SlideShare une entreprise Scribd logo
1  sur  24
Télécharger pour lire hors ligne
ADVICE for the WISE




     Newsletter –April’11
Index             Page No.
Economic Update        4
Equity Outlook         8

Debt Outlook          13
Forex                  15
Commodities            16
Real Estate           19




                             2
Dear Investor,

 The month of March has seen the return of the positive sentiments to                                       Risk taking investors can evaluate private equity as an interesting
 the Indian Equity markets and to a smaller extent to Indian Debt                                           and sufficiently diversified investment option. It also has the
 markets. FIIs poured money into Indian equities thus helping the indices                                   additional positive of enforcing a long term outlook which is often
 to decisively break out of the range of the earlier months. Part of this                                   lacking in public equity investments that allow entry and exit at
 rally is genuine catching up of the valuations in light of expected results.                               will. Private Equity can be thought of as an aggressive play on India
 Some other factors that contributed to the sentiment were lack of major                                    growth story. This is because in a high growth environment, not
 negative news on the 2G scam investigation and relatively contained                                        only do several small companies do well to deliver supernormal
 inflation levels. At the current level, the equity markets seem fairly                                     returns to early investors, the downside risk is also reduced
 priced. Any quick run-up from here would enter the overvalued                                              significantly for the suboptimal investment choices.
 territory. As of now, we continue to recommend investing into Indian                                       When markets show some positive momentum, investors often
 equities.                                                                                                  worry that they might buy into an overvalued market. On the other
 The fortunes of different sectors changed quite rapidly in the last few                                    hand many times investors keep waiting on the sidelines for the
 months. Banking which went through a rough patch in December last                                          correction that never happens. Principal protected structured
 year is back to being a favored sector. Real estate showed some signs of                                   products can provide a way out of this by ensuring that the
 revival last year but has lost steam again owing to corporate governance                                   maximum downside remains at zero while the participation in the
 concerns. FMCG had performed quite well in the recent months whereas                                       upside is maintained and even enhanced. Often some degree of
 infrastructure and cyclical sectors like metals lagged behind. Going                                       innovation in these products can allow an investor to take a more
 forward we believe that equity portfolios can be altered to include more                                   specific view on the market movement – thus enabling
 aggressive sectors such as metals and infrastructure. In the coming                                        diversification and enhancement of returns for most outcomes of
 months defensive sectors like FMCG and Pharma may not deliver very                                         market levels in future.
 good returns.
 The liquidity crunch of last month has now eased partially. The yields
 have stayed steady or come down a little. Fixed deposit rates seem to
 have peaked as some banks have started to cut the FD rates. Most of
 this indicates that the debt investment returns have hit their maximum
 and could well be on their way down. For clients looking to invest into
 debt it is advisable to lock in the higher rates/yields available now.
“Advisory services are provided through Karvy Stock Broking Ltd. (PMS) having SEBI Registration No: INP000001512. Investments are subject to market risks. Please read the disclaimer on slide no.23”   3
As on   Change over   Change over    130                                      Sensex
                                                                                                                            S&P 500
                                                                                                                                                                                        Nifty
                                                                                                                                                                                        Nikkei 225
                                                                                   120

                                     Mar 31 st 2011    last month      last year   110
                                                                                   100
                      BSE Sensex           19,445            9.1%         10.9%     90

    Equity            S&P Nifty               5,833          9.4%         11.1%     80
                                                                                    70
   markets            S&P 500                 1,325        (0.1%)         13.4%




                                                                                                                                                                                                         Dec-10
                                                                                          Mar-10




                                                                                                                                                                               Oct-10
                                                                                                                                                     Aug-10
                                                                                                      Apr-10




                                                                                                                                                                                                                   Jan-11
                                                                                                                                                                 Sep-10



                                                                                                                                                                                             Nov-10
                                                                                                                   May-10



                                                                                                                                           Jul-10
                                                                                                                                Jun-10
                      Nikkei 225              9,755        (8.2%)       (12.0%)
                                                                                                                                     10 yr Gsec
                                                                                         8.8
                                                                                         8.3
                                                                                         7.8
                      10-yr G-Sec Yield     7.98%        (2 bps)         13 bps          7.3
Debt markets          Call Markets          9.25%        2.4 bps       4.25 bps          6.8

                      Fixed Deposit*        8.25%          0 bps        225 bps

                                                                                     22000
                                                                                     21000
                                                                                     20000
                                                                                     19000

 Commodity            RICI Index            4,275           2.4%         33.6%       18000
                                                                                     17000                                                                                  Gold
  markets             Gold (`/10gm)        20,760         (0.2%)         27.4%       16000
                                                                                     15000
                      Crude Oil ($/bbl)     118.6             4%           46%

                                                                                   48
                                                                                   47
                                                                                                                                                                              `/$
    Forex             Rupee/Dollar           44.65          1.2%         (0.4%)
                                                                                   46
                                                                                   45
                                                                                   44
   markets            Yen/Dollar             82.86        (1.3%)        (11.9%)    43
                                                                                   42




                                                                                                               May-…




                                                                                                                                                                                                                  Mar-11
                                                                                         Mar-10




                                                                                                                                                                                    Dec-10
                                                                                                                                                              Oct-10
                                                                                                                                           Aug-10
                                                                                                   Apr-10




                                                                                                                                                                                                Jan-11
                                                                                                                                                                                                         Feb-11
                                                                                                                                                    Sep-10
                                                                                                                                  Jul-10




                                                                                                                                                                          Nov-10
                                                                                                                       Jun-10
* Indicates SBI one-year FD                                                                                                                                                                                                 4
• The Conference Board Consumer Confidence Index, which had increased in
              February, declined in March. The Index now stands at 63.4 down from 72 in
   US         February. This is due to consumers short term outlook being less favorable
              than in February .
            • US m-o-m unemployment rate drops to 8.8 per cent in Mar 11.

            • Euro-zone PMI declined to 57.6 in March, down from a four-and-a-half year
              high of 58.2 in Feb 11. All countries saw a slower pace of growth than in
              February, but France and Germany continued to see strong increase in
 Europe       manufacturing and services-sector output.
            • Unemployment rate in the Euro zone at 9.9% in Feb 11, compared to 10% in
              Jan 11 .


            • The Japan Manufacturing Purchasing Managers Index (PMI) fell to a seasonally
              adjusted 46.4 in March, the lowest since April 2009, down from February’s
  Japan       52.9, owing to the disrupted supply chains and production operations post the
              massive earth-quake and Tsunami
            • Japan’s unemployment rate decreased to 4.6% in Feb 11 from 4.9% in Jan 11
            • The HSBC China Manufacturing Purchasing Managers Index, a gauge of
              nationwide manufacturing activity, remained almost flat at 51.8 in Mar from
 Emerging     51.7 in Feb.
economies   • Chinese economy is expected to slow down to grow at 9.6% in 2011.The retail
              sales rose 15.8% in the first two months of 2011 which was 3.3% lower than
              December owing to the decline in consumer confidence in recent months.          5
IIP monthly data
20.0%                                                     • The GDP growth rate for Q2 FY11 came in at 8.9%
18.0%
16.0%                                                       backed by a strong growth in services and
14.0%                                                       agricultural output.
12.0%
10.0%
 8.0%
 6.0%
                                                          • The agriculture sector, which accounts for nearly
 4.0%                                                       17% of GDP, rose 4.4% and this offset the
 2.0%
 0.0%                                                       moderation manufacturing sector growth, where
                                                            production went up by 9.8%. The services sector
                                                            too grew at 9.7% during July-September this year,
                                                            led mainly by finance and real estate as well as
                                                            trade, hotels, transport and communication
• Industrial output as measured by the Index of
  Industrial Production (IIP) grew by 3.7% (y-o-y) in     • The Finance ministry is targeting FY11 growth at
  January ‘11 as compared to an upward revised 2.7%
  in December ’10.
                                                           ~8.50% - 8.75% which may be revised upwards. We
                                                           believe the current target is sustainable as we
                                                           expect manufacturing and service sectors to
• Capital good output contracted 18.6 percent              continue to drive growth in the next few quarters.
  compared with an expansion of 57.9 percent in the
  year ago period.                                        10
                                                          9                  GDP growth
                                                          8
• We believe that monthly indicators are not a very       7
  efficient way of indicating growth and the lower        6

  numbers could also be attributed to higher base         5
                                                          4
  effect. But, the growth will eventually moderate out.
                                                               FY09 (Q3) FY09 (Q4) FY10 (Q1) FY10(Q2)   FY10(Q3)   FY10(Q4)   FY11(Q1)   FY11(Q2)

                                                                                                                                                    6
Growth in credit & deposits of SCBs                                                        • Inflation as measured by WPI increased
30.0%                                        Bank Credit                    Aggregate Deposits               marginally and stood at 8.31% (y-o-y) for the
25.0%                                                                                                        month of February -11 as compared to 8.23%
20.0%                                                                                                        during January 11. Rising oil prices and high
15.0%                                                                                                        food prices have led to high inflation in the
10.0%                                                                                                        month. These figures are based on the new
5.0%                                                                                                         base year and WPI list.
        Feb-10 Mar-10 Apr-10 May-10 Jun-10    Jul-10   Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11


                                                                                                           • We expect WPI inflation numbers to moderate
  • Bank credit growth remained stable at 23.2% in the                                                       in m-o-m inflation numbers due to the expected
    month of February while Deposits grew by 16.4%                                                           decrease in food inflation and the monetary
    compared to 15.9% in January 2011.                                                                       tightening stance by RBI, but increasing fuel
                                                                                                             prices may be a cause of worry.
  • Growth of credit demand and tight liquidity had put
    pressure on the banks to raise their deposit rates,.
    Though we see liquidity concerns easing, high                                                                                                     Wholesale Price Index
                                                                                                          12.0%
    inflationary pressure may lead the RBI to increase                                                    10.0%
    rates further.                                                                                         8.0%
                                                                                                           6.0%
  • We expect credit growth to settle at ~20% levels in                                                    4.0%
    the coming quarters on the back of improving                                                           2.0%
    business confidence and decline in risk aversion on                                                    0.0%
                                                                                                          -2.0%




                                                                                                                                                                                                   Nov-10




                                                                                                                                                                                                                              Feb-11
                                                                                                                  Feb-10




                                                                                                                                                                                 Sep-10

                                                                                                                                                                                          Oct-10
                                                                                                                                             May-10




                                                                                                                                                                        Aug-10
                                                                                                                                                               Jul-10
                                                                                                                                                      Jun-10
                                                                                                                                    Apr-10
                                                                                                                           Mar-10




                                                                                                                                                                                                            Dec-10

                                                                                                                                                                                                                     Jan-11
    the part of banks.

                                                                                                                                                                                                                                       7
March turned out to be a good month for Indian equity markets. In the first two months of CY11, Nifty ended on a negative note with an
outflow of 9000 crores by FII. This changed in the month of March with a gain 9.4%. FIIs returned in the last week of March with almost
9000 cr invested in 7 days. The FII buying was seen across quality large cap names and a few mid-cap ideas.
On the macro economic front, consumer demand continues to hold up quite well across both rural and urban India. March witnessed
strong auto sales numbers growth. All manufacturers’ sales surpassed expectations as retail demand continues to remain buoyant with
two wheeler and four wheeler sales numbers well ahead of expectations.
The sector which has seen the most difficult times last year was infrastructure. There were various issues in terms of environmental
clearances, lack of new orders, land acquisition and commodity prices. There seems to be some movement on the first two issues. Last
month saw several coal mine development plans being cleared by the environment ministry. A few commodity green field projects also
got clearances. There was a revival in order announcements by key infrastructure vendors like PGCIL which announced its largest ever
Transmission & Distribution order of 5000 crores. NHAI is also expected to announce highway development orders to the tune of 2000
crores in this quarter. This momentum, if continued, will provide a much needed fillip to infrastructure development of the country and
would be a big positive for the infrastructure stocks. Concerns related to commodity prices and interest rates have already been priced
in by the market. The government also seems keen to press ahead with key reforms and introduced GST and Pension Reform bill in
parliament.


