Advice for the Wise: June 2013


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Advice for the Wise: June 2013

  1. 1. 1 ADVICE for the WISE Newsletter –JUNE 2013
  2. 2. Economic Update 4 Equity Outlook 8 Debt Outlook 11 Forex 13 Commodities 14 Index Page No. Contents Real Estate 15 2
  3. 3. From the Desk of CIO “Advisory services are provided through Karvy Capital having SEBI Registration No: INP000001512. Investments are subject to market risks. Please read the disclaimer on slide 17” Dear Investors, Continued bleak picture on the domestic economic growth coupled with falling inflation numbers led most debt market investors to assume a fairly fast monetary loosening by RBI in the months to come. This has led to a sharp fall in 10-year G-Sec yields in recent weeks. With this rally, we believe that the long term debt tactical overweight allocation theme is starting to conclude. Most investors have realized double digit returns in long term debt in last 1-2 years. From here on, the returns expectations from long term debt are not as strong. We would expect single digit returns from now on. Hence we are recommending partial exit from the tactical allocation to long term debt – in effect booking some profits. As the expected rate cuts do happen over next few months, we will recommend taking out the remaining tactical allocation to long term debt as well. We continue to look at long term debt as an important part of the portfolio for yield accrual still. It is only the rate-cut driven capital appreciation that we are expecting to come down. An additional factor guiding our recommendation is the likelihood of increased volatility in long term yields – as debt market participants try to second guess the speed and extent of monetary policy loosening. It is quite possible that RBI temporarily disappoints the majority of the debt market investors from time to time – thus leading to occasional spurts in the yields. The risk to reward ratio of long term debt has turned higher than what it was till recently. Our outlook on economic growth continues to remain cautious. With order book growth of infrastructure companies still below expectations, the investment climate is far from healthy. Unless the government expedites some public or PPP-driven infrastructure spending, investment activity will remain subdued. A few large-ticket government-led infrastructure projects are looking set for revival (e.g. the Mumbai-Delhi corridor). Hopefully there is more to come. Global investors’ love for and domestic investors’ aversion to Indian equities continues. The FII inflows into equities continued while domestic exits nearly balanced them through last few weeks. We are witnessing a fatigue for equity markets amongst several investors that have stayed invested for last few years and have lost patience to wait longer for the “long term returns”. By their very nature, equity market returns are quite volatile from one year to another. It is quite likely that a large proportion of the 5-year returns are made in a single year or two one year periods. The attitude to time the markets for an exit for an entry at a lower point later is likely to be the victim of missing out on such make-or-break years. We recommend staying invested with the advice that next one year can be bumpy but next three are quite likely to be lucrative. Our bearish outlook on gold continues. We believe that the market price of gold in the recent years has been a product of multi-year trend- following speculation, demand from newly rich Asian investors and the general fiat-money-phobia of select developed market investors. As the third of these factors starts to reduce in strength (western demand) and thus put strain on the first factor as well (speculative long positions), support for gold price will come primarily from Asian retail investors. Considering the huge quantities of gold-as-investment holdings (through financial instruments) looking to get out, the gold-as-consumption-cum- investment demand is unlikely to be able to prop the price up. 3
