Advice for the Wise April 2012


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Advice for the Wise April 2012

  1. 1. ADVICE for the WISE Newsletter – APRIL 2012
  2. 2. ContentsIndex Page No.Economic Update 4Equity Outlook 8Debt Outlook 12Forex 14Commodities 15Real Estate 16 2
  3. 3. From the Desk of the CIO… Dear Investor, Last few weeks were testimony to a curious phenomenon – markets approach it is a good time to buy into equities as well as long term performed badly even as the sentiment about the underlying debt. For the investors actively managing their tactical portfolio shifts, macroeconomic factors was improving almost without exception. this is a suitable time to move into stock picking and sector selection in Indian equities as well as debt markets were part of this seemingly equities. That is because the recent run up in equities has lifted most of absurd occurrence. On closer scrutiny though it is clear that the asset the typical large cap names quite a lot. At the same time, several well prices merely reverted to a more realistic level – and the reaction run companies remain relatively undervalued. If the broad sentiment stemmed largely from disappointment in the extent of economic remains positive, many of these stocks will play catch-up. recovery than from the direction of it. Another interesting angle that has emerged in the recent months is the Apart from academic curiosity though, this experience has a very cost of investing. These have generally been ignored by Indian investors noteworthy lesson – financial markets often incorporate an owing to the relatively high returns of most asset classes. However as exaggerated vision of the future highly prone to the experience of the returns return to less heady levels and promise to hover there for recent past. In the bad times, this amounts to unmistakable foreseeable future, one needs to start incorporating these costs in overreaction to even half-expected bad news (say a slightly weaker decision making. Seen in the light of costs, the portfolios of several than expected purchasing managers’ index). In good times, it leads to investors seem sub optimally designed. This is because most of their hunting for the silver lining even in a sufficiently dark cloud! The primary holdings are relatively blunt in their strategy. The underlying tendency arises from the conformity bias amongst human being which strategy typically has two components – a relatively passive core and makes us look for news in line with our prevailing sentiment – good or an actively managed remainder. The management fee is however bad. It seems we resist news opposing our perception of the world till charged on both. The ideal split would be to own a low-cost core and a such time that the reality is too stark to ignore. At that point, we set of appropriately incentivized satellite portfolios. This can be incorporate all the pending ignored side of things, often correct our implemented in the equity space through using index ETFs for the core stance and start looking for the news conforming to this new and fairly focused portfolios (mid-cap only or sector only or a good sentiment. Through January, as the sentiment changed to positive from theme or even a long dated call option) for the satellites. On the debt the earlier negative one, investors quickly built a picture of the world front this would involve owing a low-cost long term debt fund coupled rosier than it had actually become in January. Our commentary in with high yield debt products like real estate NCDs. The total cost of January had a dose of caution owing to this expectation. Events in owning a 70% low cost core and 30% specialized portfolio is almost March were reversion to what nearly was the true state of affairs. always lower than the total cost of owning a 100% relatively blunt portfolio. When one accounts for the superior returns of the core and Seen in this light, equities and bonds both seem fairly priced about satellite portfolio, the difference becomes even starker. now. Hence, for the long term buyers with a passive management 3“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.19”
  4. 4. Economic Update - Snapshot of Key Markets Sensex Nifty 110 As on 31st Change over Change over 105 100 S&P 500 Nikkei 225 March 2012 last month last year 95 90 85 BSE Sensex 17404 (2.0%) (10.5%) 80 75 Equity S&P Nifty 5296 (1.7%) (9.2%) Markets S&P 500 1408 3.1% 6.2% 9.30 8.80 10 yr Gsec Nikkei 225 10084 3.7% 3.4% 8.30 7.80 7.30 6.80 10-yr G-Sec Yield 8.57% 37 bps 56 bpsDebt Markets Call Markets 15.0% 595 bps 650 bps 31000 Gold 29000 Fixed Deposit* 9.25% 0 bps 100 bps 27000 25000 23000 21000 19000 17000 RICI Index 3814 (2.6%) (10.8%) 15000 Commodity Gold (`/10gm) 28075 (1.8%) 35.2% Markets Crude Oil ($/bbl) 123.23 1.0% 5.5% 56.00 54.00 52.00 50.00 48.00 46.00 `/$ 44.00 42.00 Forex Rupee/Dollar 51.16 (4.33%) (12.72%) 40.00 Markets Yen/Dollar 82.27 (2.2%) 0.7%* Indicates SBI one-year FD 4
