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Advice For The Wise: July, 2013


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Advice For The Wise: July, 2013

  1. 1. 1 ADVICE for the WISE Newsletter –JULY 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, Asset prices are driven by a combination of liquidity, sentiment and economic growth. While economic growth is a primary driver in the long run, the short term fluctuations are mostly influenced by sentiment and liquidity. The response of capital markets around the world to the announcement from the US Federal Reserve regarding ‘tapering’ of Quantitative Easing (QE) was a testimony to this. While the announcement came on the back of what is meant to be positive economic news (pick up in US GDP growth) the primary thing on the minds of investors was the reduction in liquidity that QE’s removal implies. Emerging markets equity markets and currencies came down virtually without exception. While Indian Rupee was the second worst performer, other emerging market currencies were not far behind. The slide of Rupee and the equity market has come on the back of the reversal of FII money flows. Look a little deeper and it becomes clear that the FII outflows are dominated by debt rather than equities. Much of the fall of the Rupee is driven by exit from Indian debt by FIIs rather than exit from Indian equities. However, this slide is making investors nervous and adding fuel to the equity market fire. The divestments of FIIs from equities are relatively modest in comparison. The unfortunate development for net importer like India is that a sliding Rupee contributes to inflation. Also the relative price inelasticity of imports such as crude oil means the slide of Rupee means even greater current account deficit at least in the short term. RBI’s and Finance Ministry’s crackdown on gold imports has reduced those a little in terms of volume. However crude oil imports will have no such respite. The combination of these factors does not auger too well for further monetary easing by RBI. That could further delay a pick-up in investments and GDP growth. For now, the corporate debt and absolute return strategies remain primary investment avenues. After the long term debt story plays out through the falling yields of long term government securities, the next set of yields to fall are typically high quality corporate papers. For good capital appreciation from the falling yields (in effect spreads over G- Secs), medium to long term AAA and AA rated corporate bonds are a good idea. These can be invested into directly or through credit-focused debt funds. We expect these funds and bonds to deliver a fairly high yield for certain and a moderate capital appreciation in the most likely scenario. The other alternative during turbulent times is absolute returns strategies. These are generally designed to benefit from moderate levels of volatility and expected to produce stable returns irrespective of equity market directions. Hence they are a good addition to a portfolio during uncertain times such as now. 3
  4. 4. As on 28th June 2013 Change over last month Change over last year Equity Markets BSE Sensex 19396 (1.8%) 11.3% S&P Nifty 5842 (2.4%) 10.7% S&P 500 1606 (1.5%) 17.9% Nikkei 225 13677 (0.7%) 51.9% Debt Markets 10-yr G-Sec Yield 7.49% (3 Bps) (89 Bps) Call Markets 7.27% (0 Bps) (81 Bps) Fixed Deposit* 8.75% 0 Bps (25 bps) Commodity Markets RICI Index 3455 (1.7%) 0.4% Gold (`/10gm) 25180 (7.4%) (14.9%) Crude Oil ($/bbl) (As on 25th June) 101.51 0.3% 14.5% Forex Markets Rupee/Dollar 59.7 (5.22%) (5.68%) Yen/Dollar 98.92 2.1% (19.6%) Economic Update - Snapshot of Key Markets 10 yr Gsec Gold • Indicates SBI one-year FD •New 10 Year benchmark paper(8.15%, 2022 Maturity) was listed in the month of June, the 1 year yield is compared to the earlier benchmark(2021 Maturity) 4 0 50 100 150 0 100 200 Nifty S&P 500 Nikkei 225 Sensex 6.8000 7.0000 7.2000 7.4000 7.6000 7.8000 8.0000 8.2000 8.4000 23500 25500 27500 29500 31500 33500 50 52 54 56 58 60 62 `/$
  5. 5. US Europe Japan Emerging economies • The yield on 10-year US Treasury bonds rose to 2.47%, the highest since August 2011. • Employers added 175,000 new jobs to their payrolls last month, with the unemployment rate ticking up a tenth of a percentage point to 7.6 percent. • Standard & Poor's on Monday removed the near-term threat of another credit rating downgrade for the U.S. credit by revising its outlook to stable from negative, citing an improved economic and fiscal outlook. • EU unemployment now stands at 11%, the highest since records began, with more than 19 million people unemployed, a particular problem, especially in Spain, Greece, Italy, Portugal and Cyprus. • The ECB held interest rates unchanged at a record low 0.5% in June, but said it had discussed a raft of options it could deploy should the economy need more stimulus. • Britain's banks will have to raise 13 billion pounds of extra capital and meet a new cap on lending ahead of international peers as the Bank of England seeks to curb risk in the financial sector. • Japan's core-core CPI, which excludes both food and energy, fell 0.4% in the year to May, following a 0.6 percent annual decline in April, the government data showed. • Wage earners' household spending fell 1.6 percent in May from a year earlier, sharply below the median estimate for a 1.4 percent increase . • Industrial output rose by a better-than-expected 2.0 percent in May from April and the outlook is for slight net growth in coming months. • The weighted average for the benchmark seven-day repo rate of China fell 61 basis points to 6.13% in early trade, still above its usual range of 3-4%. The overnight rate fell by 52 basis points to 4.92%. • India's March quarter current account deficit was $18.1 billion, or 3.6% of GDP, lower than expected and below the $21.7 billion deficit a year earlier, the Reserve Bank of India said on Thursday. 5 Economy Update - Global
