MARKET OUTLOOK                              AND FUND UPDATE                                                               ...
Fixed Income Overview • The Benchmark 10 Yr government bond yield moved down sharply from 8.41% pa in the beginning of the...
DSP BlackRock Balanced Fund (DSPBRBalF) is an open ended balanced Scheme, seeking to generate long term capital appreciati...
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DSP Black Rock Mid month Market Outlook June 17, 2011

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DSP Black Rock Mid month Market Outlook June 17, 2011

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DSP Black Rock Mid month Market Outlook June 17, 2011

  1. 1. MARKET OUTLOOK AND FUND UPDATE June 17, 2011 Equity Market Overview • As of June 16, 2011, the Nifty index closed at 5,397, down 2.9% mtd while the Sensex Index closed at 17,986, down 2.8% mtd. • Based on the new series of index numbers of industrial production with 2004-05 serving as the benchmark, the growth rate of factory output has dipped to 6.3%in April 2011 from 13.1% during the corresponding month of the preceding year. Among the industry groups that have registered a high rate of growth during April 2011 were food products, paper, basic metals, office, accounting and computing machinery, motor vehicles, trailers and semi-trailers and other transport equipment. • The WPI headline inflation rose an annual 9.06 per cent in May, driven by higher manufactured goods prices. The figures showed that the manufactured products index, the largest constituent of the wholesale price index shot up 7.27 per cent, while the primary articles index rose sharply by 11.3 per cent. The index of food articles too increased by 8.37 per cent in May. • Month to date, the economy has seen FII outflows of approx. USD 174mn from equities, while the YTD outflows have been approx. USD 454mn. Outlook • Month to date for June, the Index was down 2.8% on the back of continued signs of slowdown in the economy after aggressive tightening by the Central Bank in the face of stubborn inflation. From a macro economic perspective, while inflation remains at elevated levels, growth also seems to be slowing down with the industrial production index showing signs of weakness. After a poor earnings season, there have been several downgrades to earnings forecasts for the year which have contributed to the negative sentiment. The reduced likelihood of further quantitative easing in the US and continued uncertainty in peripheral Europe have also caused a lot of volatility in India as well as global markets. Source: Internal Scheme in Focus: DSP BlackRock Balanced FundPortfolioAsset size: Rs. 744.30 crore as on May 31, 2011 Compounded Annualized Returns as on June 15, 2011 Period PERIODTop 10 Stocks % to Net Assets Top 10 Sectors % to Net Assets Period DSP BLACKROCK CRISIL BALANCEDHDFC Bank 3.70% Banks 7.86% BALANCED FUND FUND INDEX^Tata Consultancy Services 3.57% Software 7.07%Housing Development Industrial Capital Goods 6.67% Last 1 year 7.49% 4.68%Finance Corporation 3.56% Finance 5.34% Last 3 year 11.85% 7.67%Bharat Petroleum Corpn. 2.67% Consumer Non Durables 5.10% Last 5 year 17.53% 12.07%ICICI Bank 2.44% Pharmaceuticals 4.55% Since Inception 16.88% NA#Cairn India 2.25% Oil 4.40%Oil & Natural Gas Corpn 2.15% Construction Project 2.83% NAV / Index Value (June 15) ` 65.634 3,448.59Hindalco Industries 1.97% Fertilisers 2.68%Larsen & Toubro 1.80% Petroleum Products 2.67%ITC 1.61%^Benchmark. As per the SEBI standards for performance reporting, the “since inception” returns are calculated on ` 10/- invested at inception. For this purpose theinception date is deemed to be the date of allotment (May 27, 1999). The “Returns” shown are for the growth option. #Since historical data for the benchmarkis not available, performance has not been compared. Past performance may or may not be sustained in future and should not be used asa basis for comparison with other investments.