  4. 4. As on 31st May 2013 Change over last month Change over last year Equity Markets BSE Sensex 19760 1.3% 21.8% S&P Nifty 5986 0.9% 21.6% S&P 500 1631 2.1% 24.5% Nikkei 225 13775 (0.6%) 61.2% Debt Markets 10-yr G-Sec Yield 7.45% (28 Bps) (93 bps) Call Markets 7.18% (37 Bps) (91 Bps) Fixed Deposit* 8.75% 0 Bps (50 bps) Commodity Markets RICI Index 3513 (1.7%) 4.7% Gold (`/10gm) 27197 0.2% (6.8%) Crude Oil ($/bbl) (As on 29th May) 102.1 (0.7%) (1.6%) Forex Markets Rupee/Dollar 56.58 (4.17%) (0.28%) Yen/Dollar 101.01 (3.1%) (21.5%) Economic Update - Snapshot of Key Markets 10 yr Gsec Gold • Indicates SBI one-year FD •New 10 Year benchmark paper(8.15%, 2022 Maturity) was listed in the month of June, the 1 year yield is compared to the earlier benchmark(2021 Maturity) 4 75 95 115 135 155 175 195 Sensex Nifty S&P 500 Nikkei 225 50 51 52 53 54 55 56 57 58 `/$ 7.0000 7.2000 7.4000 7.6000 7.8000 8.0000 8.2000 8.4000 8.6000 24500 25500 26500 27500 28500 29500 30500 31500 32500 33500
  5. 5. US Europe Japan Emerging economies • Us consumer confidence index jumped to 76.2in May from an upwardly revised 69.0i n April • Us initial jobless claims climbed to 354,000in the week ended May 25th, an increase of 10,000 from the previous week's revised figure of 344,000. • US gross domestic product(GDP) increased at an annual rate of 2.4% in the first quarter compared to the previously reported 2.5% growth. • Euro-zone unemployment rate rose to 12.2% in April from 12.1% a month ago • Euro-zone annual inflation rose to 1.4% from 1.2% in April • Euro-zone consumer confidence indicator came in at -21.9 in May, up from April's final score of -22.3. • Euro zone composite output index, which measures the performance of the both manufacturing and service sectors, rose to a three-month high of 47.7 in May from 46.9 in April. Economy Update - Global • Japan’s unemployment rate came in at 4.1% in April, unchanged from the previous month. • Japan’s core consumer price index fell 0.4% in April from a year earlier, compared with the 0.5% decline in March. • Japan’s industrial production rose 1.7% in April from the previous month, faster than the 0.9% rise in March; on an annualized basis it fell 2.3% in April from a year earlier • Japan’s Markit/ JMMA Japan Manufacturing Purchasing Managers’ Index rose to a seasonally adjusted 51.5 in May, from 51.1 in April. • IMF lowers China growth outlook and calls for decisive reforms; says the economy will grow 7.75% in 2013 and 2014 as compared with earlier projection of 8% in 2013 and 8.2% in 2012. • India's fiscal deficit narrowed to Rs 4.899 lakh cr rupees or 4.9% of GDP in the year ended March, lower than the revised Budget estimate of Rs 5.209 lakh cr or 5.2% of GDP. 5
  6. 6. Economy Outlook - Domestic • Asia's third largest economy grew an expected 4.8 percent from a year earlier in the January-March quarter, slightly faster than an upwardly revised 4.7 percent growth in the previous three months, which was the lowest in fifteen quarters. • India's economic growth was at 6.2 per cent for the 2011-12 fiscal. It had grown by 5.4 per cent, 5.2 per cent and 4.7 per cent in the first, second and third quarters, respectively, of 2012-13. GDP growth remained sub 5.0% for the consecutive second quarter, at 4.8% (our estimate of 4.6%) taking the full year’s GDP to 5.0% • The manufacturing sector of the economy grew at 2.6%. Public spending growth slowed to an annual 0.6 percent during the quarter from 2.2 percent a quarter ago GDP growth • IIP, in line with our expectations, rose to 2.5% YoY for the month of March as compared 2.8% decline in Mar’12. Feb’13 IIP is revised downwards by 11bps to 0.5% YoY, While Dec’12 IIP has been revised downwards by 6bps to (0.6)% • The manufacturing sector, which accounts for over 75% of the IIP, grew by 3.2% in March as compared to a decline of 3.6% in the same month last year • Sharp acceleration was witnessed in capital goods production for the month of March. This is mainly due to lower base in last March, wherein the capital goods sector declined sharply by 20.1% YoY. • Industrial output has grown by 1.0% in 2012-13, down from 2.9% in 2011-12; manufacturing output, with nearly three quarter weight in the IIP, has grown by only 1.2% during the fiscal. IIP 6 -6.0% -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% Feb 12 Mar 12 Apr 12 May 12 Jun 12 Jul 12 Aug 12 Sep 12 Oct 12 Nov 12 Dec 12 Jan 13 Feb 13 7.8 7.7 6.9 6.1 5.3 5.5 5.3 4.5 4.8 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0
