefit
In the unfortunate event of the death of the life insured duringpolicy term, the nominee will receive the Sum Assured as the De
Benefit.
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Benefits of both Endowment as well as Whole Life
a)You are also eligible for a Survival Benefit
b)Plan continues with life cover till age 100
You choose Sum Assured and GSB Term at policy inception
a)You are also eligible for a Survival Benefit
b)Plan continues with life cover till age 100
You are assured of a Guaranteed Maturity Benefit, if yousurvive till age 100
Guaranteed Maturity/ Survival/ Death Benefit all in one plan
You are rewarded with Monthly Additions starting from first
policy month till completion of GSB Term
You can also customize your plan by adding 5 Riders
You have the facility to surrender your policy as well as avail
policy loans
You are eligible for premium discounts in the form of Sumassured rebates(higher life cover) and Modal rebates
You can avail Tax benefits under Sections 80C,80D and
10(10D) of the Income Tax Act,1961
Key Features
GSB Term 5 -10 Years 11 -15 Years 16 -20 Years 21+ YeCurrently Declared 39.0 39.0 41.4 45.0
Sum Assured Band Band 1 Band 2 Band 3 Band
Sum Assured (Rs.) 100,000 to 199,999 200,000 to 399,999 400,000 to 799,999 800,000
For Each Policy Year 2.50% 5.00% 6.25% 6.75%
Exceeding 21
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During the first week of the month the liquidity was hovering
around ` 50,000 crs. on an average but subsequently the situation
reversed and liquidity had totally dried up and banks were net
borrowers to the tune of ` 20,000 crs. During the current financial
year RBI floated Cash Management Bills for various maturities in
order to match temporary mismatches between revenue &
expenditure of Govt. mainly on account of Income Tax refunds of
over ` 25,000 crs. The cut-off yield of these bills ranged from
7.27% to 7.66%.
In the first week of the month RBI announced auction of new 7
year & 10 year GOI benchmark securities along with 8.30% GOI
2040. This being the first issue of Current financial year, and also on
Uniform price based the market participants had bid aggressively
for the 10 year security taking down the cut off yield for it to 7.80%,
against the prevailing yield of 8.05%. The cut-off for the 7 year
security was fixed at 7.83%. After the cut-off the market witnessed
heavy selling & by the end of the day itself the securities were
trading at below par. By the end of the month, the prices of
securities had fallen by 2 to 2.5%
The inflation numbers for March 2011 were declared at 8.98% as
against the market expectation of 8.4%. Market was also of the
view that after elections the fuel prices may be increased as Brent
crude was trading at about $125 / bbl (which is close to the last 2.5
year's high). The Monetary Policy to be announced on 3rd May
2011 also had a dampening effect on the prices as market was
expecting a hike in Repo & Reverse Repo rates by 25-50 bps. All
these factors contributed to increase in yields of all the securities.
RBI issued Central Government securities worth ` 36,000 Crs &
about ` 8,423 Crs. of State Development loans in the month of
April, 2011. The T-Bill auctions conducted in the month also saw arising trend as the cut-off for the 91 Day T-Bills ranged from 7.14%
to 7.52%, and the cut-off for 182 Day & 364 Day T- Bills ranged
from 7.45% to 7.75% & 7.55% to 7.76% respectively.
In the coming month, we feel the situation may remain more or less
the same as every week there is an auction of govt. securities and
market borrowing programme itself may be revised upwards due to
Income Tax refunds and under performance of various IPOs
which may make disinvestment programme difficult to achieve.
Bond Market Outlook
12
Currency Market OutlookIndian rupee climbed to 3-weeks high against the dollar on
April,2011 on robust dollar selling by exporters combined w
broader weakness in dollar overseas.