  5. 5. Economy Update - Global • The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent in February on a seasonally adjusted basis. Over the last 12 months, the all items index increased 2.9 percent before US seasonal adjustment • The U.S. economy expanded at its fastest rate in a year and a half in the final quarter of 2011, at an unrevised 3.0%, while corporate profits moderated from the previous quarter. • The seasonally adjusted manufacturing PMI fell to three month low at 47.7 for the month of March down from 49.0 which was recorded in the month of February. • Unemployment in the Eurozone rose to 10.8% in February from 10.7% in January. This is the highest level Europe seen since the currency was introduced in 1999, adding the fears that the region is in recession. • Eurozone inflation has remained stubbornly high this month, dropping only slightly to 2.6%, complicating the European Central Bank’s task as the Eurozone economy struggles to return to growth. • The seasonally adjusted Markit /JMMA Purchasing Managers’ Index (PMI) was at 51.1 in March 2012, slightly up from 50.5 in February 2012, signalling an improvement in Japanese manufacturing sector operating conditions. Japan • The unemployment rate in Japan came in at a seasonally adjusted 4.5% in February down from 4.6% recorded in month of January. The core inflation, which excludes volatile food prices, edged up 0.1% in February from the same month a year earlier, the first rise in five months. • The seasonally adjusted HSBC Purchasing Managers’ Index™ (PMI™) for India registered 54.7 in March, down from February’s 56.6. The latest reading pointed to a solid improvement in business conditions, Emerging although growth was below the long-run trend.economies • China’s HSBC Purchasing Managers’ Index registered 48.3 in March, shrinking further from 49.6 in the month of February signalling a fifth successive month-on-month deterioration in manufacturing operating conditions. 5
  6. 6. Economy Outlook - Domestic10.0% IIP • The double-digit expansion of consumer non-durables for 8.0% the second month in a row (14.4% in November 2011 and 6.0% 13.4% in December 2011) suggests some revival in consumer 4.0% spending on non-durable items, following a moderation in 2.0% 0.0% food inflation.-2.0%-4.0%-6.0% • Gross domestic product in India - Asias third-largest Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan economy - grew at an annual 6.1% in the third quarter. It is a 11 11 11 11 11 11 11 11 11 11 11 11 12 significant slowdown from 6.9% in the previous quarter and marks the fourth straight quarter of growth below 8%.• Index of Industrial Production grew by 6.8% year-on-year in January 2012. In December 2011, the Index grew by just • The sluggish growth can be attributed to poor performance 1.8% year-on-year due to contraction in mining and capital of the manufacturing, mining and farm sectors. The goods sectors and a lower manufacturing sector growth. slowdown in the manufacturing sector, coupled with decline Industrial output in January grew at its fastest pace in 7 in mining and quarrying, is likely to put pressure on the months, powered by a surge in manufacturing, including Reserve Bank of India to cut interest rate at its monetary consumer non-durables, a sign of strength in a sluggish policy review in April 2012. economy that reinforces expectations the central bank will wait until April before cutting interest rates. GDP growth• Capital goods recorded a negative growth of 1.5%, its fifth 9.0 8.6 8.1 8.4 8.3 consecutive month of contraction, while consumer goods 7.8 7.7 8.0 grew at a rapid 20.2%. In fact, consumer goods were 6.9 7.0 6.1 dragged by negative growth in consumer durables of 6.8% 6.0 over the corresponding period last year. 5.0• The decline in both capital goods and consumer durables, 4.0 however, reveal critical chinks in the growth story. FY10(Q4) FY11(Q1) FY11(Q2) FY11(Q3) FY11(Q4) FY12(Q1) FY12(Q2) FY12(Q3) 6