  2. 2. Fixed Income Overview • The Benchmark 10 Yr government bond yield moved down sharply from 8.41% pa in the beginning of the month to 8.25% pa as on June 17, 2011 as appetite for securities has improved as RBI has not taken any strong action at its mid-quarter policy review, despite inflation overshooting beyond the central bank’s comfort level. The RBI has raised Repo rate and Reverse Repo rate, both by 25bps to 7.50% and 6.50% respectively. The market was relieved by the small quantum of monetary tightening as a higher-than-expected May Inflation numbers had battered sentiments in the past two sessions. • Money market rates softened in May on account of lack of supply and strong demand from Mutual Funds. 3M Bank CD yields moved from around 9.8% pa at the beginning of the month to around 9.0% pa as of June 17, 2011. 12M Bank CD yields moved from 9.9% pa to around 9.75% pa during the same period. • Based on the new series of index numbers of industrial production with 2004-05 serving as the benchmark, the growth rate of factory output has dipped to 6.3%in April 2011 from 13.1% during the corresponding month of the preceding year. Among the industry groups that have registered a high rate of growth during April 2011 were food products, paper, basic metals, office, accounting and computing machinery, motor vehicles, trailers and semi-trailers and other transport equipment. • The WPI headline inflation rose an annual 9.06 per cent in May, driven by higher manufactured goods prices. The figures showed that the manufactured products index, the largest constituent of the wholesale price index shot up 7.27 per cent, while the primary articles index rose sharply by 11.3 per cent. The index of food articles too increased by 8.37 per cent in May. • The liquidity in the system continues to remain tight and is on average Rs. 60,000 cr in deficit. Outlook • Bond market participants are cautious amid high credit offtake, geo-political uncertainties and rigid headline inflation. • We expect benchmark 10 Yr yield to remain range bound with an upward bias keeping in mind the recent rate hike by the central bank and elevated inflation levels. We expect to see the 10Yr trading in a range of 8.20-8.40% pa at its peak. • According to RBI, headline inflation currently underestimates the pressure because domestic fuel prices have yet to reflect global crude prices. Monetary Policy to remain ‘firmly’ anti inflationary and some short term growth deceleration will be inevitable in bringing inflation under control. Growth is already slowing as indicated by service PMI and industrial output. • Money market rates have seen some softening due to strong buying from MFs. We expect money market rates to trend up in a gradual manner due to the anti inflationary and restrictive monetary policy stance maintained by the RBI. Source: InternalPositioning of our Fixed Income Schemes as on June 17, 2011 Fixed Floating Money Modified AUM Securitised Cash and duration Rs. crore rate rate debt market equivalent instruments instruments instruments (years)DSP BlackRock Liquidity Fund 3,098.35 0.00% 0.00% 0.00% 89.29% 10.71% 0.10DSP BlackRock Money Manager Fund 2,562.25 10.83% 1.36% 0.01% 71.22% 16.58% 0.11DSP BlackRock Floating Rate Fund 424.32 37.03% 0.00% 0.00% 62.01% 0.96% 0.56DSP BlackRock Short Term Fund 436.53 16.71% 0.23% 1.57% 77.17% 4.32% 0.62DSP BlackRock Bond Fund 43.04 69.88% 0.00% 1.58% 0.00% 28.54% 1.83DSP BlackRock Strategic Bond Fund 488.42 14.69% 2.08% 0.00% 78.90% 4.33% 1.02Scheme in Focus: DSP BlackRock Short Term Fund Portfolio Construct* % of Net Assets Compounded Annualised Returns as on June 15, 2011 Certificates of Deposit 71.00% DSP BLACKROCK CRISIL LIQUID PERIOD Commercial Papers 8.17% SHORT TERM FUND FUND INDEX^ Securitised Debt Instruments 1.71% Last 1 Year 7.04% 7.06% Bonds & NCDs 13.64% Last 3 Years 6.30% 6.23% Cash & Equivalent 5.48% Last 5 Years 6.60% 6.54%Modified Duration: 0.58 years, Average Maturity: 0.69 years*Data as on May 31, 2011. Since Inception 6.27% 5.75% Rating Profile* % of Net Assets NAV / Index Value (June 15) ` 17.0414 1,683.37 AAA 10.56% AA 4.79% A1+ / P1+ / PR1+ / F1+ 79.17% CASH & EQUIVALENT 5.48%*Data as on May 31, 2011. All corporate ratings are assigned by rating agencieslike CRISIL, CARE, ICRA, FITCH etc.^Benchmark. Returns < 1 year are absolute returns. “Since inception” returns are calculated on ` 10/- invested at inception, viz. date of allotment(Sept 09, 2002). All returns are for Regular Plan - Growth Option. Past performance may or may not be sustained in future and shouldnot be used as a basis for comparison with other investments.