Crude continues to be a cause of concern with Nymex crude touching 109$/barrel driven by continued unrest in Middle East and North
Africa. Fighting continues in Libya with no side emerging as a clear winner. It would be prudent to assume that Libyan supplies would be
disrupted for some time. Saudi Arabia has increased supplies to make up for that. However, concerns remain on the unrest in Yemen
and Bahrain spreading to Saudi Arabia which is the world’s largest crude producer.                                                         8
Food price inflation in mid-March again touched the double digit levels due to firm price trend seen in protein rich items like milk,
cereals and fish. We now expect WPI inflation in March to cross 8%. We would expect inflation to stay at elevated levels led by firm
food price trends and high commodity prices and average around 7% in Fy12. RBI is expected to announce its forecast for full year
inflation in the May review. We would expect a further hike of 25bps when RBI next meets with a total hike of 50 to 100 bps for FY12.
This view would change if there is any big spike in retail fuel prices led by continued upside to global crude prices.


The market seems to be trading at reasonable valuations of around 16 times based on FY12 earnings. Further clarity on valuations will
emerge once the Q4 results start coming in from second week on April. We believe that in Q4 FY11, we would witness steady earnings
growth of 17-18% for Nifty companies. Similar to the scenario in Q3FY11, manufacturing sector might face some earnings
disappointments due to high commodity prices and interest rates, but that should get compensated by the increase in earnings of
Metal companies. We would continue to maintain a strict vigil on crude prices and inflationary expectations in the economy. We like
sectors with earnings visibility, growth, superior capital efficiency of the businesses & good corporate governance and have maintained
overweight position on Financials, Metals, Healthcare & Capital Goods.
                     FII & MF data
 25000.0
                                                                          • After pulling out ` 9,400 Cr. in this year (Jan & Feb) FIIs
 20000.0
                        FII   MF                                            invested `6898 Cr. in the Indian markets in the month of
 15000.0                                                                    March’11. High growth prospects in the Indian market are a
 10000.0                                                                    driver for these investments.
  5000.0
     0.0                                                                  • Mutual Funds invested around ` 459 Cr. in the month of
 -5000.0                                                                    February.
-10000.0
-15000.0
                                                                                                                                          9
Sector     Stance                                                       Remarks
                              We believe in a large sized opportunity presented by Pharma sector in India. India’s strength in generics
                              is difficult to replicate due to quality and quantity of available skilled manpower. With the developed
Healthcare      Overweight    world keen to cut healthcare costs, and a vast pipeline of drugs going off-patent, Indian pharma players
                              are at the cusp of rapid growth. Here, we have taken exposure to medium-sized, non-index ideas while
                              trying to play on the opportunity in Generics and CRAMS.
                              The USD 1 trillion Infra opportunity is hard to ignore. Here, we have carefully taken Power sector as our
                              dominant bet over other sub sectors such as ports, roads and telecom infrastructure, because of
E&C             Equalweight   favorable economics under PPP model. Within power, we focus on the engineering companies over
                              utilities, T&D and other infrastructure owners because of their superior profitability and better
                              competitive dynamics.
                              Financial sector is undeniably the lubricant for economic growth. Whether the growth comes from
                              consumption or investments, credit growth is inevitable. Being a well regulated sector, BFSI in India has
BFSI            Overweight    good asset quality and capital adequacy ratios. This, when juxtaposed to the growth opportunity
                              available makes an attractive long term opportunity.
                              The exposure is in “discretionary consumption” beneficiaries such as Paints and branded food, as the
FMCG              Neutral     growth in this segment will disproportionately higher vis-à-vis the increase in disposable incomes. This
                              also provides a defensive posture to the portfolio.

                              The regulatory hurdles, competitive pressures and leverage prevent any return to high rofitability levels
                              in the short to medium term. The huge capex incurred in the rollout of 3G services will put further
Telecom         Underweight   stress on the already stretched balance sheets. Remain cautious on Sector’s prospects.

                                                                                                                                          10
Sector        Stance                                                    Remarks


                                 Robust volume growth led by some uptick in pricing makes IT an attractive investment. Market
IT/ITES           Equalweight    share gains led by deeper and wider expansion of global delivery model will drive earnings
                                 growth. Best played through Tier I stocks.
                                 Demand outlook remains very robust with strong earnings growth despite raw material price hikes
Automobiles       Overweight     and raging competition. We are more bullish on commercial vehicle and agricultural vehicles
                                 segment due to lesser competition and higher pricing power.

                                 Through a single company, we have taken a large-sized exposure to refinery and natural gas
                                 exploration sector. The regulatory cap on RoE does not allow a vast value creation opportunity in
Energy            Underweight    the infrastructure owning companies. We have also purposely tried to stay away from PSUs, due
                                 to issues of cross subsidization distorting the underlying economics of oil exploration and refinery
                                 businesses.
                                 Indian metal companies will benefit from global upturn in demand. Commodity prices have
Metals            Equal weight   moved up significantly as recovery takes place in US and Europe. Positive on the producers of
                                 Steel, Copper and Aluminium.

                                 Cement demand will certainly grow over the next three years. But the issue is on the supply side.
Cement            Underweight
                                 We do see an oversupply situation for the next 3-4 quarters.

                                 We like the growth prospects of power sector but believe that value will be created by
Power Utilities   Underweight    engineering services providers. Merchant power rates have been sliding downwards and coal
                                 prices have been on the way up putting pressure on return ratios.
                                                                                                                                        11
Basic Theme
A diversified portfolio of stocks that seeks Alpha through superior stock selection. The Portfolio Management adopts a comprehensive
approach and invests across sectors, investment themes and market capitalization categories.

 Portfolio Details                                                                               Absolute Returns (%)
Placement fee  2%                                                                                Comparatives 3 Month Since Inception
Exit Load      Nil (Full management fee to be levied if redeemed before 1 yr)
               2.5% for investments 2% for investments                                           Alpha Portfolio       -6.4%            17.0%
Management Fee                                               NIL
               below Rs. 1 Cr.        above Rs. 1 Cr.                                                                  -4.9%            11.7%
                                                                                                 S&P CNX Nifty
Profit Share   NIL                    NIL                    15% of all gains


 Top 10 Holdings                       Sector Allocation                                         Performance (as on 31st Mar 2011)
Reliance Industries Ltd.         8.5                                                              20%
                                 6.8                                                                                                17.0%
Infosys Technologies Ltd.                          Energy
                                                            Metals       BFSI                            Alpha Portfolio   Nifty
                                                             7.9%       26.5%
HDFC                             6.4                8.5%                                          15%
                                        Others                                                                                              11.7%
Punjab National Bank             5.9    11.0%
State Bank of India              5.8                                                       IT     10%
                                                                                          6.8%
Titan Industries Ltd.            5.3       FMCG                                 Capital
                                           18.3%                                Goods              5%
Nestle India Ltd.                5.1                           Pharma           13.0%
                                                                7.9%
Larsen & Toubro Ltd.             5.1                                                               0%
Bharat Heavy Electricals Ltd.    4.9                                                                              3M               Since Inception
                                                                                                                                      (30/11/09)
Page Industries                  4.5                                                              -5%
                                                                                                                    -4.9%
Top 10 Stock Concentration      58.3                                                                      -6.4%
                                                                                                 -10%
                                                                                                                                                     12
Yield curve
      9.0
                                                               • The benchmark 10 yr G-sec yield decreased
      8.5
                                                                 marginally from 8.0% in the month of February
      8.0                                                        ‘11 to close at around 7.98% in February ‘11.
      7.5
                                                               • With no respite from the high inflation in spite
      7.0
                                                                 of monetary tightening, it is possible that RBI
      6.5                                                        may take a stand that the monetary tightening is
(%)



             1.0




             7.1




            13.2




            18.3
            19.3
             0.0

             2.1
             3.1
             4.1
             5.1
             6.1

             8.2
             9.2
            10.2
            11.2
            12.2

            14.2
            15.3
            16.3
            17.3
                                                                 unlikely to bring down food inflation in a direct
                                                                 manner.

      • We expect yields at the longer end of the yield
        curve to remain stable. High inflation, monetary        8.4
                                                                                   10-yr G-sec yield
        tightening and rising credit growth will keep the       8.2

        yields at the longer end range bound.                    8

                                                                7.8


      • After the rate hike by RBI in Mar, the 10 year G        7.6

                                                                7.4
        Sec yields are trading around 8.0% from 8.15            7.2
        levels in Jan 2011. If the inflation continues to be     7

        high, there may be another increase in the              6.8

        interest rates by RBI.

                                                                                                                     13
Category    Outlook                               Details
                          We recommend short term bond funds with a 6-12 month
                          investment horizon as we expect them to deliver superior
Short Tenure              returns due to high YTM. We have seen the short term yields
   Debt                   harden due to reduced liquidity      in the market and
                          consecutive rate hikes prompted by inflationary pressures.
                          Hence, Short term bond funds and FMPs provide an
                          interesting investment option.


                         Some AA and select A rated securities are very attractive at
                         the current yields. A similar trend can be seen in the Fixed
   Credit                Deposits also. Tight liquidity in the system has also
                         contributed to widening of the spreads making entry at
                         current levels attractive.



                         With tight liquidity and inflationary pressure being high, we
                         expect more rate hikes in the current year. As the inflationary
 Long Tenure             pressure begins to settle down, these may be attractive
    Debt                 investments but currently, we would recommend staying out of
                         the longer term investments.


                                                                                           14
Rupee movement vis-à-vis other currencies (M-o-M)                           Trade balance and export-import data
                                                                  80                                                                                                       0
                                                                                        Export             Import                Trade Balance (mn $)
                                                                  60
                                                                  40                                                                                                       -5000
                                                                  20                                                                                                       -10000
                                                                   0
                                                                 -20                                                                                                       -15000




                                                                   • Exports for the month of February increased by 49.7%
                                                                     (y-o-y) while imports increased by 21.2% over last year.
                                                                     The trade deficit increased to USD 8.1 bn.