  7. 7. Economic Outlook - Domestic Growth in credit & deposits of SCBs  The WPI based inflation, which has remained in25.0% Bank Credit Aggregate Deposits double digits for almost two years, rose to 6.95% in February because of sharp increase in food prices. It20.0% was 6.55% in January 2012 & 9.54% in February last year.15.0%  Prices of manufactured items, which have a weight of10.0% around 65% in the WPI basket, went up by 5.75% year- on-year in February, as against 6.49% in the previous 5.0% month. Notably, the WPI for the month of December has been revised upwards to 7.74% from 7.47%.  The Consumer Price Index, which was introduced keeping in mind that demand-side pricing would be a  As on 24th February there was a negative growth in bank better indicator of inflation accelerated to 8.83% in credit by 82 bps i.e. 15.7% on a y-o-y basis. The aggregate February from 7.65% in January, adding yet another deposits grew by 14.4% on a y-o-y basis witnessing a element of uncertainty to prospects of the Reserve decline of 136 bps as compared to last month. Bank of India (RBI) cutting interest rates starting in April.  RBI has cut the cash reserve ratio by 75 bps to 4.75% with effect from the fortnight starting March 10, 2012. This 10.0% 9.5% action is expected to increase the system liquidity by Rs. 9.0% 48,000 cr. 8.5% 8.0% 7.5%  We expect a rate cut in April 2012 leading to credit off-take 7.0% 6.5% Wholesale Price Index provided RBI decides to choose Growth over Inflation 6.0% worries. * End of period figures 7
  8. 8. Equity OutlookAfter a very difficult FY12, we expect FY13 to be a good year for equities with India emerging as a big outperformer. Growth in Indiaseems to have bottomed out in Quarter 3 of last fiscal. All manufacturing, car sales and IIP numbers point to a revival in domesticdemand. FIIs have given a vote of confidence to the Indian economy by pumping in nine billion dollars in Indian equity markets so farthis calendar year. India’s PMI manufacturing data Increased rate of growth 60 58 57.5 57.5 58 56.6 55.3 56 54.7 54.2 53.6 54 52.6 52 52 51 50.4 50 48 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 46 Increased rate of 44 contraction Source: Markit, HSBCRBI has started the reversal of the tight monetary policy with a 125 bps cut in cash reserve ratio (CRR) so far this calendar year. Wewould expect a Repo rate cut in the April policy. We expect a cumulative repo rate cut of 100 bps for this fiscal year. The biggestbeneficiaries of the reversal in policy would be interest rate sensitive sectors like banks, autos and capital goods. 8
  9. 9. Equity OutlookMonetary policy remaining extremely easy in developed part of the world and developing markets like China & India have started themonetary easing cycle. European debt markets have calmed down due to massive liquidity injection (LTRO 1) done by European centralbank. This easy liquidity will result in risk asset prices remaining high across the world.Union budget which was tabled on 16th March came in on expected lines. The fiscal deficit number has been pencilled at 5.1% for FY13.The provisions for fuel and fertilizer subsidies look inadequate and the fiscal deficit number would be closer to 5.5% in absence ofmeaningful hikes in auto fuel prices. The government borrowing programme at Rs. 4.79 lakh crores is quite high and would result infurther hardening of bond yields.Government’s focus clearly has been to shore up the revenue side with increase in Indirect tax rates. We were expecting a slightincrease in Service tax and excise duty which happened in line with our expectations with the rate changing from 10% to 12%. Thesectors which will take the hit include Automobiles, FMCG, Tourism and Cement. The government has expanded the service taxcoverage by having an ‘negative List’ for service tax with all but 17 services becoming applicable for service tax. No timelines have beengiven for implementation of Direct tax code and Goods and services tax (GST).As far as the market is concerned, budget is a non-event. The market will start focusing on Q4 FY12 earnings which start from 10thApriland RBI policy in the third week of April.We believe that going forward GDP growth will bounce back to 7-7.5% with monetary easing resulting in a boost to infrastructure andmanufacturing activity. We expect that inflation would come down this year and could average around 7% leading to nominal growth of14-15%. That would lead to corporate earnings growth of 15%. We expect Sensex earnings of INR 1300 for FY13 and around INR 1500for FY14. We arrive at a year end Sensex target of 22,500 based on 15 times FY14 earnings which would give an upside of 30% fromcurrent levels. 9