  3. 3. DSP BlackRock Balanced Fund (DSPBRBalF) is an open ended balanced Scheme, seeking to generate long term capital appreciation and current income from a portfolioconstituted of equity and equity related securities as well as fixed income securities (debt and money market securities). Asset Allocation: Equity & equity related securities:65%-75%; Debt, Securitised Debt and Money market securities: 25% - 35%. Features: Declaration of NAV on all Business Days. Redemption normally within 3 Business Days. Saleand Redemption of Units on all Business Days at Purchase Price and Redemption Price respectively. Minimum Investment: Rs. 5000/-. Entry load: - NIL. Exit load: Holding Period< 12 months: 1%, Holding Period >= 12 months: NIL. DSP BlackRock Bond Fund (DSPBRBF) is an open ended income Scheme, seeking to generate an attractive return, consistentwith prudent risk, from a portfolio which is substantially constituted of high quality debt securities, predominantly of issuers domiciled in India. As a secondary objective, theScheme will seek capital appreciation. Asset Allocation: Debt & money market securities: 100% (Debt securities may include securitised debts upto 50% of net assets). Features:Sale and redemption of Units on all Business Days at Purchase Price and Redemption Price. Minimum Investment – Rs. 5,000/- and Rs.1000/- thereafter. Entry Load: Nil; Exit Load- For holding period <= 6 months : 0.50% and for holding period > 6 months : Nil. Declaration of NAV on all Business Days. Redemption normally within 3 Business Days. DSPBlackRock Strategic Bond Fund (DSPBRSBF) is an open ended income scheme, seeking to generate optimal returns with high liquidity through active management of the portfolioby investing in high quality debt and money market securitites. Asset Allocation: Money market securities and/or Debt securities with residual or average maturity of less thanor equal to 367 days or put options within a period not exceeding 367 days: 0% - 100%; Debt securities which have residual or average maturity of more than 367 days: 0% - 100%(Debt Instruments may include securitised debts up to 75% of the net assets). Features: Minimum investment: Regular Plan – Rs. 5,000/- and Rs.1000/- thereafter, InstitutionalPlan – Rs. 1 crore and Rs.1000/- thereafter. Declaration of NAV on all Business Days. For Holding period from the date of allotment: <= 7 calendar days: 0.10%, > 7 calendar days:Nil. Redemption normally within 3 Business Days. DSP BlackRock Short Term Fund (DSPBRSTF) is an open ended income Scheme, seeking to generate income commensurate withprudent risk, from a portfolio constituted of money market securities, floating rate debt securities and debt securities. Asset Allocation: Money market securities, floating ratedebt securities whose coupon(s) are reset at least once a year, fixed rate debt securities having an average or residual maturity <= 367 days or having put options within a periodnot exceeding 367 days: 50%-100% (Floating rate debt securities will include fixed rate debt securities swapped for floating rate returns by using derivatives); Fixed rate debtsecurities having a residual or average maturity > 367 days and floating rate debt securities where the next reset date is more than 367 days from the date of purchase: 0%-50%(Debt securities may include securitised debts up to 60% of the net assets). Features: For holding period <= 6 months : 0.50% and for holding period > 6 months : Nil. Sale andredemption of Units on all Business Days at Purchase Price and Redemption Price. Switching facility subject to prevailing terms of the relevant schemes. SWP and STP facilitiesavailable. Minimum investment – Rs. 5,000/- and Rs.1000 thereafter. Declaration of NAV on all Business Days. Redemption normally within 1 Business Day. DSP BlackRock FloatingRate Fund (DSPBRFRF) is an open ended income Scheme, seeking to generate interest income through investments in acceptable floating rate assets commensurate with thecredit risk. The Scheme may also invest in fixed rate debt securities. Asset Allocation: Floating rate debt securities* or money market securities: 65% to 100%; Fixed rate debtsecurities: 0% to 35% (Debt securities may include securitized debts upto 60% of the net assets). Features: No entry/exit load. Sale and redemption of Units on all Business Daysat Purchase Price and Redemption Price. Switching facility subject to prevailing terms of the scheme. SWP and STP facilities available in each