  7. 7. Economic Outlook - Domestic  As on May 2013 Bank credits grew by 14.7% on a Y-o-Y basis which is about 3% lower than the growth witnessed in May 2012. Aggregate deposits on a Y-o-Y basis grew at 13.5%, viz-a viz a growth of 13.8% in May 2012.  In keeping with the guidance and an increasingly benign stance, RBI reduced the repo rate by 25 bps to 7.25% in its monetary policy as of 3rd May 2013. While doing so, it also emphasized that supporting growth is going to be a priority in days ahead. It kept the others rates.  The key triggers favoring the rate cut seem to be lower trajectory of WPI and core inflation, lower GDP data than anticipated and of course the government’s intent to rein in the fiscal deficit.  WPI inflation hit a 41-month low of 4.89 per cent in April on the back of meaningful decline across its main product groups, especially food and fuel groups. core inflation (non-food manufactured products) dipped to 39-month low of 2.80 per cent in April. The RBI closely tracks core inflation for devising its monetary policy and is thus likely to take a favorable view of this development.  WPI for the month of Feb’13 has been revised upwards sharply by 41 bps to 7.23% YoY. Divergence in CPI and WPI reading has widened considerably over 400bps in last two months. Divergence in Feb’13 reading was above 400bps, however after revision in the Feb’13 numbers, the gap has narrowed down.  CPI for April has come in below 10.0 per cent due to the lagged impact of fiscal tightening by the government and slower pace of growth in rural wages. CPI drops by nearly 1.0% point to 9.39% YoY from 10.39% in Mar’13; this is mainly due to favourable base and sharp slowdown in food prices for the month of April. Growth in credit & deposits of SCBs * End of period figures 7 5.0% 7.0% 9.0% 11.0% 13.0% 15.0% 17.0% 19.0% Bank Credit Aggregate Deposits 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0% 8.5% Wholesale Price Index
  8. 8. Equity Outlook The month of May saw FII inflows continuing into India with fresh buying worth 3.5 billion dollars taking the YTD number past 15 billion. Macroeconomic indicators continue to improve with WPI inflation coming in at a 40 month low. The downward trajectory of WPI inflation has paved the way for further monetary easing by RBI. We expect further 50-75bps cut in repo rates this fiscal as inflation continues to cool-off. The cool off in crude oil prices and continuing decontrol of diesel prices will be incrementally positive for the fiscal account. The fiscal deficit for FY13 has come in at 4.9% which shows that significant fiscal consolidation was achieved last fiscal. The government has continued with politically difficult reform measures like monthly hike in diesel prices. If price hikes continue for auto fuels, it will lead to significant easing of pressure on fiscal deficit front. We expect deficit for FY14 to be closer to 5%. RBI has taken cognizance of these fiscal consolidation measures and carried out monetary easing in the last few reviews. We expect another 25bps cut in repo rates on 17th June, when RBi meets for mid- quarter review. Indian rupee has been under significant pressure last month due to strength in US dollar. Dollar moved about against most emerging market currencies. We believe that as gold prices cool-off, Current account situation will stabilize and ease off the pressure on rupee. With US economy bouncing back and improvement in unemployment number, Global situation remains benign and conducive to equity markets in 2013. The fourth quarter results of Indian companies have been on expected lines. Private sector banks, Pharma & consumer staples continue to do well. We believe the worst of the corporate earnings is now behind us and we expect a 12% growth in earnings this fiscal. We expect a cyclical recovery in economy in second half of this year which will be positive for equity market . Investors should continue to buy at every dip. 8
  9. 9. Sector Stance Remarks Healthcare Overweight We believe in the 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 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. BFSI Overweight The reversal of the interest rate cycle will assist in managing asset quality better and would lead to increase in credit growth. However, we like the private sector more than public sector due to better management quality and higher balance sheet discipline FMCG Overweight We like the secular consumption theme. We prefer “discretionary consumption” beneficiaries such as Cigarettes, IT hardware, durables and branded garments, as the growth in this segment will be disproportionately higher vis-à-vis the increase in disposable incomes. Telecom Neutral The regulatory hurdles and competitive pressures seem to be reducing. Incumbents have started to increase tariffs slowly and we believe that consolidation will happen sooner than expected. IT/ITES Neutral Demand seems to be coming back in Europe. US volume growth has also remained resilient. With pricing already bottomed out, we have turned constructive on the space. Sector View 9