It moved totally in divergence with the movement in local equit
which is its key driving force. By contrast, the Sensex extended
losses for the fifth consecutive day as investors remained cautio
gauging the Central banks mood to tighten liquidity further at next policy meeting on Tuesday. It lost nearly 0.8 percent to end
19135.96 amid posting its worst week since late February. Wh
the partially convertible rupee ended at 44.21/ 22 per dollar,
0.5% as compared to its prior sessions close of 44.43/ 44 on
April, 2011.
In the currency futures market, the most traded near-mon
dollar-rupee contract on the NSE closed at 44.71. The USD/ IN
May open interest was up 21.2%.
Indian rupee should trade higher against the dollar as weakness
euro against the dollar, stronger cues from Asian currencies awith much of the focus on May 3rd, 2011 RBI decision howe
makes the case in rupee stronger.
Utilise the lows in the USD/ INR May contract to buy above 44
with target of 44.80/ 44.86 and a stop loss of 44.54.
43.6
43.8
44
44.2
44.4
44.6
44.8
USD/INR
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Real Estate Opportunities
Runwal Pride (Mulund West)
1
Company Overview
Project overview (Runwal Pride)
The Runwal group was established in 1978 by its visionary founder - Chairman - Mr. Subhash Runwal. Today, it is one of the leading players
several segments including construction and retail. The Group enjoys tremendous Equity, Goodwill and is identified as an established play
in the real estate market. Not just that, the Runwal Group has the privilege of being recognized as a PREFERRED DEVELOPER of re
estate by the Maharashtra Government. They also make sure that great quality work, professionalism and customer satisfaction.
The Runwal Pride makes you wish, you could stay there forever. The magnetic charm of Runwal Pride makes sure you never felt like steppi
out of your home: The majestic multi-storeyed residential tower offers everything you could possibly want in life. A spacious multi-lev
podium car park and luxurious Swimming pool welcome you on the most modern amenities. To match your lifestyle, the three-winged tow
offers a host of club class comforts. From a Clubhouse with party room, fully equipped gym, and a beautifully landscaped garden to children
play area. Just about everything you could possibly dream of: You can sleep easy when you have a home at Runwal Pride, because you ha
invested wisely, in an apartment that is luxurious yet without the premium price tag.
Amenities @ Runwal Pride?
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Marbonite flooring in all rooms and passages
French window in living room
Powder coated aluminum sliding windows
Marble sills in all Windows,
Granite kitchen platform with S.S Sink and full height dado.
Service platform in kitchen.
Exhaust fan in Kitchen
Designer glazed tiles, full height in all bathroomsGeyser/ Heater in all bathrooms.
Bathtub in master bedroom in C wing only
Drying space
Concealed plumbing and high quality C.P. fittings
POP Moulding in full flat
Decorative main door.
Entrance A/ C decorative lobby with Italian marble
2 high speed lifts
Intercom facility
High quality exterior paint, Swimming pool.
Club house with party room.
Well equipped gymnasium, Landscaped Garden ,
Childrens play area
Podium Parking
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Real Estate Opportunities
3c Sports Village (N oida)
14
Company Overview
Project overview (3c sports village noida)
3C is a pioneer in conceiving and executing green developments. The company has delivered over12 million sq. ft. credited to be one of t
fastest execution platforms in India. The company mission is to be globally recognized as an integrated green developer that is Creating, Cari
and Conserving. 3C is member of US Green Building Council and the founder member of Indian Green Building Council
After setting many Benchmarks in real estate industry and having presence on expressway, This time 3c is going to have a latest project
Noida's sec-78, 79, 3c Sports Village About Sec-78, 79 is a gift from Noida authority as Metro is at your door step, Community center, Lu
Green Park, Schools, commercial space etc.
3C Sport Village a perfect blend of Residential blocks and sports activities within single complex
Key Features?
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International standard academic for GolfCricket stadiumBoxingBadminton CourtLawn Tennis CourtSwimming ,Athletics ,HockeyJogging trackSwimming poolKids' play areaTennis courtsbasketball practice courtSkating rinkYoga cum fitness courtSenior citizens' parkDedicated social club with a swimming pool
Location Advantage :-?