  10. 10. Sector View Sector Stance Remarks The USD 1 trillion Infra opportunity is hard to ignore. However, The significant slowdown in order inflow E&C Overweight activity combined with high interest rates has hurt the sector. Now since the interest rate cycle has started to reverse, we have turned more constructive on this space. 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. The reversal of the interest rate cycle will assist in managing asset quality better and would lead to increase in credit growth 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 theHealthcare Neutral 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. We would bet on the opportunity in Generics and CRAMS space We prefer “discretionary consumption” beneficiaries such as Cigarettes and branded garments, as the FMCG Neutral growth in this segment will be disproportionately higher vis-à-vis the increase in disposable incomes. The regulatory hurdles, competitive pressures and leverage prevent any return to high profitability levels Telecom Neutral in the short to medium term. However, incumbents have started to increase tariffs slowly and we believe that consolidation will happen sooner than expected. 10
  11. 11. Sector View Sector Stance Remarks While US and European customers of Indian IT companies are in good health, Order inflows might slow IT/ITES Neutral down in near term. However, in the next few quarters big rupee depreciation will provide cushion to IT companies earnings . Demand outlook remains robust with strong earnings growth. Raw material prices have started comingAutomobiles Neutral down which would boost margins. We are more bullish on two-wheeler and agricultural vehicles segment due to lesser competition and higher pricing power. Commodity prices have corrected significantly over the last few months due to concerns about growth Metals Neutral in developed parts of the world. We believe the commodity prices will bounce back once growth recovers and hence would be positive on industrial metals space. Cement demand will certainly grow over the next three years. With pricing power returning, e are Cement Neutral becoming constructive on this space. We like the regulated return characteristics of this space. This space provides steady growth inPower Utilities Neutral earnings and decent return on capital. We would stay away from oil PSUs, due to issues of cross subsidization distorting the underlying Energy Underweight economics of oil exploration and refinery businesses. 11
  12. 12. Debt Outlook 9.50 8.9 Yield curve 10-yr G-sec yield 8.8 9.00 8.7 8.50 8.6(%) (%) 8.00 8.5 8.4 7.50 8.3 7.00 8.2 0.0 0.7 1.5 2.2 2.9 3.7 4.4 5.1 5.8 6.6 7.3 8.0 8.8 9.5 10.2 11.0 11.7 12.4 13.1 13.9 14.6 15.3 16.1 16.8 17.5 18.2 19.0 19.7 Tenure • The 10 year benchmark G–Sec yield increased by 37 bps in March to close at 8.57%. • The yields on 10-year government bonds have been steadily going up after the government announced the borrowing calendar for the first half of FY13 of 3.7 lakh crore (65% of the total borrowing), almost 46% higher than it borrowed in the first half of last year. • The yields on 10-year benchmark government bonds rose 33 bps from 8.42% since the budget was announced to 8.74% on 3rd April 2012 against the previous close of 8.61%. • The spread a AAA rated corporate bond offers has increased by 29 bps to 91 bps giving an yield of 9.48% as on 30th March 2012. 12
  13. 13. Debt Strategy Category Outlook Details With the pause by RBI and the expected trend reversal of the interest rates, we would recommend a core and satellite allocationShort Tenure to long term and short term debt respectively. Due to liquidity Debt 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 (9.5% – 10%) providing interesting investment opportunities. Some AA and select A rated securities are very attractive at the Credit 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 expected trend reversal in the interest rates, we would strongly recommend investment in Longer term papers. These, whileLong Tenure being available at attractive yields, also provide an opportunity for Capital appreciation due to a decrease in interest rates. Hence, these Debt would be suitable for both - 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. 13
  14. 14. ForexRupee movement vis-à-vis other currencies (M-o-M) Trade balance and export-import data 100 Export Import Trade Balance (mn $) 0 80 -5000 USD GBP EURO YEN 60 -10000 0.00% 40 -15000 20 0 -20000-1.00% -20 -25000-2.00%-3.00% -2.82% • India’s exports grew 4.3% to $24.62 billion in February-4.00% 2012, compared to $23.61 billion in the same year-ago -3.91% -4.05%-5.00% -4.34% month, while imports were up 20.65% at $39.78 billion translating into a trade deficit of $15.16 billion.• INR depreciated by 3.9%, in March against the US Dollar. But, 140000 Capital Account Balance since the beginning of the calendar year it has appreciated by 90000 4.2% 40000• However, surging crude oil prices and their cascading impact on inflation and growth in India, which imports about 80 per -10000 FY 10 (Q2) FY 10 (Q3) FY 10 (Q4) FY 11 (Q1) FY 11 (Q2) FY 11 (Q3) FY 11 (Q4) FY 12 (Q1) cent of its oil requirements, is expected to limit the rise in the rupee. • The projected capital account balance for Q2 FY 12 is at Rs. 84,400 Cr. while the Q1 figure was revised upwards to• Rupee depreciated against Euro by 4.05% as the Rs.1,02,100 Crores. governments are preparing to increase rescue funds against • We expect factors such as higher interest rates to attract future financial turmoil. 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. 14