  10. 10. Sector Stance Remarks Automobiles Neutral Raw material prices have started coming down which would boost margins. Auto loans are also getting cheaper. We are more bullish on SUV’s and agricultural vehicles segment due to lesser competition and higher pricing power. Energy Neutral With the ongoing price deregulation of diesel, we believe the total subsidy burden on Oil PSU’s will come down during the course of the year. Power Utilities Neutral We like the regulated return charteristic of this space. This space provides steady growth in earnings and decent return on capital. Metals Underweight Commodity prices have corrected significantly over the last few months due to concerns about growth in China and developed parts of the world. Cement Underweight Cement industry is facing over capacity issues and lack-lustre demand. With regulator taking a strong view against pricing discipline, the profits of the sector are expected to stay muted. E&C Underweight The significant slowdown in order inflow activity combined with high interest rates has hurt the sector. It will take some time before capex activity revives Sector View 10
  11. 11. Debt Outlook • G-Sec yields harden during the last week of the month on the policy makers concern regarding inflation and Current account deficit. The new benchmark 10-year security 7.16% GOI 2023 closed the week at 7.24% vs. previous close of 7.11%. • In G-sec auction, RBI auctioned G-sec (Rs. 15000cr) in following G-sec- 7.16% GS 2023 (Rs. 6000cr), 8.97% GS 2030 (Rs.3000cr), 8.83% GS 2041 (Rs. 3000cr) and new 6 year GS 2019 (Rs. 3000cr) with cut-off of 7.28%, 7.50%, 7.54% and 7.28% respectively. • The spread on a 10 year AAA rated corporate bond reduced to 70 Bps on 31st May 2013 from 79 Bps (as on 30th April 2013). AAA Rated bond yields dipped by 37 bps to 8.15% as compared to the yields a month earlier at 8.52% 10-yr G-sec yieldYield curve (%) (%) 11 7.100 7.150 7.200 7.250 7.300 7.350 7.400 7.450 7.500 7.550 0.0 0.9 1.7 2.6 3.4 4.2 5.1 5.9 6.8 7.6 8.5 9.3 10.1 11.0 11.8 12.7 13.5 14.4 15.2 16.1 16.9 17.7 18.6 19.4 7.0000 7.2000 7.4000 7.6000 7.8000 8.0000 8.2000 8.4000 8.6000
  12. 12. Debt Strategy OutlookCategory Details Long Tenure Debt Indian long term debt is likely to see capital appreciation owing to the expected monetary easing. With the fourth policy rate cut that happened in March 2013, with a 25 Bps cut in Repo rate and no CRR cut, there is lesser probability of rate cuts in the near future and there could be a lot of volatility in the g-sec yields as well. An important point to note is that as commodity prices are cooling down, current account deficit may reduce to some extent. But all this is coupled with uncertainty. Hence we recommend that if investing for a period of 2 years or above then long term can be looked upon or else holding/profit booking could be a good idea. Investors who may want to stay invested for the medium term (exiting when prices appreciate) and those who would want to lock in high yields for the longer term can also invest in longer tenure papers/Funds. Some AA and select A rated securities are very attractive at the current yields. A similar trend can be seen in the Fixed Deposits also. Tight liquidity in the system has also contributed to widening of the spreads making entry at current levels attractive. With the fourth policy rate cut that happened in May 2013, with a 25 Bps cut in Repo rate and no CRR along with lesser probability of future cuts in the policy rates in the coming quarter, but as there is influence of global factors in the market, a lot of uncertainty is coupled with it, hence, we would recommend to invest in and hold on to current investments in short term debt Due to liquidity pressures increasing in the market as RBI has a huge borrowing plan, short term yields would remain higher. Short Term funds still have high YTMs (9%–9.5%) providing interesting investment opportunities. Short Tenure Debt Credit 12