                                                                 140000

                                                                 120000                                           Capital Account Balance
                                                                 100000

                                                                  80000
•The rupee appreciated against all the currencies except the      60000

euro.                                                             40000

                                                                  20000

•The appreciation was on the back of improved performance of           0
                                                                           FY 09 (Q4)   FY 10 (Q1)   FY 10 (Q2)    FY 10 (Q3)   FY 10 (Q4)   FY 11 (Q1)   FY 11 (Q2)   FY 11 (Q3)
the Indian equity markets and inflow of funds in to the
domestic markets
                                                                 • Capital account balance continues to be positive through
•Going forward, the rupee will be helped by the narrowing of       FY11 and stands at `241293 Cr. for the Q1 – Q3.
the current account deficit and the inflow of funds into the     • We expect the capital account balance to remain positive
domestic markets. However rising oil prices remains a concern.     as higher interest rates would make investment in the
                                                                   Indian markets attractive hence drawing investments into
                                                                   the market.
                                                                                                                                                                                    15
Gold prices continue to remain stable amid demand from              22000                                                       Gold
                                                                                21000
            emerging economies including China, where the investment            20000

            demand growth was strongest last year. The global political         19000

Precious    uncertainty and growing Middle East tensions shall continue to
                                                                                18000
                                                                                17000

 Metals     support prices. Further, the seasonal demand during Akshaya         16000
                                                                                15000
            Tritiya in India is likely to support prices. Nevertheless, we do




                                                                                                                   May-10
                                                                                           Mar-10




                                                                                                                                                                                                                                         Mar-11
                                                                                                     Apr-10




                                                                                                                                                          Aug-10
                                                                                                                                                                      Sep-10




                                                                                                                                                                                                                               Feb-11
                                                                                                                                Jun-10




                                                                                                                                                                                              Nov-10
                                                                                                                                                                                                         Dec-10
                                                                                                                                                                                  Oct-10
                                                                                                                                             Jul-10




                                                                                                                                                                                                                    Jan-11
            not expect any sharp spikes in the yellow metal in the near
            term; however the falling dollar is a concern and shall push the
            metal prices higher.



                                                                                120                                                                                         Crude
            Although the Middle East status quo remains, crude oil prices       110

            found support from the renewed demand for conventional              100


            energy after the Japanese Nuclear fiasco. The difference             90

Oil & Gas   between WTI and Brent continues to wide. Crude is expected           80

                                                                                 70
            to remain stable in the near term amid declining dollar aiding
                                                                                 60
            its rise.




                                                                                                              May 10
                                                                                      Mar 10




                                                                                                                                                                                                                                        Mar 11
                                                                                                Apr 10




                                                                                                                                                      Aug 10
                                                                                                                                                                   Sep 10




                                                                                                                                                                                                                             Feb 11
                                                                                                                            Jun 10




                                                                                                                                                                                           Nov 10

                                                                                                                                                                                                       Dec 10
                                                                                                                                                                               Oct 10
                                                                                                                                         Jul 10




                                                                                                                                                                                                                  Jan 11
Tenor                  36/40 months

Issuer                 Karvy Financial Services Limited

Reference Index        S&P CNX Nifty Index

Principal Protection   100%

Initial Fixing Level   Official Closing level of S&P CNX Nifty Index as on DDA

Final Fixing Level     Average of Official Closing Level of S&P CNX Nifty Index as on 34M, 35M and 36M

Exit Nifty Level       Official Closing level of S&P CNX Nifty Index as on DDA +36M

Participation Rate     200%

Knockout Level         150% of Initial Fixing Level

Knockout Rebate        30%

                       2 * Max {0, (Final Fixing Level / Initial Fixing Level) -1}, if Knockout event is not
Payoff
                       triggered

                                                                                                               17
Overview                                                            Product Features
•   Aditya Birla has launched a private equity fund targeting       • Fund size: Rs. 350 Cr. + green shoe option of Rs. 150 Cr.
    innovation themed growth capital investments within sunrise     • Sponsor Commitment: 10%
    sectors – Lifestyle, Lifeskills and Education, Lifecare and     • Fund tenure: 6 years with an option of a 1 year extension
    Applied Technologies.                                           • Commitment Period: 30 Months from date of initial closing
                                                                    • Minimum Commitment: 1,000,000
Attractiveness                                                      • Indicative Draw-down:
• We believe that the sectors that they have selected are             INR 10 lakh                 100%
    attractive growing annually at 20% plus supported by benefits     INR 15 lakh–45 lakh         Higher of 20% of commitment or
    of higher disposable income and improving infrastructure in                                   INR 7.5 lakh
    the country.                                                      > INR 45 lakh               10% of commitment
• The managers have had a successful track record in similar
    sectors and have delivered consistent returns. Operational      • Expected IRR: 25% gross p.a.
    value addition and domain knowledge would be the drivers of     • Upside Sharing: 20% of net profits of the fund with catch up
    IRR.                                                            • Management fee: 2% p.a. of the total commitment amount
• Based on the Investment team’s extensive business network in      • Setup fee : 2.25% upfront
    overweight sectors 60 high quality early stage proposals have
    been received over the last 12 months

                                                                                                                                     18
Asset Classes                             Tier-1*                                                          Tier-II**
 Residential    This sector is the only one to be left out of the correction   These cities still manage to sell from the attractive entry point
                wrath. Heavy media reporting’s on probable correction, 40%     (Avg. Rs.2800-3600 per sqft) but are getting over-supplied in
                down-trend in sales and unavailability of finance to           pockets. A recent report from Knight Frank suggests that these
                developers are the major factors putting pressure on this      cities have seen lot of investor confidence between 2007-2009
                segment to correct. The investor community also varies on      which for some reasons have seen 30% down-trend. Typically
                the assumptions on account of bad sales and gives their “no    the investor’s early buy-in and upfront payment of the total
                confidence motion” towards any visible appreciation. Markets   consideration for best discount gives the developer strong hold
                like NCR, Pune, Hyderabad and Chennai would set the course     time for local demand. Ironically, across markets Investors
                of correction on the forthcoming over-supply.                  contribute not more than 15% of sales.

Commercial/IT   Still in the shadows of over-supply and cautious expansion Commercial segment not that significant, but unlike Tier-I the
                approach by corporate, this segment has gone through price differentiation is double favoring commercial since most
                correction. Rates per sqft have seen almost 30% down-trend of them are in CBD areas.
                and will be stagnant for the coming 2-3 quarters. Surely, the
                segment is at the down-tip of the cycle, and is the best
                opportunity for companies looking for long term holding of
                real estate office space. Since most of the commercial growth
                had happened in 05-06, many lease agreements are getting
                expired giving way for companies to shift base, re-negotiate,
                etc. IT/ITEs would remain the main driver for consumption.
   Retail       Sales have definitely recovered but distress in the over-  Unlike the Tier 1 markets the retails is unable to cope with sales
                supplied market is evident. Many deals have been done on   and thus the sales to rent ratio is becoming bigger pulling down
                Revenue Share, giving more control to the Lessee to hold   the rent paying capacity. Important point also is that, unlike the
                price per sqft for a longer time-frame                     Tier 1 markets more than 40% of any mall in these cities are
                                                                           operated by local franchisees making cash-flows not regulated
    Land        Land is highest in demand and still a maintaining a steady Very similar to the trend in Tier 1 cities. Opportunistic
                growth of 15-20% per annum                                 investment can really give great returns since N.A land is still
                                                                           available cheap (between 200-300 per sqft)
                                                                                                                                                   19
Residential Market Snapshot (Supply and Developers)

As you would find out from the below mentioned table, most cities have supply concentrated in a particular zone and investment in these zones would be
lucrative (entry point being low) with a long term view, since the supply would always keep the capital value appreciating to 5-7% per annum. Rest zones
would be always speculative and demand led behavior. The only differentiator would be quality development which could command premium.

   Markets                       Major Locations/Zones                       Total Sqft (In Mn), Expected in                Established Builders
                                                                                        2011-2013
  Bangalore       Hebbal, Whitefiled, Hosur Road, Jayanagar, MG Road,       74Mn Sqft, out of which 60% supply is    Shobha, Prestige, Salarapuria,
                  Malleshwaram                                              in Hosur & Whitefiled followed by 18%    Purvankara, Brigade Group, Nitesh
                                                                            in Hebbal                                Estate, Mantri, Confident group, Pride
                                                                                                                     Group
     NCR          Gurgaon - DLF city, Sohna Rd, Manesar                     436 Mn sqft, out of which Noida-32%,     Parsavnath, Emaar MGF, DLF, Unitech,
                                                                            Ghaziabad-21%, Gurgaon-24% &             Ansal properties, M2K, Uppal, Cosmos,
                  Noida – Sec 14,15,92,93,128 and Greater Noida             Faridabad-12%.                           Suncity, Vipul
                  Ghaziabad – Indirapuram, Vaishali

                  Faridabad – prime chandanwood village, Sec 78,89

   Mumbai         Prime Residential Among Zones                             183 Mn Sqft, out of which 69% is         Hiranandani Developers Pvt Ltd,
                                                                            accounted from Prabhadevi, Ghatkopar,    Marathon Realty Pvt Ltd, Akruti City
                  Napean Sea Road, Tardeo, Worli, Lower Parel, Bandra,      Goregaon, Malad, Gorbunder, kalyan,      Ltd, Kalpataru Ltd, K Raheja Universal
                  Andheri West, Juhu and Powai                              Dombivili, Belapur and Panvel.           Pvt Ltd, K Raheja Corp, Lokhandwala
                                                                            Malad/Goregaon accounts for more         Group of Companies, Sheth,
                  Mid Segment Among Zones
                                                                            than 23mn sqft and other btw 10-12Mn     Rustomjee, DB Realty, Godrej
                  Prabhadevi, Ghatkopar, Goregaon, Malad, Gorbunder,        sqft                                     properties, Oberoi to name a few.
                  Kalyan, Dombivili, Belapur and Panvel

 Hyderabad        Banjara hills, Shameerpet, Securabad Contonment,          58 Mn sqft, out of which 58% supply is   DLF, Jayabheri, Manjeera, Mantri,
                  Ghatkesar, Old Hyderabad and Shamshabad                   expected in and around Hi-Tech city      Saisree, SMR Holdings, Aliens Group
                                                                                                                                                              20
Pune         Pimpri Chichwad and Chakan,                            93 Mn Sqft, out of which over 70% is   Kumar Builders, Gera, Lunkad,
                                                                        accounted by Pimpri Chinchwad,         Konark, Goel Ganga, Marvel,
                 Hinjewadi, Baner, Audh, Wakad and Balewadi
                                                                        Hinjewadi and Kalyani Nagar zones      Magarpatta, Rohan
                 Kothrud, Kondwa, Hadapsar, Central Pune

                 Kalyani Nagar, Viman Nagar, Kharadi
   Kolkata       CBD Areas-Ballygaunge, Carmac street and Park street   55Mn Sqft, out of which North 24    Ekta Developers, Eden group, Fort,
                                                                        Parganas accounts for more than 50% Mayfair, Merlin, Srijan group,
                 Salt Lake & EM Bypass
                                                                        of supply                           Swastic, Somani, Godrej, GM Group,
                 North 24 Parganas-Rajarhat, Barasat, madhyamgram                                           nangalia, Orbit, Bengal Sharachi, Sriji
                                                                                                            Developers
                 South 24 Parganas – narendrapur, Sonarpur

                 Batanagar & Mahestala
   Chennai       North Chennai – Ayanavaram, Kilpauk, Korathur,         68 Mn Sqft, of which South Chennai     Emmar, Ozone, Chaintanya, Mantri,
                 madhavaram, Perambur, Villivakam                       accounts for 64% of supply             Doshi, Sabari, Hiranandani, L&T,
                 South Chennai – Adambakam, Chromepet, madipakkam,                                             Unitech
                 Medavakkum, Sholinganur, OMR, Selaiyur, tamabaram,
                 Urapakam, Velachery

                 West – Ambattur, Annanagar, Avadi, KK Nagar,
                 manapakam, Nolambur, Porur, salingramam,
                 Sriperumpudur, Vadapalani

                 Central – Adayar, Alwarpet, Egmore, mataliyapuram,
                 Nungampakkam, Parry’s, Tnagar
Please Note:
1.Tier I* markets include Mumbai, Delhi & NCR, Bangalore, Pune, Chennai, Hyderabad and Kolkata
2.Tier II* markets includes all state capitals other than the Tier I markets
3.The IC note is proposed to be presented every quarter
                                                                                                                                                      21
Leveraging breadth of related businesses that KARVY is in
KARVY is an integrated financial services group, with Karvy Private Wealth being one of its arms. The entire
group’s strengths are leveraged to provide end-to-end wealth advice to Karvy Private Wealth clients. For
example, SME clients can receive advice on their personal wealth while also getting investment banking advice
from the I-banking arm of Karvy.