  15. 15. Commodities We continue to maintain our non positive to neutral view on the 31000 yellow metal. Gold prices continued to tumbled following the U.S. Federal Reserve released minutes from its last policy meeting which 29000 Gold showed policymakers were less likely to push for more monetary 27000 easing as the economic outlook gradually improves. The increase inPrecious the tariff value and the import duty on India would further alleviate 25000 the pain for the bulls as the demand in India – the world’s largest 23000 Metals consumer of gold might reduce their imports by 59%. As a quasi currency, gold in dollar denomination is more prone to the 21000 downward pressure given the recent strength in the dollar index. 19000 Nevertheless, the weakness in the rupee amid an increase in the duty makes landed cost of gold costlier in India; and we may not see a drastic fall in prices in the domestic currency. The perception of shortage following the Iran issue keeps the lid on 140.0 the oil prices boiling. On the flip side, both US and UK has been Crude 135.0 active in releasing the strategic reverse to counter the Iran supply 130.0 shortage. Further, the US stockpiles surged the most since 2008 as 125.0Oil & Gas domestic crude output climbed to the highest level in 12 years. This 120.0 may lead to WTI testing $100 a barrel mark shortly. Oil too came 115.0 under pressure following the U.S. Federal Reserve released minutes 110.0 from its last policy meeting which showed policymakers were less 105.0 likely to push for more monetary easing as the economic outlook 100.0 gradually improves. However, the backwardation in the oil prices 95.0 clearly implies a supply pressure at the short end as compared to the 90.0 longer tenor and the Iran issues will continue to hover for the days to come.
  16. 16. Real Estate Outlook - IAsset Classes Tier-1* Tier-II** The FY12 year ended with expectations of price correction, Not much change in prices has been witnessed. Investors however nothing being actually witnessed. All prime pockets in demand in these sectors increased since prices continue Mumbai, Pune, Gurgaon and Bangalore have recorded increase in to be affordable. Also infrastructure development in Tier sales numbers by 8% - 9% in the last quarter of FY12 compared to II cities in last 2-3 years has led to massive real estate FY11, majorly due to new project launches. Markets like developments with high-rise buildings taking the glam Hyderabad, Chennai, Pune and Bangalore remained stagnant to quotient high with the new generation or emergence of an extent due to bigger projects being launched by all major local nuclear families in last decade. With the new Finance Bill developers. Mumbai is majorly affected by the building plans not approving of ECB in Affordable Housing sector, a positiveResidential being sanctioned from almost over a year. The new Development change is expected in demand since it targets houses in Control Rules (DCR) has only indicated a rise in price. Precisely the range of 15-20 lakhs. due the same reasons, Thane has gained enormously on the appreciation and investment front last year. Gurgon expansion in sectors like 114, 90 and 65 all far ends, has taken the price of prime sectors higher by 10% - 12%. The UP elections kept Noida unattractive for almost three quarters in FY12. Though lease transactions have risen by 30% as compared to last High streets have seen appreciation, traditional year, the capital values have taken a major hit due to the rent commercial locations still preferred and are intact on being compressed. Supply remains a concern and is expected to values. Cities like Lucknow, Indore, Jaipur, Ahmedabad,Commercial/IT even out in 2014 - 15 only. IT/ITES and Services consuming over Surat, Vishakhapatnam, Chandigarh, and Madurai are 70% of real estate in India is now seen governing the market thriving on better consumer aspirations. dynamics. Average rentals other than Mumbai for warm shell remains still under Rs. 40 per sqft. 16