  6. 6. Economy Outlook - Domestic • Asia's third largest economy grew an expected 4.8% from a year earlier in the January-March quarter, slightly faster than an upwardly revised 4.7% growth in the previous three months, which was the lowest in fifteen quarters. • India's economic growth was at 6.2% for the 2011-12 fiscal. It had grown by 5.4%, 5.2% and 4.7% 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% taking the full year’s GDP to 5.0% • Gross fixed capital formation, as expected, has fallen substantially mainly due to tightening of government spending in infrastructure space as well deterioration in business confidence in the first three quarters of fiscal. • The manufacturing sector of the economy grew at 2.6%. Public spending growth slowed to an annual 0.6% during the quarter from 2.2% a quarter ago GDP growth • Apr’13 IIP slowed down to 2.0% YoY as compared to 3.4% in Mar’13 and 1.3% decline in Apr’12. Nearly 50% of the headline growth was contributed by stellar growth in consumer non durables sector which grew by 12.3% YoY as compared to 2.3% in the previous year. Sharp acceleration in Apparels industry in last two months contributed in pushing the growth in this sector. • Mar’13 IIP is revised upwards by 88bps to 3.4% YoY primarily driven by 5.5% upward revision in Coke refined and petroleum products which now stand at 13.7%. Jan’13 IIP has been revised upwards by 11bps to (2.5)% also due to upward revision in Coke and refined petroleum products. Average IIP for FY13 is now revised to 1.1% from earlier estimate of 1.0% • Electricity, mining drag down IIP growth. Electricity production grew merely 0.7% in Apr'13, following 3.5% growth in Mar'13. Mining production continued to contract for the seventh consecutive month in Apr'13 (-3%). IIP 6 -4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% Apr 12 May 12 Jun 12 Jul 12 Aug 12 Sep 12 Oct 12 Nov 12 Dec 12 Jan 13 Feb 13 Mar 13 Apr 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 FY11(Q4) FY12(Q1) FY12(Q2) FY12(Q3) FY12(Q4) FY13(Q1) FY13(Q2) FY13(Q3) FY13(Q4)
  7. 7. Economic Outlook - Domestic  As on June 2013 Bank credits grew by 13% on a Y-o-Y basis which is about 3.5% lower than the growth witnessed in June 2012. Aggregate deposits on a Y-o-Y basis grew at 11.8%, viz-a viz a growth of 13.5% in May 2012.  RBI retained its key operative rate, Repo rate at 7.25%, consequently Reserve Repo rate and MSF stands at 6.25%and 8.25% respectively. While CRR was kept unchanged at 4.0% and liquidity is expected to be managed through the route of OMO’s.  RBI has clearly indicated that each policy stance will be viewed in light of emerging inflationary risks and CAD position; growth (in line with earlier policies) has taken a back seat. Sharp rupee depreciation due to reversal of FII debt inflows on expectations of trimming of Fed stimulus policy has raised huge concerns on financing of CAD.  WPI tapered down to 4.70% YoY %, primarily driven by deceleration in fuel prices and slowdown in core inflation. WPI for the month of Mar’13 has been revised downwards by 29bps to 5.65% YoY driven by 9.84% downward revision in coal prices & 12.64% revision in LPG prices. Average inflation in FY13 now stands adjusted at 7.36% YoY as compared to 7.23% in FY12  Total food inflation augmented to 7.64% YoY as compared to 6.27% in Apr’13 due to spike in vegetable prices. Market driven fuel inflation for May’13 has declined by 6.50% YoY, second consecutive decline in prices. As indicated by decline in output prices in May’13 PMI release, Core inflation slowed to 2.35% from 2.74% in Apr’13 and 5.20% in May’12  Divergence in CPI and WPI reading has widened considerably over 400bps in last two months. Divergence in May’13 was 461 bps with CPI at 9.31% and WPI at 4.70%. We expect the gap to narrow down eventually. Gap has widened due to augmenting of food prices and higher weight of food prices in CPI as compared to WPI . 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 June saw fresh volatility due to US Federal Reserve’s comments on tapering down of bond buying programme. The global asset markets reacted negatively with Gold, equity and emerging market currencies correcting against the dollar. Ben Bernanke, US Federal Reserve (FED) Chairman, announced the exit plan for the Quantitative easing programme which began last year. He believes that the downside risks to US growth have receded which should lower the need for quantitative easing. US economic growth forecast for CY13 has been raised to 3.25% from 3.15% on the back of strong growth in last two quarters. Unemployment rate is also expected to improve through this year. On the back of improving macroeconomics, Fed aims to start reducing the quantum of bond buying towards the end of this year with a complete stop expected by middle of next year. But the timing of the "tapering" could change and it is contingent on incoming macroeconomic data. US interest rates are expected to rise only in 2015 once unemployment rate falls below 6.5%. The markets have ignored the improvement in macro situations and focused on tapering of QE which will lead to reduction in liquidity in asset markets. We believe that markets have over-reacted to this announcement and will stabilize in the next few weeks. RBI has kept rates unchanged in the June review despite WPI inflation coming in at a 40 month low. RBI has acknowledged that ‘easing commodity prices at the global level and weaker pricing power of corporates at the domestic level are having a softening influence.’ However, RBI is worried about the elevated food inflation as well as suppressed inflation in administered diesel prices and minimum support prices (MSP) for food crops which can lead to uptick in WPI inflation in the months to come. We believe that the impacts of these would be marginal. 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. Rupee has depreciated significantly in the last two months. With India being vulnerable to debt outflows and a large CAD, we believe that the Government may act in a stronger way to stem the depreciation. We believe that the recent cool-off in gold and crude oil will also help Current account situation stabilize and ease off the pressure on rupee. This cool off in crude oil prices and continuing decontrol of diesel prices will also be incrementally positive for the fiscal account. The first quarter results of Indian companies for FY14 will start this month. We expect Private sector banks, Pharma, IT & 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 use the current dip in markets as a buying opportunity. 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 lackluster 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 cap-ex activity revives Sector View 10
  11. 11. Debt Outlook • The Gsec market started the last week of June on a bearish note after the Fed announcement of tapering of the QE3 previous week. The G-Sec yields moved higher tracking hardening in US Treasury yields, weakening rupee and tightening of money markets in China. • The benchmark 10-year security 7.16% GOI 2023 touched a high of 7.58% on Wednesday (26th June). However, later lower CAD numbers for FY13 supported yields. On Friday, the G-Sec market improved tracking softening in US Treasury yields, as the New York Fed President William Dudley reportedly stated that the quantitative easing programme could be expanded if macroeconomic indicators did not improve as expected. • The spread on a 10 year AAA rated corporate bond rose to 108 Bps on 28th June 2013 from 70 Bps (as on 31st May 2013). AAA Rated bond yields increased by 38 bps to 8.53% as compared to the yields a month earlier at 8.15% 10-yr G-sec yieldYield curve (%) (%) 11 7.500 7.600 7.700 7.800 7.900 8.000 8.100 0.0 0.8 1.6 2.4 3.2 4.0 4.9 5.7 6.5 7.3 8.1 8.9 9.7 10.5 11.3 12.1 12.9 13.7 14.5 15.3 16.1 16.9 17.7 18.5 19.4 6.8000 7.0000 7.2000 7.4000 7.6000 7.8000 8.0000 8.2000 8.4000
  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. • The rupee touched an all-time low of 60.73 a dollar on Tuesday (25th June), having lost more than 10% since May this year, on fund outflows. • Foreign investors have pulled out over $5 billion from Indian debt this month. This fund ouflow was triggered by Fed chairman Ben Bernanke's comments that the Fed may go slow on bond purchases or its quantitative easing programme, which has so far fuelled the rush of capital flows into riskier assets from emerging countries. • The impact of the restrictions on gold import and steps taken by the government to tackle policy issues in the power sector will all help the sentiment in favour of a stronger rupee. 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 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 -5.37% -5.63% -5.51% -7.37%-8.00% -7.00% -6.00% -5.00% -4.00% -3.00% -2.00% -1.00% 0.00% USD GBP EURO YEN -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 23500 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 Due to a flurry of new launches in the first quarter of the year, most markets witnessed an increase in the unsold inventory levels even with relatively steady sales. Consequently, last quarter saw lesser new launches. With reduced new launches and steady absorption, the demand supply gap is expected to reduce over the coming months. 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 cane be expected to continue generating good percentage returns with relatively lower risk. 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 The over-supply in commercial asset class still continues, thereby dampening the capital values. While rentals have been seen increasing at a slow pace over the last couple of months, they still remain lower than the peal values achieved in the past. In relative terms, Bangalore market continues to outperform 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. Lease rentals as well as capital values continue to be stable at their current levels in the commercial asset class. Low unit sizes have played an important role in maintaining the absorption levels in these markets. 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
  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 Capital values as well as lease rentals continue to be stagnant. The effects of the change in FDI policy to allow 51% foreign ownership in multi-brand retail and 100% in single-brand retail are yet to have any effect of the market for retails assets. Developers continue to defer the construction costs as absorption continues to be low unsold inventory levels high. 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