                                Maximum choice of products & services

KARVY Private Wealth offers the widest breadth of products and services, providing clients a variety of options
through a single contact. Products and services include equities, debt instruments, commodities, Mutual Funds,
Insurance, Structured Products, Financial Planning, real estate advice, etc.

                                          Product-neutral advice

We ensure that our recommendations are 100% product-neutral and unbiased because unlike other players,
we are neither tied up with any one particular insurance company nor do we have our own mutual funds.

                                            All-India presence
Set to have business in 20 - 25 cities we are poised to cater to families and businesses spread across multiple
cities in India providing them with combined and integrated advice. For one-off services, if required, we can
also leverage KARVY Group’s presence in 400 cities.
                                                                                                                  22
The information and views presented here are prepared by Karvy Private Wealth or other Karvy Group companies. 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.

The investments discussed or recommended here may not be suitable for all investors. Investors must make their own
investment decisions based on their specific investment objectives and financial position and using such independent advice,
as they believe necessary. While acting upon any information or analysis mentioned here, investors may please note that
neither Karvy nor any person connected with any associated companies of Karvy accepts any liability arising from the use of
this information and views mentioned here.

The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above-mentioned
companies from time to time. Every employee of Karvy and its associated companies are required to disclose their individual
stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment
recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has
either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only
through Karvy Stock Broking Ltd.

The information given in this document on tax are for guidance only, and should not be construed as tax advice. Investors are
advised to consult their respective tax advisers to understand the specific tax incidence applicable to them. We also expect
significant changes in the tax laws once the new Direct Tax Code is in force – this could change the applicability and incidence
of tax on investments




                                                                                                                                   23
Bangalore               080-26606126
                                  Chennai                 044-45925923
                                  Delhi                   011-43533941
                                  Goa                    0832-2731822
                                  Gurgaon                 0124-4780228
                                  Hyderabad               040-44507282
                                  Kolkata                 033-40515100
                                  Mumbai                  022-33055000
                                  Noida                   0120-4219708
                                  Pune                    020-30116238

     Email: wealth@karvy.com            SMS: ‘HNI’ to 56767         Website: www.karvywealth.com


Corporate Office : 702, Hallmark Business Plaza, Off Bandra Kurla Complex, Bandra (East), Mumbai – 400 051
                                                                                                             24

Contenu connexe

Tendances

Investor Guide 230584
Investor Guide 230584Investor Guide 230584
Investor Guide 230584MGD123
 
LPL Research Portfolio compass 1-23-13
LPL Research Portfolio compass 1-23-13LPL Research Portfolio compass 1-23-13
LPL Research Portfolio compass 1-23-13JP Marketing | NE
 
Performance of PE Ratio as an Technical Indicator
Performance of PE Ratio as an Technical IndicatorPerformance of PE Ratio as an Technical Indicator
Performance of PE Ratio as an Technical IndicatorSangamesh K.S
 
Emutual knowledge center_december_2021
Emutual knowledge center_december_2021Emutual knowledge center_december_2021
Emutual knowledge center_december_2021BinodShukla2
 
Trading bareng koko meetup
Trading bareng koko meetupTrading bareng koko meetup
Trading bareng koko meetupKokolato .
 
Access Bank Seminar Session 3b - Ebenezer Olufowose
Access Bank Seminar Session 3b - Ebenezer OlufowoseAccess Bank Seminar Session 3b - Ebenezer Olufowose
Access Bank Seminar Session 3b - Ebenezer Olufowoseproshare
 
KNR constructions a case study of patience and multibagger returns
KNR constructions   a case study of patience and multibagger returnsKNR constructions   a case study of patience and multibagger returns
KNR constructions a case study of patience and multibagger returnsNiteen S Dharmawat
 
Volatility in indian stock market and foreign institutional investor
Volatility in indian stock market and foreign institutional investorVolatility in indian stock market and foreign institutional investor
Volatility in indian stock market and foreign institutional investorPranjal Chopda
 
Finance project report on a study on financial derivatives ...
Finance project report on a study on  financial derivatives                  ...Finance project report on a study on  financial derivatives                  ...
Finance project report on a study on financial derivatives ...Mba projects free
 
A project report on market volatility the way to recover the difference in eq...
A project report on market volatility the way to recover the difference in eq...A project report on market volatility the way to recover the difference in eq...
A project report on market volatility the way to recover the difference in eq...Babasab Patil
 
Niveshak - The Investment Report
Niveshak - The Investment ReportNiveshak - The Investment Report
Niveshak - The Investment ReportWeSchool
 
A project report on fundamental & technical analysis of automobile sector
A project report on fundamental & technical analysis of automobile sectorA project report on fundamental & technical analysis of automobile sector
A project report on fundamental & technical analysis of automobile sectorBabasab Patil
 

Tendances (20)

Investor Guide 230584
Investor Guide 230584Investor Guide 230584
Investor Guide 230584
 
LPL Research Portfolio compass 1-23-13
LPL Research Portfolio compass 1-23-13LPL Research Portfolio compass 1-23-13
LPL Research Portfolio compass 1-23-13
 
Novjournalicai
NovjournalicaiNovjournalicai
Novjournalicai
 
Advice for the wise August 2012
Advice for the wise August 2012Advice for the wise August 2012
Advice for the wise August 2012
 
Untitleddocument
UntitleddocumentUntitleddocument
Untitleddocument
 
Bse indices version_2
Bse indices version_2Bse indices version_2
Bse indices version_2
 
Performance of PE Ratio as an Technical Indicator
Performance of PE Ratio as an Technical IndicatorPerformance of PE Ratio as an Technical Indicator
Performance of PE Ratio as an Technical Indicator
 
Emutual knowledge center_december_2021
Emutual knowledge center_december_2021Emutual knowledge center_december_2021
Emutual knowledge center_december_2021
 
Advice for the wise december'10
Advice for the wise   december'10Advice for the wise   december'10
Advice for the wise december'10
 
Trading bareng koko meetup
Trading bareng koko meetupTrading bareng koko meetup
Trading bareng koko meetup
 
Access Bank Seminar Session 3b - Ebenezer Olufowose
Access Bank Seminar Session 3b - Ebenezer OlufowoseAccess Bank Seminar Session 3b - Ebenezer Olufowose
Access Bank Seminar Session 3b - Ebenezer Olufowose
 
KNR constructions a case study of patience and multibagger returns
KNR constructions   a case study of patience and multibagger returnsKNR constructions   a case study of patience and multibagger returns
KNR constructions a case study of patience and multibagger returns
 
Equity analysis
Equity analysisEquity analysis
Equity analysis
 
Investeurs chronicles 7
Investeurs chronicles  7Investeurs chronicles  7
Investeurs chronicles 7
 
Volatility in indian stock market and foreign institutional investor
Volatility in indian stock market and foreign institutional investorVolatility in indian stock market and foreign institutional investor
Volatility in indian stock market and foreign institutional investor
 
Finance project report on a study on financial derivatives ...
Finance project report on a study on  financial derivatives                  ...Finance project report on a study on  financial derivatives                  ...
Finance project report on a study on financial derivatives ...
 
A project report on market volatility the way to recover the difference in eq...
A project report on market volatility the way to recover the difference in eq...A project report on market volatility the way to recover the difference in eq...
A project report on market volatility the way to recover the difference in eq...
 
Mt31112007
Mt31112007Mt31112007
Mt31112007
 
Niveshak - The Investment Report
Niveshak - The Investment ReportNiveshak - The Investment Report
Niveshak - The Investment Report
 
A project report on fundamental & technical analysis of automobile sector
A project report on fundamental & technical analysis of automobile sectorA project report on fundamental & technical analysis of automobile sector
A project report on fundamental & technical analysis of automobile sector
 

Similaire à Advice For The Wise April'11

Advice For The Wise - November'2011
Advice For The Wise - November'2011Advice For The Wise - November'2011
Advice For The Wise - November'2011Karvy Private Wealth
 
Dividend yield category - the consistent performer among diversified equity c...
Dividend yield category - the consistent performer among diversified equity c...Dividend yield category - the consistent performer among diversified equity c...
Dividend yield category - the consistent performer among diversified equity c...Dhuraivel Gunasekaran
 
Advice For The Wise - October'2011
Advice For The Wise - October'2011Advice For The Wise - October'2011
Advice For The Wise - October'2011Karvy Private Wealth
 
Advice for the Wise - February 2012
Advice for the Wise - February 2012Advice for the Wise - February 2012
Advice for the Wise - February 2012Karvy Private Wealth
 
Centurion Apartment REIT Investor Presentation
Centurion Apartment REIT Investor PresentationCenturion Apartment REIT Investor Presentation
Centurion Apartment REIT Investor Presentationgromundt
 
Advice For The Wise : September'2011
Advice For The Wise : September'2011Advice For The Wise : September'2011
Advice For The Wise : September'2011Karvy Private Wealth
 
HDFCsec-Learning Series-DIYSIP
HDFCsec-Learning Series-DIYSIPHDFCsec-Learning Series-DIYSIP
HDFCsec-Learning Series-DIYSIPHDFC securities
 
Gilt and income funds – right time to start sip?
Gilt and income funds – right time to start sip?Gilt and income funds – right time to start sip?
Gilt and income funds – right time to start sip?Dhuraivel Gunasekaran
 
Advantages And Disadvantages Of Stock Shares
Advantages And Disadvantages Of Stock SharesAdvantages And Disadvantages Of Stock Shares
Advantages And Disadvantages Of Stock SharesRenee Franco
 
Top Debt fund schemes to participate in falling interest rates environment
Top Debt fund schemes to participate in falling interest rates environmentTop Debt fund schemes to participate in falling interest rates environment
Top Debt fund schemes to participate in falling interest rates environmentDhuraivel Gunasekaran
 
Outlook us-2011
Outlook us-2011Outlook us-2011
Outlook us-2011jennacatao
 
Pension Risk Transfer Index: February 2012
Pension Risk Transfer Index: February 2012Pension Risk Transfer Index: February 2012
Pension Risk Transfer Index: February 2012Jay Dinunzio
 

Similaire à Advice For The Wise April'11 (20)

Advice For The Wise - November'2011
Advice For The Wise - November'2011Advice For The Wise - November'2011
Advice For The Wise - November'2011
 
Dividend yield category - the consistent performer among diversified equity c...
Dividend yield category - the consistent performer among diversified equity c...Dividend yield category - the consistent performer among diversified equity c...
Dividend yield category - the consistent performer among diversified equity c...
 