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10 minutes away from DND Flyway.10 minutes away from Sector 18.2 Minutes away from Lotus Boulevard Sector 100Next to proposed Metro Station
Other features?
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Insulated Wall 60% Heat reductionInsulated Roof 60% Heat reductionElectric charge points Reva / alternate fuel vehicleShuttle Bus ServiceLobbies to have censor LightsExternal Lighting Solar80% open spacesEnergy efficient mechanical & electric equipment0% discharge buildingSolid waste managementWaste segregation systemNative & low water consuming plantsWater conserving fixtures & fittingsNaturally lit, cross ventilated living spaces.Toughened glass.Rain water harvesting
8/6/2019 UniconMonthly-(ThePathfinder)May2011
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From a fundamental perspective, outperformance of silappears abnormal given the oversupply situation. Mine supply hbeen on the rise since 2003. According to GFMS, miproduction, accounting for 70% of total silver supply, climb+2.5% to 735.9M oz with Mexico surpassing Peru as the worl
largest silver producing country in 2010. Mine supply is expectto hit another record this year with several new projects in MexiPeru and Argentina starting operations. Sales of silver scrap ro+14.1% to 215M oz and producer hedging (61.1M oz) returnfor the first time in 5 years as a result of higher prices. Primafrom Russia, net government sales almost tripled to 44.8M oz lyear.
Investment demand remains robust with retail purchaparticularly strong. While we expect silver price to climb highwith its characteristic as the poor's gold, weakness in fundamentmay cause a sharp correction in prices anytime. Robust investmedemand that has drove silver prices higher will continue this year
long as geopolitical tensions, sovereign crisis in the Europeperiphery and debt concerns in the US, uncertainties of natudisasters remain a threat to global economic growth and financmarkets.
While evolution of new drivers is expected to boost silver demaexcess supply will have to be absorbed by investment demawhich is the key determinant of silver prices in the near- medium-term. We expect silver to continue its run up as the gloeconomic and political outlook remains highly uncertain. Yinvestors have to be cautious about volatility in silver pricMoreover, a massive correction is likely if economic growproves to be tampered by high oil prices.
Technically silver might take a good resistance at $50.60/ Oz COMEX whereas on MCX Resistance is pegged ` 75000.Investors have to wait for a correction which can be
steep fall till $41-38/ oz on COMEX and ` 61000-54000 on MCto enter into fresh buying.
Base Metal complex traded mixed as investors remainconcerned about Chinese demand. Lead was the worst performwith a fall of 7 percent followed by Copper and zinc which fell 2and 1.94 percent respectively on MCX .Aluminum and Nicwere the only metals in the complex to register a gain on monthbasis. Copper plunged amid worries that tightening in China wdampen the demand outlook. According to International CoppStudy Group (ICSG), preliminary data the refined copper mark
balance reached a deficit of -20K metric ton in January 20compared with a surplus of +86K metric ton the same period lyear. In another report released earlier in April, ICSG forecaglobal growth in copper demand to exceed global growth copper production this year. The annual production deficitexpected increase to 380K metric ton this year, up +52% fro250K metric ton in 2010. A further correction in copper pricepossible in the coming months as stockpile in China remaample but looking at the deficit figures the trend might revelater in the year
15
Commodity round upWeakness in the greenback triggers safe haven buying in precious metals.
Gold rallied to a new record high of $1569.80/ oz on COMEX and
traded above ` 22800 on MCX as sovereign crisis in the Europeanperiphery, rising inflationary pressures, weakness in the US dollarand ongoing tensions in the Middle East and North Africatriggered safe haven buying in the yellow metal.
Inflationary pressures have not only been seen in emerging marketsbut also in advanced economies. Inflation in emerging countriesremains elevated which has sent gold to record highs.
Weakening fiscal conditions and expansionary monetary policiesare deteriorating confidence on the US dollar, triggering demandfor hard assets. The dollar index slumped to as low as 72.83, a levelnot seen since August2008. Weakness in USD is positive for gold.