  17. 17. Real Estate Outlook - IIAsset Classes Tier-1* Tier-II** Other than India’s top 10-15 malls, most of the other Nothing to beat local traditional markets. Malls are many existing malls have vacancy of minimum 30% and lately and footfalls keep reducing year on year putting heavy these seem to have changed plans to suit commercial conversion pressure on retailers to keep innovating lease demand. Traditional investors exposure to the segment as well as product to achieve break-even. Many brandsRetail came down drastically making exit of developers have increased their presence in Hi-streets than malls. difficult. The revenue share model with retailers remains a concern to all mall developers. Very attractive, still has scope of high appreciation. Still available cheaper, plotted development is a hit since India’s infrastructure story will only keep demand high the trend of standalone homes are prevalent.Land and the Real Estate Investors (small and big) are exploring the unexplored.Please Note:1.Tier I* markets include Mumbai, Delhi & NCR, Bangalore, Pune, Chennai, Hyderabad and Kolkata2.Tier II* markets includes all state capitals other than the Tier I markets3.The IC note is proposed to be presented every quarter 17
  18. 18. Why Karvy Private Wealth? Open Architecture – Widest array of products We are an open-architecture firm at two levels – asset class level and product level : • Offering COMPREHENSIVE choice of investing across all asset classes • Offering EXTENSIVE choice of multiple products from different product providers under each asset class Intensive Research We closely track the historical performance across asset classes, sub-asset classes and product providers to identify, evaluate and recommend investment products (KPW’s or third-party). We have our own proprietary methodology for evaluating products; for product providers, we also note the investment style and risk management philosophy. Our comprehensive analysis determines truly exceptional performers to be added to your portfolio Honest, unbiased adviseGroup-wide, we have no Mutual Fund or Insurance products of our own unlike most of the financial services groups (banks orbroking houses), who are doing wealth management. Neither do we have exclusive tie-up with any single insurance company likeall banks do. The KPW 3-S Service promise: When you become a Client of KPW, besides getting intelligent & practicable Investment Advice, you get the benefit of “The KPW 3- S Service Promise” : • Smooth and Hassle Free – Attention, Service & Convenience • Sharp and proactive – Portfolio monitoring and tracking • Smart –Incisive insights on markets and Investment products Pedigreed Senior Management Team A talented team of leaders with global and Indian experience, having a unique blend of backgrounds of wealth management, private equity, strategy consulting and building businesses powers Karvy Private Wealth and its operations. 18
  19. 19. DisclaimerThe information and views presented here are prepared by Karvy Private Wealth(a division of Karvy Stock Broking Limited) or other Karvy Groupcompanies. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for theaccuracy 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 ontheir specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon anyinformation or analysis mentioned here, investors may please note that neither Karvy nor any person connected with any associated companies ofKarvy 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 totime. Every employee of Karvy and its associated companies are required to disclose their individual stock holdings and details of trades, if any, thatthey undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or othersecurities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are furtherrestricted 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 theirrespective tax advisers to understand the specific tax incidence applicable to them. We also expect significant changes in the tax laws once the newDirect Tax Code is in force – this could change the applicability and incidence of tax on investmentsKarvy Private Wealth (A division of Karvy Stock Broking Limited) operates from within India and is subject to Indian regulations.Karvy Stock Broking Ltd. is a SEBI registered stock broker, depository participant having its offices at:702, Hallmark Business plaza, Sant Dnyaneshwar Marg, Bandra (East), off Bandra Kurla Complex, Mumbai 400 051 .(Registered office Address: Karvy Stock Broking Limited, “KARVY HOUSE”, 46, Avenue 4, Street No.1, Banjara Hills, Hyderabad 500 034)SEBI registration No’s:”NSE(CM):INB230770138, NSE(F&O): INF230770138, BSE: INB010770130, BSE(F&O): INF010770131,NCDEX(00236,NSE(CDS):INE230770138, NSDL – SEBI Registration No: IN-DP-NSDL-247-2005, CSDL-SEBI Registration No:IN-DP-CSDL-305-2005, PMS Registration No.:INP000001512” 19
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