Advice For The Wise - October'2011
Advice For The Wise - October'2011Advice For The Wise - October'2011
Advice For The Wise - October'2011
 
Advice for the Wise - February 2012
Advice for the Wise - February 2012Advice for the Wise - February 2012
Advice for the Wise - February 2012
 
Advice For The Wise - July'2011
Advice For The Wise - July'2011Advice For The Wise - July'2011
Advice For The Wise - July'2011
 
Advice for the Wise April 2012
Advice for the Wise April 2012Advice for the Wise April 2012
Advice for the Wise April 2012
 
Centurion Apartment REIT Investor Presentation
Centurion Apartment REIT Investor PresentationCenturion Apartment REIT Investor Presentation
Centurion Apartment REIT Investor Presentation
 
Advice For The Wise : September'2011
Advice For The Wise : September'2011Advice For The Wise : September'2011
Advice For The Wise : September'2011
 
Advice For The Wise November 2012
Advice For The Wise  November 2012Advice For The Wise  November 2012
Advice For The Wise November 2012
 
Advice for the wise January' 11
Advice for the wise January' 11Advice for the wise January' 11
Advice for the wise January' 11
 
HDFCsec-Learning Series-DIYSIP
HDFCsec-Learning Series-DIYSIPHDFCsec-Learning Series-DIYSIP
HDFCsec-Learning Series-DIYSIP
 
Weekly market review july 13 2012
Weekly market review   july 13 2012Weekly market review   july 13 2012
Weekly market review july 13 2012
 
Weekly market review July 13, 2012
Weekly market review   July 13, 2012Weekly market review   July 13, 2012
Weekly market review July 13, 2012
 
Gilt and income funds – right time to start sip?
Gilt and income funds – right time to start sip?Gilt and income funds – right time to start sip?
Gilt and income funds – right time to start sip?
 
Advice for the Wise July 2012
Advice for the Wise July 2012Advice for the Wise July 2012
Advice for the Wise July 2012
 
Advantages And Disadvantages Of Stock Shares
Advantages And Disadvantages Of Stock SharesAdvantages And Disadvantages Of Stock Shares
Advantages And Disadvantages Of Stock Shares
 
Top Debt fund schemes to participate in falling interest rates environment
Top Debt fund schemes to participate in falling interest rates environmentTop Debt fund schemes to participate in falling interest rates environment
Top Debt fund schemes to participate in falling interest rates environment
 
Advice For The Wise March 2013
Advice For The Wise  March 2013Advice For The Wise  March 2013
Advice For The Wise March 2013
 
Outlook us-2011
Outlook us-2011Outlook us-2011
Outlook us-2011
 
Pension Risk Transfer Index: February 2012
Pension Risk Transfer Index: February 2012Pension Risk Transfer Index: February 2012
Pension Risk Transfer Index: February 2012
 

Plus de Karvy Private Wealth

The world this week 15th june From Karvy Wealth
The world this week 15th june From Karvy WealthThe world this week 15th june From Karvy Wealth
The world this week 15th june From Karvy WealthKarvy Private Wealth
 
The World This Week November 14 - November 18 2016
The World This Week November 14 - November 18 2016The World This Week November 14 - November 18 2016
The World This Week November 14 - November 18 2016Karvy Private Wealth
 
The World This Week November 7 - November 11 - 2016
The World This Week November 7 - November 11 - 2016The World This Week November 7 - November 11 - 2016
The World This Week November 7 - November 11 - 2016Karvy Private Wealth
 
The World This Week October 31 - November 4 - 2016
The World This Week October 31 - November 4 - 2016The World This Week October 31 - November 4 - 2016
The World This Week October 31 - November 4 - 2016Karvy Private Wealth
 
The World This Week October 24 - October 28 - 2016
The World This Week October 24 - October 28  - 2016The World This Week October 24 - October 28  - 2016
The World This Week October 24 - October 28 - 2016Karvy Private Wealth
 
The World This Week October 17 - October21 2016
The World This Week October 17 - October21 2016The World This Week October 17 - October21 2016
The World This Week October 17 - October21 2016Karvy Private Wealth
 
The world this week October 10 - October 14 - 2016
The world this week October  10 - October 14  - 2016The world this week October  10 - October 14  - 2016
The world this week October 10 - October 14 - 2016Karvy Private Wealth
 
The World This Week October 3 - October 7 - 2016
The World This Week October 3 - October 7  - 2016The World This Week October 3 - October 7  - 2016
The World This Week October 3 - October 7 - 2016Karvy Private Wealth
 
The World This Week - 5th to 9th Sept, 2016
The World This Week - 5th to 9th Sept, 2016The World This Week - 5th to 9th Sept, 2016
The World This Week - 5th to 9th Sept, 2016Karvy Private Wealth
 
The World This Week - 29th Aug to 2nd Sept, 2016
The World This Week - 29th Aug to 2nd Sept, 2016The World This Week - 29th Aug to 2nd Sept, 2016
The World This Week - 29th Aug to 2nd Sept, 2016Karvy Private Wealth
 
Advice for the Wise - September 2016
Advice for the Wise - September 2016Advice for the Wise - September 2016
Advice for the Wise - September 2016Karvy Private Wealth
 
The World This Week - 22nd to 26th Aug, 2016
The World This Week - 22nd to 26th Aug, 2016The World This Week - 22nd to 26th Aug, 2016
The World This Week - 22nd to 26th Aug, 2016Karvy Private Wealth
 
The World This Week - 16th to 19th August, 2016
The World This Week - 16th to 19th August, 2016The World This Week - 16th to 19th August, 2016
The World This Week - 16th to 19th August, 2016Karvy Private Wealth
 
The World This Week - 8th to 12th August, 2016
The World This Week - 8th to 12th August, 2016The World This Week - 8th to 12th August, 2016
The World This Week - 8th to 12th August, 2016Karvy Private Wealth
 

Plus de Karvy Private Wealth (20)

The world this week 8th june
The world this week 8th juneThe world this week 8th june
The world this week 8th june
 
The world this week 1st june
The world this week 1st juneThe world this week 1st june
The world this week 1st june
 
The world this week 15th june From Karvy Wealth
The world this week 15th june From Karvy WealthThe world this week 15th june From Karvy Wealth
The world this week 15th june From Karvy Wealth
 
Advice for the Wise November 2016
Advice for the Wise   November 2016Advice for the Wise   November 2016
Advice for the Wise November 2016
 
Advice for the Wise October 2016
Advice for the Wise   October 2016Advice for the Wise   October 2016
Advice for the Wise October 2016
 
The World This Week November 14 - November 18 2016
The World This Week November 14 - November 18 2016The World This Week November 14 - November 18 2016
The World This Week November 14 - November 18 2016
 
The World This Week November 7 - November 11 - 2016
The World This Week November 7 - November 11 - 2016The World This Week November 7 - November 11 - 2016
The World This Week November 7 - November 11 - 2016
 
The World This Week October 31 - November 4 - 2016
The World This Week October 31 - November 4 - 2016The World This Week October 31 - November 4 - 2016
The World This Week October 31 - November 4 - 2016
 
The World This Week October 24 - October 28 - 2016
The World This Week October 24 - October 28  - 2016The World This Week October 24 - October 28  - 2016
The World This Week October 24 - October 28 - 2016
 
The World This Week October 17 - October21 2016
The World This Week October 17 - October21 2016The World This Week October 17 - October21 2016
The World This Week October 17 - October21 2016
 
The world this week October 10 - October 14 - 2016
The world this week October  10 - October 14  - 2016The world this week October  10 - October 14  - 2016
The world this week October 10 - October 14 - 2016
 
The World This Week October 3 - October 7 - 2016
The World This Week October 3 - October 7  - 2016The World This Week October 3 - October 7  - 2016
The World This Week October 3 - October 7 - 2016
 
The World This Week - 5th to 9th Sept, 2016
The World This Week - 5th to 9th Sept, 2016The World This Week - 5th to 9th Sept, 2016
The World This Week - 5th to 9th Sept, 2016
 
The World This Week - 29th Aug to 2nd Sept, 2016
The World This Week - 29th Aug to 2nd Sept, 2016The World This Week - 29th Aug to 2nd Sept, 2016
The World This Week - 29th Aug to 2nd Sept, 2016
 
Advice for the Wise - September 2016
Advice for the Wise - September 2016Advice for the Wise - September 2016
Advice for the Wise - September 2016
 
GST Bill - Infographic
GST Bill - InfographicGST Bill - Infographic
GST Bill - Infographic
 
The World This Week - 22nd to 26th Aug, 2016
The World This Week - 22nd to 26th Aug, 2016The World This Week - 22nd to 26th Aug, 2016
The World This Week - 22nd to 26th Aug, 2016
 
The World This Week - 16th to 19th August, 2016
The World This Week - 16th to 19th August, 2016The World This Week - 16th to 19th August, 2016
The World This Week - 16th to 19th August, 2016
 
The World This Week - 8th to 12th August, 2016
The World This Week - 8th to 12th August, 2016The World This Week - 8th to 12th August, 2016
The World This Week - 8th to 12th August, 2016
 
GST Bill - Infographic
GST Bill - InfographicGST Bill - Infographic
GST Bill - Infographic
 

Dernier

LIC PRIVATISATION its a bane or boon.pptx
LIC PRIVATISATION its a bane or boon.pptxLIC PRIVATISATION its a bane or boon.pptx
LIC PRIVATISATION its a bane or boon.pptxsonamyadav7097
 
MARKET FAILURE SITUATION IN THE ECONOMY.
MARKET FAILURE SITUATION IN THE ECONOMY.MARKET FAILURE SITUATION IN THE ECONOMY.
MARKET FAILURE SITUATION IN THE ECONOMY.Arifa Saeed
 
Contracts with Interdependent Preferences
Contracts with Interdependent PreferencesContracts with Interdependent Preferences
Contracts with Interdependent PreferencesGRAPE
 
Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]Commonwealth
 
Work and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB fundingWork and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB fundingHenry Tapper
 
The CBR Covered Bond Investor Roundtable 2024
The CBR Covered Bond Investor Roundtable 2024The CBR Covered Bond Investor Roundtable 2024
The CBR Covered Bond Investor Roundtable 2024Neil Day
 
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTESACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTESKumarJayaraman3
 
Zakat and it’s Social Benefits - THE FORGOTTEN PILLAR OF ISLAM
Zakat and it’s Social Benefits - THE FORGOTTEN PILLAR OF ISLAMZakat and it’s Social Benefits - THE FORGOTTEN PILLAR OF ISLAM
Zakat and it’s Social Benefits - THE FORGOTTEN PILLAR OF ISLAMFaisal834049
 
The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?Stephen Perrenod
 
Buy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxBuy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxPrecize Formely Leadoff
 
Introduction to Entrepreneurship and Characteristics of an Entrepreneur
Introduction to Entrepreneurship and Characteristics of an EntrepreneurIntroduction to Entrepreneurship and Characteristics of an Entrepreneur
Introduction to Entrepreneurship and Characteristics of an Entrepreneurabcisahunter
 
Stock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdfStock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdfMichael Silva
 
What Key Factors Should Risk Officers Consider When Using Generative AI
What Key Factors Should Risk Officers Consider When Using Generative AIWhat Key Factors Should Risk Officers Consider When Using Generative AI
What Key Factors Should Risk Officers Consider When Using Generative AI360factors
 
CLMV-Outlook-March-2024-ENG-20240327.pdf
CLMV-Outlook-March-2024-ENG-20240327.pdfCLMV-Outlook-March-2024-ENG-20240327.pdf
CLMV-Outlook-March-2024-ENG-20240327.pdfSCBEICSCB
 
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdfLundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdfAdnet Communications
 
ACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINT
ACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINTACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINT
ACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINTindexPub
 
Taipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
Taipei, A Hidden Jewel in East Asia - PR Strategy for TourismTaipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
Taipei, A Hidden Jewel in East Asia - PR Strategy for TourismBrian Lin
 

Dernier (20)

LIC PRIVATISATION its a bane or boon.pptx
LIC PRIVATISATION its a bane or boon.pptxLIC PRIVATISATION its a bane or boon.pptx
LIC PRIVATISATION its a bane or boon.pptx
 
MARKET FAILURE SITUATION IN THE ECONOMY.
MARKET FAILURE SITUATION IN THE ECONOMY.MARKET FAILURE SITUATION IN THE ECONOMY.
MARKET FAILURE SITUATION IN THE ECONOMY.
 