Apart from consumers and investors, Central and Stategovernments find precious metals appealing as well. RecentlyPeople's Bank of China (PBOC) recommended in the annualFinancial Markets Report to buy gold as a hedge against inflationand as value preservation in a world where major currencies were
declining in values against the precious metal.
A survey shows that central banks turned net buyers of gold in2010 and cut exposure to debts issued by Greece, Ireland andPortugal. It's also unveiled that reserve managers found gold,investment-grade corporate bonds and AAA-rated bonds as moreattractive than the year before. We believe the trend will continue asconcerns over fiscal stabilities and inflation will trigger central bankpurchases of the metal.
Despite rebounds in equities and oil, concerns over US' debtoutlook linger. S&P's lowering of debt outlook to 'negative' is areminder of the unresolved issues in US' budget deficits.
In the medium- to long-term, the outlook for the metal remainsbullish with price eventually hitting new highs. Sovereign crisis inthe European periphery, rising inflationary pressures, weakness inthe US dollar, ongoing tensions in the Middle East and NorthAfrica coupled with robust physical demand will keep gold priceshigher and will eventually test $1600/ Oz on COMEX whereas on
MCX it is expected to test ` 23500 on MCX.
Technically, gold looks to take resistance at $1575/ Oz on COMEX
and ` 22880 on MCX. Strong support is at $ 1500/ Oz on COMEX
and ` 21820 on MCX which if breaks can take the prices furtherlower. Until $1500/ Oz holds buying in dips is advisable.
Silver continued to outperform gold, rising above $49/ oz on
COMEX and ` 73000 on MCX. Outperformance of silver overgold has sent the gold/ silver ratio to around 30, the lowest level inalmost 3 decades. Geopolitical tensions, natural disasters andsubsequent radiation leak in Japan and ongoing sovereign debtproblems in the European periphery have increased demand forsafe-haven assets. Meanwhile, rising inflationary pressures resultingfrom surges in commodity prices and maintenance ofexpansionary monetary stances by the Fed, the BOE, the BOJ, etc,have raised the need for inflation hedges. Gold is a traditionalalternative to fiat currencies and risky assets in such anenvironment. However, silver has been increasingly appealing inrecent years as many investors view it as 'poor people's gold.
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Alternate Investment Idea
16
The future of investing
Managed Futures - Absolute returns independent of
Market Conditions
Why Managed Futures?
Investment Rationale
Managed Futures - Absolute returns independent of
Market Conditions
Managed futures - Portfolio
Synopsis of Managed Futures Offerings.
The net asset value of the fund is linked to, or essentia
denominated in the value of gold, which hedges the fund agai
currency risk.Managed future funds aim to generate positive returns in both
rising and falling markets, by taking long or short positions in
financial and commodity markets around the world. Broad diversification of investment opportunities across 1
stocks, bonds, currencies, interest rates and commodities.
Investments in multiple sectors lead to non-correlation -The fund's absolute return strategy is based on trend following
managed futures performance with any single asset class.approach which reacts to real events in the global markets as they
happen. The investments are not based on fundamental or analyst Portfolio risk is minimized by having low correlatopinions which try to predict where the market is headed. investments i.e. independent movement of differe-The fund gives an opportunity to benefit from up or down trends investments in a portfolio lead to minimization of risk ain all the global sectors, through one single investment. Unlike probability of positive returns.
most mutual funds, managed futures is not limited to an An ideal addition to any long only portfolio as the fund can investment mandate which restricts the investment to certain
short as well to ridegeographical location or sector only.
downtrends.
Managed Futures funds are also available in go
denominated form intended to link, as closely as practicabManaged future funds aim to generate positive returns in both the base currency to the value of gold. Gold denominatrising and falling markets, by taking long or short positions in managed future funds combines the benefit of managfinancial and commodity markets around the world. futures strategy with Gold which works as the perfect hed
to US dollar devaluation.