  13. 13. Forex • INR depreciated against all four major currencies. It saw a depreciation of 4% against USD and 3.7% against Euro. Rupee has depreciated against dollar since the beginning of the calendar year by 3.17%. • The rupee has been vacillating in a range between 53 and 57 since the start of this calendar year. The Indian Rupee exchange rate for May, 2013 averaged 55.00 INR to USD & that is 62 basis points higher than the April, 2013 rate of 54.38 • Volatility as last year is expected to continue as the rupee would track cues from the domestic markets as well as global shores. If US economy recovers, the dollar will rally, putting the rupee under pressure Rupee movement vis-à-vis other currencies (M-o-M) Trade balance and export-import data • The projected capital account balance for Q3 FY 13 is projected at Rs. 171984 crores along with the Q1 and Q2 being at 88013 Cr and 130409 Cr respectively. • We expect factors such as higher interest rates to attract more investments to India. Increased limits for investment by FIIs would also help in bringing in more funds though uncertainty in the global markets could prove to be a dampener. Exports during April, 2013 were valued at US $ 24.16 bn which was 1.68% higher than the level of US $ 23.76 bn during April, 2012. Imports during April, 2013 were valued at US $ 41.95 Bn representing a growth of 10.96% over the level of imports valued at US $ 37.80 Bn in April 2012 translating into a trade deficit of $17.79 Bn. 13 -4.0% -2.3% -3.7% -1.0% -4.5% -4.0% -3.5% -3.0% -2.5% -2.0% -1.5% -1.0% -0.5% 0.0% USD GBP EURO YEN 37755 95500 78800 40700 83385 88013 130409 171984 -20000 30000 80000 130000 180000 FY 11 (Q4) FY 12 (Q1) FY 12 (Q2) FY 12 (Q3) FY 12 (Q4) FY 13 (Q1) FY 13 (Q2) FY 13 (Q3) Capital Account Balance -25000 -20000 -15000 -10000 -5000 0 -20 -15 -10 -5 0 5 10 15 Export Import Trade Balance (mn $)
  14. 14. Commodities Precious Metals Oil & Gas While the expectation of steadier global growth is a good news for the oil counter given the excess liquidity available, the growth concerns in China will cap any upside. In the energy sufficient USA, there is a structural shift towards Shale Gas production amid crude oil inventories ruling at 30 year high. With no supply disruption in sight amid feeble global growth, we expect lower energy prices. Crude Gold Having risen consecutively for eleven years, dollar-gold price performance is one of the best among other asset classes, generating an annualized return of 18%. The global financial system was flood with central banks liquidity that had risen risk asset in the year 2012 and this is expected to further lift risk asset prices in the year 2013. Given this backdrop, one could expect a decent profit booking on the precious metal counter as the money flow shall now be diverted to equities that was under owned since 2008. We also expect liquidity to dry up significantly around end of 1QCY following the ECB’s LTROs amid a sharp pull back in dollar index -following the Fed’s signal to wind down the stimulus program this year - could rattle global commodity prices. The controlled measures by the central bankers to curb gold demand with a prime objective being to shore up confidence in the monetary and banking system, bullion in all probability will not be a free market. As bullion derivatives market is far larger than the size of physical metal, a small trigger is sufficient enough to create a big impact. Domestically, it now seems that gold has formed an intermediate top and one could see considerable price pull back going ahead in the year 2013. 14 24500 25500 26500 27500 28500 29500 30500 31500 32500 33500 60 70 80 90 100 110 120 130
  15. 15. 15 Real Estate Outlook Asset Classes Tier I Tier II Residential A lot of new supply has been seen in the Tier I markets across all price segments, especially in NCR-Delhi and Mumbai, owing to faster approvals and expectations of a sales recovery due to the reduction in the home loan interest rates. While some of the new launches have selectively seen a good response, overall sales have still been slow and prices continued to be stagnant in most markets. Mid-income residential segment with Rs. 4,000 – 6,000 per sq. ft. entry pricing with good developers in Pune, Bangalore, NCR and Mumbai suburbs are expected to see good percentage returns with relatively low risk. Implications of Budget 2013: The additional one-time tax exemption of Rs. 1,00,000 for home loans below Rs. 25 Lacs is expected to give a slight push in the affordable housing segment. TDS of 1% on all properties above Rs. 50 lacs after May 2013 and increase in service tax from 3.09% to 3.71% for flats above 2,000 sq. ft. in size or Rs. 1 Cr. in value may act as dampeners for sale of mid to high end residential space. Demand in Tier II cities is largely driven by the trend towards nuclear families, increasing disposable income, rising aspiration to own