Contracts with Interdependent Preferences
Contracts with Interdependent PreferencesContracts with Interdependent Preferences
Contracts with Interdependent Preferences
 
Effects & Policies Of Bank Consolidation
Effects & Policies Of Bank ConsolidationEffects & Policies Of Bank Consolidation
Effects & Policies Of Bank Consolidation
 
Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]
 
Work and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB fundingWork and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB funding
 
The CBR Covered Bond Investor Roundtable 2024
The CBR Covered Bond Investor Roundtable 2024The CBR Covered Bond Investor Roundtable 2024
The CBR Covered Bond Investor Roundtable 2024
 
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTESACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
 
Zakat and it’s Social Benefits - THE FORGOTTEN PILLAR OF ISLAM
Zakat and it’s Social Benefits - THE FORGOTTEN PILLAR OF ISLAMZakat and it’s Social Benefits - THE FORGOTTEN PILLAR OF ISLAM
Zakat and it’s Social Benefits - THE FORGOTTEN PILLAR OF ISLAM
 
The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?
 
Monthly Economic Monitoring of Ukraine No.230, March 2024
Monthly Economic Monitoring of Ukraine No.230, March 2024Monthly Economic Monitoring of Ukraine No.230, March 2024
Monthly Economic Monitoring of Ukraine No.230, March 2024
 
Buy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxBuy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptx
 
Introduction to Entrepreneurship and Characteristics of an Entrepreneur
Introduction to Entrepreneurship and Characteristics of an EntrepreneurIntroduction to Entrepreneurship and Characteristics of an Entrepreneur
Introduction to Entrepreneurship and Characteristics of an Entrepreneur
 
Stock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdfStock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdf
 
What Key Factors Should Risk Officers Consider When Using Generative AI
What Key Factors Should Risk Officers Consider When Using Generative AIWhat Key Factors Should Risk Officers Consider When Using Generative AI
What Key Factors Should Risk Officers Consider When Using Generative AI
 
CLMV-Outlook-March-2024-ENG-20240327.pdf
CLMV-Outlook-March-2024-ENG-20240327.pdfCLMV-Outlook-March-2024-ENG-20240327.pdf
CLMV-Outlook-March-2024-ENG-20240327.pdf
 
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdfLundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
 
ACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINT
ACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINTACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINT
ACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINT
 
Taipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
Taipei, A Hidden Jewel in East Asia - PR Strategy for TourismTaipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
Taipei, A Hidden Jewel in East Asia - PR Strategy for Tourism
 
E-levy and Merchant Payment Exemption in Ghana
E-levy and Merchant Payment Exemption in GhanaE-levy and Merchant Payment Exemption in Ghana
E-levy and Merchant Payment Exemption in Ghana
 