The fully systematic trading strategy invests in approximately 150
future markets ( financial futures and commodity futures). The Assets under management in Managed Futures Funds afund has 55% exposure to Financial Futures and 45% into more than 230 bn dollars.commodity futures. Financial Futures consist of exposure to
No performance correlation with other assStock Indices, Currency, Bonds and Interest Rates. Commodityclasses(equity,bonds and commodities).Futures consist of exposure to Metals, Energy, Food Grains and
Exposure to 150 futures markets around the world across tAgriculture Markets.
asset classes with a lower investment required of 5000 USD
Ability to halve the portfolio risk and boost returns.
Long and short investments positions, broad asset and t
market exposure lends a higher probability to perform in
market conditions.
Fully automated trading system that takes calls on entry a
exit points,free from human emotion.
Returns reported net of all fees and expenses
Managed Futures are regulated, transparent and has a 15 ye
track record.The maximum risk per sector is 8% and initial risk per trade is
limited to a maximum of 1% of fund's asset under management. Strong Risk Management of 1% stoploss of the AUM.
Stop loss placement plays a key role in the managed futures
investment strategy.The total risk is continuously screened on a
daily basis and losses are automatically limited by stop-loss orders.
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Superfund Performance Statistics Vs other Assets
UPDATED VERSION TILL MARCH 2011
AVERAGE ROLLING RETURN
3
Months
12
Months
18
Months
24
Months
36
Months
48
Months
60
Months
84
Months
120
Months
BSE Index 4.06% 16.87% 24.75% 32.18% 50.55% 73.66% 103.59% 171.40% 291.76%
JP Morgan
Government
Bond Global
1.52% 6.16% 9.72% 13.39% 20.16% 28.43% 37.10% 59.86% 97.47%
Gold 2.36% 9.58% 14.36% 18.91% 29.07% 40.31% 51.13% 66.09% 63.90%
S&P 500 1.60% 6.92% 11.35% 15.78% 25.25% 38.44% 52.00% 80.90% 143.57%
MSCI Wor ld
Index1.38% 5.67% 8.93% 11.89% 18.02% 27.96% 36.07% 50.73% 78.82%
GOLDMAN
SACHS
COMMODITY
Index
2.02% 8.97% 13.11% 16.22% 22.92% 31.93% 41.73% 63.78% 112.12%
Superfund A 4.11% 16.65% 26.44% 38.26% 65.77% 96.73% 135.27% 229.38% 386.64%
Superfund
Gold A5.74% 16.55% 25.04% 33.02% 50.51% 67.89% 119.34% - -
% Positive Periods
3
Months
12
Months
18
Months
24
Months
36
Months
48
Months
60
Months
84
Months
120
Months
BSE Index 58.56% 65.75% 63.54% 65.75% 74.03% 77.90% 83.43% 86.19% 98.34%
JP Morgan
Government
Bond Global
63.54% 82.87% 89.50% 93.92% 97.79% 100.00% 100.00% 100.00% 100.00%
Gold 56.35% 69.06% 68.51% 65.19% 65.19% 67.40% 64.09% 54.70% 58.80%
S&P 500 62.98% 70.72% 67.96% 65.75% 64.09% 62.43% 63.54% 90.61% 84.53%
MSCI World
Index62.98% 69.61% 69.61% 67.40% 61.88% 62.43% 66.30% 96.13% 85.64%
GOLDMAN
SACHS
COMMODITY
Index
60.22% 64.09% 62.43% 61.33% 72.38% 75.69% 74.03% 91.16% 100.00%
Superfund A 61.24% 79.88% 83.44% 89.17% 95.17% 99.25% 100.00% 100.00% 100.00%
Superfund
Gold A65.08% 81.48% 77.08% 83.33% 100.00% 100.00% 100.00% - -
Source : Teletrader Period: (Mar96 - Mar11)
Alternate Investment Idea
16
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