quality products and the growth in infrastructure facilities in these cities. Price appreciation is more concentrated to specific micro-markets in these cities. Cities like Chandigarh, Jaipur, Lucknow, Ahmedabad, Bhopal, Nagpur, Patna and Cochin are expected to perform well. Commercial/IT Prices for the commercial asset class continue to be dampened due to the historic oversupply. In terms of absorption, Bangalore, Hyderabad and Pune markets are doing better than the national average. Rentals in commercial asset class are seen to be rising slowly but they are still below the peal values achieved in the past. In relative terms, Bangalore market has outperformed other markets owing primarily to the demand from the IT industry. Specific pre-leased properties with good tenant profile and larger lock-in periods continue to be good investment opportunities over a long-term horizon. Relatively low unsold inventory and smaller unit sizes have led to stable lease rentals in Tier II cities. Not much movement in the capital values has been seen in the Tier II cities.
  16. 16. Real Estate Outlook 16 Please Note: Tier I* markets include Mumbai, Delhi & NCR, Bangalore, Pune, Chennai, Hyderabad and Kolkatta Tier II* markets includes all state capitals other than the Tier I markets Asset Classes Tier I Tier II Retail In HY2 2012, Government approved 51% foreign ownership in multi-brand retail and 100% in single-brand retail. While this move is expected to infuse new enthusiasm in the sector, it will take a gestation period of at least an year for this to translate into actual off-take of space. In fact, completion of a number of malls has been delayed to defer the construction costs and capitalize on the expected future demand from FDI. Currently, unsold inventory levels continue to be high levels and lease rentals stagnant. Tier II cities see a preference of hi-street retail as compared to mall space in Tier I cities. While not much data on these rentals gets reported, these are expected to have been stagnant. The mall culture has repeatedly failed in the past n the Tier-2 cities. Whether the FDI in retail can change this phenomenon can be known with more certainty once the effect of FDI is more visible in Tier I cities. Land Agricultural / non-agricultural lands with connectivity to Tier I cities and in proximity to upcoming industrial and other infrastructure developments present good investment opportunities. Caution should however be exercised due to the complexities typically involved in land investments. Land in Tier II and III cities along upcoming / established growth corridors have seen good percentage appreciation due to low investment base in such areas.
  17. 17. Disclaimer The information and views presented here are prepared by Karvy Capital Ltd. 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. This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment decision. Nothing in this document should be construed as investment or financial advice. 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 Capital Ltd nor any person connected with any associated companies of Karvy Capital Ltd accepts any liability arising from the use of this information and views mentioned here. Each recipient of this document should make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine the merits and risks of such an investment. Karvy Capital Ltd, its affiliates, directors, its proprietary trading and investment businesses (hereinafter referred to as Karvy) may, from time to time, make investment decisions that are inconsistent with or contradictory to the recommendations expressed herein. The views contained in this document are those of the analyst, and the company may or may not subscribe to all the views expressed within. Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamentals. The information in this document has been printed on the basis of publicly available information, internal data and other reliable sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this document is for general guidance only. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above-mentioned assets 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 and Karvy Comtrade Ltd. Any 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 equity investments. Karvy Capital Ltd Operates from within India and is subject to Indian regulations. Mumbai office Address: 702, Hallmark Business plaza, Sant Dnyaneshwar Marg, Bandra (East), off Bandra Kurla Complex, Mumbai 400 051 17