Advice For The Wise April'11

  • 1. ADVICE for the WISE Newsletter –April’11
  • 2. Index Page No. Economic Update 4 Equity Outlook 8 Debt Outlook 13 Forex 15 Commodities 16 Real Estate 19 2
  • 3. Dear Investor, The month of March has seen the return of the positive sentiments to Risk taking investors can evaluate private equity as an interesting the Indian Equity markets and to a smaller extent to Indian Debt and sufficiently diversified investment option. It also has the markets. FIIs poured money into Indian equities thus helping the indices additional positive of enforcing a long term outlook which is often to decisively break out of the range of the earlier months. Part of this lacking in public equity investments that allow entry and exit at rally is genuine catching up of the valuations in light of expected results. will. Private Equity can be thought of as an aggressive play on India Some other factors that contributed to the sentiment were lack of major growth story. This is because in a high growth environment, not negative news on the 2G scam investigation and relatively contained only do several small companies do well to deliver supernormal inflation levels. At the current level, the equity markets seem fairly returns to early investors, the downside risk is also reduced priced. Any quick run-up from here would enter the overvalued significantly for the suboptimal investment choices. territory. As of now, we continue to recommend investing into Indian When markets show some positive momentum, investors often equities. worry that they might buy into an overvalued market. On the other The fortunes of different sectors changed quite rapidly in the last few hand many times investors keep waiting on the sidelines for the months. Banking which went through a rough patch in December last correction that never happens. Principal protected structured year is back to being a favored sector. Real estate showed some signs of products can provide a way out of this by ensuring that the revival last year but has lost steam again owing to corporate governance maximum downside remains at zero while the participation in the concerns. FMCG had performed quite well in the recent months whereas upside is maintained and even enhanced. Often some degree of infrastructure and cyclical sectors like metals lagged behind. Going innovation in these products can allow an investor to take a more forward we believe that equity portfolios can be altered to include more specific view on the market movement – thus enabling aggressive sectors such as metals and infrastructure. In the coming diversification and enhancement of returns for most outcomes of months defensive sectors like FMCG and Pharma may not deliver very market levels in future. good returns. The liquidity crunch of last month has now eased partially. The yields have stayed steady or come down a little. Fixed deposit rates seem to have peaked as some banks have started to cut the FD rates. Most of this indicates that the debt investment returns have hit their maximum and could well be on their way down. For clients looking to invest into debt it is advisable to lock in the higher rates/yields available now. “Advisory services are provided through Karvy Stock Broking Ltd. (PMS) having SEBI Registration No: INP000001512. Investments are subject to market risks. Please read the disclaimer on slide no.23” 3
  • 4. As on Change over Change over 130 Sensex S&P 500 Nifty Nikkei 225 120 Mar 31 st 2011 last month last year 110 100 BSE Sensex 19,445 9.1% 10.9% 90 Equity S&P Nifty 5,833 9.4% 11.1% 80 70 markets S&P 500 1,325 (0.1%) 13.4% Dec-10 Mar-10 Oct-10 Aug-10 Apr-10 Jan-11 Sep-10 Nov-10 May-10 Jul-10 Jun-10 Nikkei 225 9,755 (8.2%) (12.0%) 10 yr Gsec 8.8 8.3 7.8 10-yr G-Sec Yield 7.98% (2 bps) 13 bps 7.3 Debt markets Call Markets 9.25% 2.4 bps 4.25 bps 6.8 Fixed Deposit* 8.25% 0 bps 225 bps 22000 21000 20000 19000 Commodity RICI Index 4,275 2.4% 33.6% 18000 17000 Gold markets Gold (`/10gm) 20,760 (0.2%) 27.4% 16000 15000 Crude Oil ($/bbl) 118.6 4% 46% 48 47 `/$ Forex Rupee/Dollar 44.65 1.2% (0.4%) 46 45 44 markets Yen/Dollar 82.86 (1.3%) (11.9%) 43 42 May-… Mar-11 Mar-10 Dec-10 Oct-10 Aug-10 Apr-10 Jan-11 Feb-11 Sep-10 Jul-10 Nov-10 Jun-10 * Indicates SBI one-year FD 4
  • 5. • The Conference Board Consumer Confidence Index, which had increased in February, declined in March. The Index now stands at 63.4 down from 72 in US February. This is due to consumers short term outlook being less favorable than in February . • US m-o-m unemployment rate drops to 8.8 per cent in Mar 11. • Euro-zone PMI declined to 57.6 in March, down from a four-and-a-half year high of 58.2 in Feb 11. All countries saw a slower pace of growth than in February, but France and Germany continued to see strong increase in Europe manufacturing and services-sector output. • Unemployment rate in the Euro zone at 9.9% in Feb 11, compared to 10% in Jan 11 . • The Japan Manufacturing Purchasing Managers Index (PMI) fell to a seasonally adjusted 46.4 in March, the lowest since April 2009, down from February’s Japan 52.9, owing to the disrupted supply chains and production operations post the massive earth-quake and Tsunami • Japan’s unemployment rate decreased to 4.6% in Feb 11 from 4.9% in Jan 11 • The HSBC China Manufacturing Purchasing Managers Index, a gauge of nationwide manufacturing activity, remained almost flat at 51.8 in Mar from Emerging 51.7 in Feb. economies • Chinese economy is expected to slow down to grow at 9.6% in 2011.The retail sales rose 15.8% in the first two months of 2011 which was 3.3% lower than December owing to the decline in consumer confidence in recent months. 5
  • 6. IIP monthly data 20.0% • The GDP growth rate for Q2 FY11 came in at 8.9% 18.0% 16.0% backed by a strong growth in services and 14.0% agricultural output. 12.0% 10.0% 8.0% 6.0% • The agriculture sector, which accounts for nearly 4.0% 17% of GDP, rose 4.4% and this offset the 2.0% 0.0% moderation manufacturing sector growth, where production went up by 9.8%. The services sector too grew at 9.7% during July-September this year, led mainly by finance and real estate as well as trade, hotels, transport and communication • Industrial output as measured by the Index of Industrial Production (IIP) grew by 3.7% (y-o-y) in • The Finance ministry is targeting FY11 growth at January ‘11 as compared to an upward revised 2.7% in December ’10. ~8.50% - 8.75% which may be revised upwards. We believe the current target is sustainable as we expect manufacturing and service sectors to • Capital good output contracted 18.6 percent continue to drive growth in the next few quarters. compared with an expansion of 57.9 percent in the year ago period. 10 9 GDP growth 8 • We believe that monthly indicators are not a very 7 efficient way of indicating growth and the lower 6 numbers could also be attributed to higher base 5 4 effect. But, the growth will eventually moderate out. FY09 (Q3) FY09 (Q4) FY10 (Q1) FY10(Q2) FY10(Q3) FY10(Q4) FY11(Q1) FY11(Q2) 6
  • 7. Growth in credit & deposits of SCBs • Inflation as measured by WPI increased 30.0% Bank Credit Aggregate Deposits marginally and stood at 8.31% (y-o-y) for the 25.0% month of February -11 as compared to 8.23% 20.0% during January 11. Rising oil prices and high 15.0% food prices have led to high inflation in the 10.0% month. These figures are based on the new 5.0% base year and WPI list. Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 • We expect WPI inflation numbers to moderate • Bank credit growth remained stable at 23.2% in the in m-o-m inflation numbers due to the expected month of February while Deposits grew by 16.4% decrease in food inflation and the monetary compared to 15.9% in January 2011. tightening stance by RBI, but increasing fuel prices may be a cause of worry. • Growth of credit demand and tight liquidity had put pressure on the banks to raise their deposit rates,. Though we see liquidity concerns easing, high Wholesale Price Index 12.0% inflationary pressure may lead the RBI to increase 10.0% rates further. 8.0% 6.0% • We expect credit growth to settle at ~20% levels in 4.0% the coming quarters on the back of improving 2.0% business confidence and decline in risk aversion on 0.0% -2.0% Nov-10 Feb-11 Feb-10 Sep-10 Oct-10 May-10 Aug-10 Jul-10 Jun-10 Apr-10 Mar-10 Dec-10 Jan-11 the part of banks. 7
  • 8. March turned out to be a good month for Indian equity markets. In the first two months of CY11, Nifty ended on a negative note with an outflow of 9000 crores by FII. This changed in the month of March with a gain 9.4%. FIIs returned in the last week of March with almost 9000 cr invested in 7 days. The FII buying was seen across quality large cap names and a few mid-cap ideas. On the macro economic front, consumer demand continues to hold up quite well across both rural and urban India. March witnessed strong auto sales numbers growth. All manufacturers’ sales surpassed expectations as retail demand continues to remain buoyant with two wheeler and four wheeler sales numbers well ahead of expectations. The sector which has seen the most difficult times last year was infrastructure. There were various issues in terms of environmental clearances, lack of new orders, land acquisition and commodity prices. There seems to be some movement on the first two issues. Last month saw several coal mine development plans being cleared by the environment ministry. A few commodity green field projects also got clearances. There was a revival in order announcements by key infrastructure vendors like PGCIL which announced its largest ever Transmission & Distribution order of 5000 crores. NHAI is also expected to announce highway development orders to the tune of 2000 crores in this quarter. This momentum, if continued, will provide a much needed fillip to infrastructure development of the country and would be a big positive for the infrastructure stocks. Concerns related to commodity prices and interest rates have already been priced in by the market. The government also seems keen to press ahead with key reforms and introduced GST and Pension Reform bill in parliament. Crude continues to be a cause of concern with Nymex crude touching 109$/barrel driven by continued unrest in Middle East and North Africa. Fighting continues in Libya with no side emerging as a clear winner. It would be prudent to assume that Libyan supplies would be disrupted for some time. Saudi Arabia has increased supplies to make up for that. However, concerns remain on the unrest in Yemen and Bahrain spreading to Saudi Arabia which is the world’s largest crude producer. 8
  • 9. Food price inflation in mid-March again touched the double digit levels due to firm price trend seen in protein rich items like milk, cereals and fish. We now expect WPI inflation in March to cross 8%. We would expect inflation to stay at elevated levels led by firm food price trends and high commodity prices and average around 7% in Fy12. RBI is expected to announce its forecast for full year inflation in the May review. We would expect a further hike of 25bps when RBI next meets with a total hike of 50 to 100 bps for FY12. This view would change if there is any big spike in retail fuel prices led by continued upside to global crude prices. The market seems to be trading at reasonable valuations of around 16 times based on FY12 earnings. Further clarity on valuations will emerge once the Q4 results start coming in from second week on April. We believe that in Q4 FY11, we would witness steady earnings growth of 17-18% for Nifty companies. Similar to the scenario in Q3FY11, manufacturing sector might face some earnings disappointments due to high commodity prices and interest rates, but that should get compensated by the increase in earnings of Metal companies. We would continue to maintain a strict vigil on crude prices and inflationary expectations in the economy. We like sectors with earnings visibility, growth, superior capital efficiency of the businesses & good corporate governance and have maintained overweight position on Financials, Metals, Healthcare & Capital Goods. FII & MF data 25000.0 • After pulling out ` 9,400 Cr. in this year (Jan & Feb) FIIs 20000.0 FII MF invested `6898 Cr. in the Indian markets in the month of 15000.0 March’11. High growth prospects in the Indian market are a 10000.0 driver for these investments. 5000.0 0.0 • Mutual Funds invested around ` 459 Cr. in the month of -5000.0 February. -10000.0 -15000.0 9
  • 10. Sector Stance Remarks We believe in a large sized opportunity presented by Pharma sector in India. India’s strength in generics is difficult to replicate due to quality and quantity of available skilled manpower. With the developed Healthcare Overweight world keen to cut healthcare costs, and a vast pipeline of drugs going off-patent, Indian pharma players are at the cusp of rapid growth. Here, we have taken exposure to medium-sized, non-index ideas while trying to play on the opportunity in Generics and CRAMS. The USD 1 trillion Infra opportunity is hard to ignore. Here, we have carefully taken Power sector as our dominant bet over other sub sectors such as ports, roads and telecom infrastructure, because of E&C Equalweight favorable economics under PPP model. Within power, we focus on the engineering companies over utilities, T&D and other infrastructure owners because of their superior profitability and better competitive dynamics. Financial sector is undeniably the lubricant for economic growth. Whether the growth comes from consumption or investments, credit growth is inevitable. Being a well regulated sector, BFSI in India has BFSI Overweight good asset quality and capital adequacy ratios. This, when juxtaposed to the growth opportunity available makes an attractive long term opportunity. The exposure is in “discretionary consumption” beneficiaries such as Paints and branded food, as the FMCG Neutral growth in this segment will disproportionately higher vis-à-vis the increase in disposable incomes. This also provides a defensive posture to the portfolio. The regulatory hurdles, competitive pressures and leverage prevent any return to high rofitability levels in the short to medium term. The huge capex incurred in the rollout of 3G services will put further Telecom Underweight stress on the already stretched balance sheets. Remain cautious on Sector’s prospects. 10
  • 11. Sector Stance Remarks Robust volume growth led by some uptick in pricing makes IT an attractive investment. Market IT/ITES Equalweight share gains led by deeper and wider expansion of global delivery model will drive earnings growth. Best played through Tier I stocks. Demand outlook remains very robust with strong earnings growth despite raw material price hikes Automobiles Overweight and raging competition. We are more bullish on commercial vehicle and agricultural vehicles segment due to lesser competition and higher pricing power. Through a single company, we have taken a large-sized exposure to refinery and natural gas exploration sector. The regulatory cap on RoE does not allow a vast value creation opportunity in Energy Underweight the infrastructure owning companies. We have also purposely tried to stay away from PSUs, due to issues of cross subsidization distorting the underlying economics of oil exploration and refinery businesses. Indian metal companies will benefit from global upturn in demand. Commodity prices have Metals Equal weight moved up significantly as recovery takes place in US and Europe. Positive on the producers of Steel, Copper and Aluminium. Cement demand will certainly grow over the next three years. But the issue is on the supply side. Cement Underweight We do see an oversupply situation for the next 3-4 quarters. We like the growth prospects of power sector but believe that value will be created by Power Utilities Underweight engineering services providers. Merchant power rates have been sliding downwards and coal prices have been on the way up putting pressure on return ratios. 11