plan of the scheme. Minimuminvestment – Regular Plan – Rs. 5,000 and Rs.1000/- thereafter; Institutional Plan – Rs. 1 crore and Rs.1000/- thereafter. Declaration of NAV on all Business Days. Redemptionnormally within 2 Business Days. Nomination facility available, subject to applicable conditions as per the Statement of Additional Information (SAI) and Scheme InformationDocument (SID). DSP BlackRock Liquidity Fund (DSPBRLF) is an open ended income Scheme, seeking to generate a reasonable return commensurate with low risk and a highdegree of liquidity, from a portfolio constituted of money market securities and high quality debt securities. Asset Allocation: Money market securities and/or Debt securities*with maturity of 91 days – 80% - 100% (* Debt securities may include securitised debts upto 30% of the net assets.) Features: No entry/exit load. Sale and redemption of Units onall Business Days at Purchase Price and Redemption Price. Switching facility subject to prevailing terms of the scheme. SWP and STP facilities available in each plan of the scheme.Minimum investment – Regular Plan - Rs. 5,000 and Rs.1000/- thereafter; Institutional Plan – Rs. 1 crore and Rs.1000/- thereafter. Declaration of NAV on all days. Redemptionnormally 1 Business Day. Previous day NAV applicable for all applications received prior to cut off time subject to specified conditions. DSP BlackRock Money Manager Fund(DSPBRMMF) is an open ended income Scheme, seeking to generate reasonable returns commensurate with low risk and a high degree of liquidity, from a portfolio constitutedof money market securities and high quality debt securities. Asset Allocation: Money market securities and/or debt securities which at the time of purchase have residual oraverage maturity of less than or equal to 367 days or have put options within a period not exceeding 367 days: 65%-100%; Debt securities, which, at the time of purchase haveresidual or average maturity of more than 367 days: 0%-50% (Debt securities may include securitised debts up to 75% of net assets). Features: No entry/exit load. Sale andredemption of Units on all Business Days at Purchase Price and Redemption Price. Switching facility subject to prevailing terms of the scheme. SWP and STP facilities available ineach plan of the scheme. Minimum investment – Regular Plan - Rs. 5,000 and Rs.1000/- thereafter; Institutional Plan – Rs. 1 crore and Rs.1000/- thereafter. Declaration of NAVon all Business Days. Redemption normally within 3 Business Days. Nomination facility available, subject to applicable conditions as per the Statement of Additional Information(SAI) and Scheme Information Document (SID). Statutory Details: DSP BlackRock Mutual Fund was set up as a Trust and the settlors/sponsors are DSP ADIKO Holdings Pvt. Ltd. &DSP HMK Holdings Pvt. Ltd. (collectively) and BlackRock Inc. (Combined liability restricted to Rs. 1 lakh). Trustee: DSP BlackRock Trustee Company Pvt. Ltd. Investment Manager:DSP BlackRock Investment Managers Pvt. Ltd. Risk Factors: Mutual funds, like securities investments, are subject to market and other risks and there can be no assurancethat the Scheme’s objectives will be achieved. As with any investment in securities, the NAV of Units issued under the Scheme can go up or down depending on the factorsand forces affecting capital markets. Past performance of the sponsor/AMC/mutual fund does not indicate the future performance of the Scheme. Investors in the Scheme arenot being offered a guaranteed or assured rate of return. Each Scheme/Plan is required to have (i) minimum 20 investors and (ii) no single investor holding>25% of corpus. If theaforesaid point (i) is not fulfilled within the prescribed time, the Scheme/Plan concerned will be wound up and in case of breach of the aforesaid point (ii) at the end of theprescribed period, the investor’s holding in excess of 25% of the corpus will be redeemed as per SEBI guidelines. The names of the Schemes do not in any manner indicate thequality of the Schemes, their future prospects or returns. For scheme specific risk factors, please refer the Scheme Information Document (SID). For more details, please referthe Key Information Memorandum cum Application Forms, which are available on the website, www.dspblackrock.com, and at the ISCs/Distributors. Please read the SchemeInformation Document and Statement of Additional Information carefully before investing.

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