  • 12. Basic Theme A diversified portfolio of stocks that seeks Alpha through superior stock selection. The Portfolio Management adopts a comprehensive approach and invests across sectors, investment themes and market capitalization categories. Portfolio Details Absolute Returns (%) Placement fee 2% Comparatives 3 Month Since Inception Exit Load Nil (Full management fee to be levied if redeemed before 1 yr) 2.5% for investments 2% for investments Alpha Portfolio -6.4% 17.0% Management Fee NIL below Rs. 1 Cr. above Rs. 1 Cr. -4.9% 11.7% S&P CNX Nifty Profit Share NIL NIL 15% of all gains Top 10 Holdings Sector Allocation Performance (as on 31st Mar 2011) Reliance Industries Ltd. 8.5 20% 6.8 17.0% Infosys Technologies Ltd. Energy Metals BFSI Alpha Portfolio Nifty 7.9% 26.5% HDFC 6.4 8.5% 15% Others 11.7% Punjab National Bank 5.9 11.0% State Bank of India 5.8 IT 10% 6.8% Titan Industries Ltd. 5.3 FMCG Capital 18.3% Goods 5% Nestle India Ltd. 5.1 Pharma 13.0% 7.9% Larsen & Toubro Ltd. 5.1 0% Bharat Heavy Electricals Ltd. 4.9 3M Since Inception (30/11/09) Page Industries 4.5 -5% -4.9% Top 10 Stock Concentration 58.3 -6.4% -10% 12
  • 13. Yield curve 9.0 • The benchmark 10 yr G-sec yield decreased 8.5 marginally from 8.0% in the month of February 8.0 ‘11 to close at around 7.98% in February ‘11. 7.5 • With no respite from the high inflation in spite 7.0 of monetary tightening, it is possible that RBI 6.5 may take a stand that the monetary tightening is (%) 1.0 7.1 13.2 18.3 19.3 0.0 2.1 3.1 4.1 5.1 6.1 8.2 9.2 10.2 11.2 12.2 14.2 15.3 16.3 17.3 unlikely to bring down food inflation in a direct manner. • We expect yields at the longer end of the yield curve to remain stable. High inflation, monetary 8.4 10-yr G-sec yield tightening and rising credit growth will keep the 8.2 yields at the longer end range bound. 8 7.8 • After the rate hike by RBI in Mar, the 10 year G 7.6 7.4 Sec yields are trading around 8.0% from 8.15 7.2 levels in Jan 2011. If the inflation continues to be 7 high, there may be another increase in the 6.8 interest rates by RBI. 13
  • 14. Category Outlook Details We recommend short term bond funds with a 6-12 month investment horizon as we expect them to deliver superior Short Tenure returns due to high YTM. We have seen the short term yields Debt harden due to reduced liquidity in the market and consecutive rate hikes prompted by inflationary pressures. Hence, Short term bond funds and FMPs provide an interesting investment option. Some AA and select A rated securities are very attractive at the current yields. A similar trend can be seen in the Fixed Credit Deposits also. Tight liquidity in the system has also contributed to widening of the spreads making entry at current levels attractive. With tight liquidity and inflationary pressure being high, we expect more rate hikes in the current year. As the inflationary Long Tenure pressure begins to settle down, these may be attractive Debt investments but currently, we would recommend staying out of the longer term investments. 14
  • 15. Rupee movement vis-à-vis other currencies (M-o-M) Trade balance and export-import data 80 0 Export Import Trade Balance (mn $) 60 40 -5000 20 -10000 0 -20 -15000 • Exports for the month of February increased by 49.7% (y-o-y) while imports increased by 21.2% over last year. The trade deficit increased to USD 8.1 bn. 140000 120000 Capital Account Balance 100000 80000 •The rupee appreciated against all the currencies except the 60000 euro. 40000 20000 •The appreciation was on the back of improved performance of 0 FY 09 (Q4) FY 10 (Q1) FY 10 (Q2) FY 10 (Q3) FY 10 (Q4) FY 11 (Q1) FY 11 (Q2) FY 11 (Q3) the Indian equity markets and inflow of funds in to the domestic markets • Capital account balance continues to be positive through •Going forward, the rupee will be helped by the narrowing of FY11 and stands at `241293 Cr. for the Q1 – Q3. the current account deficit and the inflow of funds into the • We expect the capital account balance to remain positive domestic markets. However rising oil prices remains a concern. as higher interest rates would make investment in the Indian markets attractive hence drawing investments into the market. 15
  • 16. Gold prices continue to remain stable amid demand from 22000 Gold 21000 emerging economies including China, where the investment 20000 demand growth was strongest last year. The global political 19000 Precious uncertainty and growing Middle East tensions shall continue to 18000 17000 Metals support prices. Further, the seasonal demand during Akshaya 16000 15000 Tritiya in India is likely to support prices. Nevertheless, we do May-10 Mar-10 Mar-11 Apr-10 Aug-10 Sep-10 Feb-11 Jun-10 Nov-10 Dec-10 Oct-10 Jul-10 Jan-11 not expect any sharp spikes in the yellow metal in the near term; however the falling dollar is a concern and shall push the metal prices higher. 120 Crude Although the Middle East status quo remains, crude oil prices 110 found support from the renewed demand for conventional 100 energy after the Japanese Nuclear fiasco. The difference 90 Oil & Gas between WTI and Brent continues to wide. Crude is expected 80 70 to remain stable in the near term amid declining dollar aiding 60 its rise. May 10 Mar 10 Mar 11 Apr 10 Aug 10 Sep 10 Feb 11 Jun 10 Nov 10 Dec 10 Oct 10 Jul 10 Jan 11
  • 17. Tenor 36/40 months Issuer Karvy Financial Services Limited Reference Index S&P CNX Nifty Index Principal Protection 100% Initial Fixing Level Official Closing level of S&P CNX Nifty Index as on DDA Final Fixing Level Average of Official Closing Level of S&P CNX Nifty Index as on 34M, 35M and 36M Exit Nifty Level Official Closing level of S&P CNX Nifty Index as on DDA +36M Participation Rate 200% Knockout Level 150% of Initial Fixing Level Knockout Rebate 30% 2 * Max {0, (Final Fixing Level / Initial Fixing Level) -1}, if Knockout event is not Payoff triggered 17
  • 18. Overview Product Features • Aditya Birla has launched a private equity fund targeting • Fund size: Rs. 350 Cr. + green shoe option of Rs. 150 Cr. innovation themed growth capital investments within sunrise • Sponsor Commitment: 10% sectors – Lifestyle, Lifeskills and Education, Lifecare and • Fund tenure: 6 years with an option of a 1 year extension Applied Technologies. • Commitment Period: 30 Months from date of initial closing • Minimum Commitment: 1,000,000 Attractiveness • Indicative Draw-down: • We believe that the sectors that they have selected are INR 10 lakh 100% attractive growing annually at 20% plus supported by benefits INR 15 lakh–45 lakh Higher of 20% of commitment or of higher disposable income and improving infrastructure in INR 7.5 lakh the country. > INR 45 lakh 10% of commitment • The managers have had a successful track record in similar sectors and have delivered consistent returns. Operational • Expected IRR: 25% gross p.a. value addition and domain knowledge would be the drivers of • Upside Sharing: 20% of net profits of the fund with catch up IRR. • Management fee: 2% p.a. of the total commitment amount • Based on the Investment team’s extensive business network in • Setup fee : 2.25% upfront overweight sectors 60 high quality early stage proposals have been received over the last 12 months 18
  • 19. Asset Classes Tier-1* Tier-II** Residential This sector is the only one to be left out of the correction These cities still manage to sell from the attractive entry point wrath. Heavy media reporting’s on probable correction, 40% (Avg. Rs.2800-3600 per sqft) but are getting over-supplied in down-trend in sales and unavailability of finance to pockets. A recent report from Knight Frank suggests that these developers are the major factors putting pressure on this cities have seen lot of investor confidence between 2007-2009 segment to correct. The investor community also varies on which for some reasons have seen 30% down-trend. Typically the assumptions on account of bad sales and gives their “no the investor’s early buy-in and upfront payment of the total confidence motion” towards any visible appreciation. Markets consideration for best discount gives the developer strong hold like NCR, Pune, Hyderabad and Chennai would set the course time for local demand. Ironically, across markets Investors of correction on the forthcoming over-supply. contribute not more than 15% of sales. Commercial/IT Still in the shadows of over-supply and cautious expansion Commercial segment not that significant, but unlike Tier-I the approach by corporate, this segment has gone through price differentiation is double favoring commercial since most correction. Rates per sqft have seen almost 30% down-trend of them are in CBD areas. and will be stagnant for the coming 2-3 quarters. Surely, the segment is at the down-tip of the cycle, and is the best opportunity for companies looking for long term holding of real estate office space. Since most of the commercial growth had happened in 05-06, many lease agreements are getting expired giving way for companies to shift base, re-negotiate, etc. IT/ITEs would remain the main driver for consumption. Retail Sales have definitely recovered but distress in the over- Unlike the Tier 1 markets the retails is unable to cope with sales supplied market is evident. Many deals have been done on and thus the sales to rent ratio is becoming bigger pulling down Revenue Share, giving more control to the Lessee to hold the rent paying capacity. Important point also is that, unlike the price per sqft for a longer time-frame Tier 1 markets more than 40% of any mall in these cities are operated by local franchisees making cash-flows not regulated Land Land is highest in demand and still a maintaining a steady Very similar to the trend in Tier 1 cities. Opportunistic growth of 15-20% per annum investment can really give great returns since N.A land is still available cheap (between 200-300 per sqft) 19
  • 20. Residential Market Snapshot (Supply and Developers) As you would find out from the below mentioned table, most cities have supply concentrated in a particular zone and investment in these zones would be lucrative (entry point being low) with a long term view, since the supply would always keep the capital value appreciating to 5-7% per annum. Rest zones would be always speculative and demand led behavior. The only differentiator would be quality development which could command premium. Markets Major Locations/Zones Total Sqft (In Mn), Expected in Established Builders 2011-2013 Bangalore Hebbal, Whitefiled, Hosur Road, Jayanagar, MG Road, 74Mn Sqft, out of which 60% supply is Shobha, Prestige, Salarapuria, Malleshwaram in Hosur & Whitefiled followed by 18% Purvankara, Brigade Group, Nitesh in Hebbal Estate, Mantri, Confident group, Pride Group NCR Gurgaon - DLF city, Sohna Rd, Manesar 436 Mn sqft, out of which Noida-32%, Parsavnath, Emaar MGF, DLF, Unitech, Ghaziabad-21%, Gurgaon-24% & Ansal properties, M2K, Uppal, Cosmos, Noida – Sec 14,15,92,93,128 and Greater Noida Faridabad-12%. Suncity, Vipul Ghaziabad – Indirapuram, Vaishali Faridabad – prime chandanwood village, Sec 78,89 Mumbai Prime Residential Among Zones 183 Mn Sqft, out of which 69% is Hiranandani Developers Pvt Ltd, accounted from Prabhadevi, Ghatkopar, Marathon Realty Pvt Ltd, Akruti City Napean Sea Road, Tardeo, Worli, Lower Parel, Bandra, Goregaon, Malad, Gorbunder, kalyan, Ltd, Kalpataru Ltd, K Raheja Universal Andheri West, Juhu and Powai Dombivili, Belapur and Panvel. Pvt Ltd, K Raheja Corp, Lokhandwala Malad/Goregaon accounts for more Group of Companies, Sheth, Mid Segment Among Zones than 23mn sqft and other btw 10-12Mn Rustomjee, DB Realty, Godrej Prabhadevi, Ghatkopar, Goregaon, Malad, Gorbunder, sqft properties, Oberoi to name a few. Kalyan, Dombivili, Belapur and Panvel Hyderabad Banjara hills, Shameerpet, Securabad Contonment, 58 Mn sqft, out of which 58% supply is DLF, Jayabheri, Manjeera, Mantri, Ghatkesar, Old Hyderabad and Shamshabad expected in and around Hi-Tech city Saisree, SMR Holdings, Aliens Group 20
  • 21. Pune Pimpri Chichwad and Chakan, 93 Mn Sqft, out of which over 70% is Kumar Builders, Gera, Lunkad, accounted by Pimpri Chinchwad, Konark, Goel Ganga, Marvel, Hinjewadi, Baner, Audh, Wakad and Balewadi Hinjewadi and Kalyani Nagar zones Magarpatta, Rohan Kothrud, Kondwa, Hadapsar, Central Pune Kalyani Nagar, Viman Nagar, Kharadi Kolkata CBD Areas-Ballygaunge, Carmac street and Park street 55Mn Sqft, out of which North 24 Ekta Developers, Eden group, Fort, Parganas accounts for more than 50% Mayfair, Merlin, Srijan group, Salt Lake & EM Bypass of supply Swastic, Somani, Godrej, GM Group, North 24 Parganas-Rajarhat, Barasat, madhyamgram nangalia, Orbit, Bengal Sharachi, Sriji Developers South 24 Parganas – narendrapur, Sonarpur Batanagar & Mahestala Chennai North Chennai – Ayanavaram, Kilpauk, Korathur, 68 Mn Sqft, of which South Chennai Emmar, Ozone, Chaintanya, Mantri, madhavaram, Perambur, Villivakam accounts for 64% of supply Doshi, Sabari, Hiranandani, L&T, South Chennai – Adambakam, Chromepet, madipakkam, Unitech Medavakkum, Sholinganur, OMR, Selaiyur, tamabaram, Urapakam, Velachery West – Ambattur, Annanagar, Avadi, KK Nagar, manapakam, Nolambur, Porur, salingramam, Sriperumpudur, Vadapalani Central – Adayar, Alwarpet, Egmore, mataliyapuram, Nungampakkam, Parry’s, Tnagar Please Note: 1.Tier I* markets include Mumbai, Delhi & NCR, Bangalore, Pune, Chennai, Hyderabad and Kolkata 2.Tier II* markets includes all state capitals other than the Tier I markets 3.The IC note is proposed to be presented every quarter 21
  • 22. Leveraging breadth of related businesses that KARVY is in KARVY is an integrated financial services group, with Karvy Private Wealth being one of its arms. The entire group’s strengths are leveraged to provide end-to-end wealth advice to Karvy Private Wealth clients. For example, SME clients can receive advice on their personal wealth while also getting investment banking advice from the I-banking arm of Karvy. Maximum choice of products & services KARVY Private Wealth offers the widest breadth of products and services, providing clients a variety of options through a single contact. Products and services include equities, debt instruments, commodities, Mutual Funds, Insurance, Structured Products, Financial Planning, real estate advice, etc. Product-neutral advice We ensure that our recommendations are 100% product-neutral and unbiased because unlike other players, we are neither tied up with any one particular insurance company nor do we have our own mutual funds. All-India presence Set to have business in 20 - 25 cities we are poised to cater to families and businesses spread across multiple cities in India providing them with combined and integrated advice. For one-off services, if required, we can also leverage KARVY Group’s presence in 400 cities. 22
  • 23. The information and views presented here are prepared by Karvy Private Wealth or other Karvy Group companies. 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. The investments discussed or recommended here may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned here, investors may please note that neither Karvy nor any person connected with any associated companies of Karvy accepts any liability arising from the use of this information and views mentioned here. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above-mentioned companies from time to time. Every employee of Karvy and its associated companies are required to disclose their individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Stock Broking Ltd. The information given in this document on tax are for guidance only, and should not be construed as tax advice. Investors are advised to consult their respective tax advisers to understand the specific tax incidence applicable to them. We also expect significant changes in the tax laws once the new Direct Tax Code is in force – this could change the applicability and incidence of tax on investments 23
  • 24. Bangalore 080-26606126 Chennai 044-45925923 Delhi 011-43533941 Goa 0832-2731822 Gurgaon 0124-4780228 Hyderabad 040-44507282 Kolkata 033-40515100 Mumbai 022-33055000 Noida 0120-4219708 Pune 020-30116238 Email: wealth@karvy.com SMS: ‘HNI’ to 56767 Website: www.karvywealth.com Corporate Office : 702, Hallmark Business Plaza, Off Bandra Kurla Complex, Bandra (East), Mumbai – 400 051 24