Monthly Markets Update (India) - October 2011

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Monthly review of key market segments within India including Equity (Domestic and International), Fixed Income, Currency, Economic Indicators, Mutual Funds & Recommended Portfolios (India).

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Monthly Markets Update (India) - October 2011

  1. 1. October 2011Prepared by: iFAST Research Team
  2. 2. Monthly Markets Update - India October 2011 Key PointsDespite the volatility witnessed, we continue to remain positive on the US equities for the nextthree years.As for the Chinese economy, although inflation continues to be a threat, yet we are of theopinion that the country will loosen its monetary stance in the second half of the year.We believe that the Indian market will remain range bound on account of the negative short-term macro parameters and the continuing gloomy atmosphere in the global environment.On the Fixed Income side, we are expecting some more rate hikes in the current fiscal itselfbefore the central bank presses the pause button on rates.The Indian mutual fund industry saw a decrease in its assets (average assets undermanagement) by 4.06% to Rs. 7, 17,129 crores in the third quarter (July – September) of 2011 incomparison to the second quarter (April – June) of 2011.A look at the performance of funds shows that all the Equity oriented categories have deliverednegative returns while the debt focused categories are in the positive territory in the month ofSeptember.
  3. 3. Monthly Markets Update - India October 2011 Equity Markets Update International Markets (As at September 2011 end) Earnings Earnings 2011 2011 2010 P/E P/E P/E Growth Growth MTD YTD Return (%) Yr 2011 Yr 2012 Yr 2013 2011 (%) 2012 (%) Asia ex Japan (MSCI Asia ex Japan) -13.39% -21.33% 17.00% 10.8 9.5 8.4 7.40% 14.00% Emerging Markets (MSCI EM) -14.78% -23.16% 16.40% 9.5 8.6 7.7 8.90% 11.30% Europe (Stoxx 600) -4.74% -18.35% 8.60% 9.6 8.6 7.9 6.70% 11.30% Japan (Nikkei 225) -2.85% -14.94% -3.00% 13.9 12.2 10.3 7.00% 14.40% USA (S&P 500) -7.18% -10.05% 12.80% 11.7 10.5 9.4 16.40% 11.70% Australia (S&P/ASX 200) -6.70% -16.32% -2.60% 10.7 9.7 8.9 9.90% 11.10% Brazil (IBOV) -7.38% -24.50% 1.00% 9.2 8.2 7.1 9.00% 12.10% China (HS Mainland 100) -16.98% -24.79% 2.20% 8.6 7.5 6.7 22.60% 13.60% Hong Kong (HSI) -14.33% -23.51% 5.30% 9.6 8.6 7.7 17.30% 11.70% India (SENSEX) -1.34% -19.30% 17.40% 14.1 12.2 11.1 11.60% 15.90% Indonesia (JCI) -7.62% -4.17% 46.10% 13.9 11.5 10.0 23.80% 20.10% Malaysia (KLCI) -4.16% -8.68% 19.30% 13.4 12.2 11.2 10.00% 9.50% Russia (RTSI$) -21.22% -24.24% 22.50% 5.1 5.2 4.7 31.20% -1.70% Singapore (STI) -7.28% -16.73% 10.10% 12.4 11.5 10.1 6.60% 8.30% South Korea (KOSPI) -5.88% -13.72% 21.90% 9.1 8.0 7.1 13.10% 13.80% Taiwan (Taiwan Weighted) -6.67% -18.89% 9.60% 13.1 11.0 9.6 -7.50% 19.00%Technology Heavy (NASDAQ 100) -4.54% -3.89% 19.20% 13.3 11.6 10.4 26.20% 14.10% Thailand (SET Index) -14.38% -11.29% 40.60% 10.5 9.2 8.3 25.90% 14.10% Source: Bloomberg, iFAST Compilations All returns are in respective local currency terms and MSCI Index returns are in USD
  4. 4. Monthly Markets Update - India October 2011 Global Market Performance Group 7 Countries Global Indices- G7 (MTD Returns) 0.00% Germany (DAX) USA (S&P 500) UK (FTSE 100) Italy (FTSE MIB) Canada (S&P/TSX) France (CAC-40) -2.00% Japan (Nikkei 225) -4.00% -6.00% -8.00% -10.00%Events Factory orders in the US rose 2.4% m-o-m in Jul 11, after a better-than-expected 0.4% decline in Jun 11 US Unemployment rate remained at 9.1% in Aug 11, unchanged from Jul 11 New home sales fell 2.3% m-o-m in Aug 11, after a better-than-expected 0.3% decline in Jul 11 Industrial production of Germany rose 4.0% m-o-m in Jul 11, after an upward-revised -1.0% decline in Jun 11 Euro-zone retail sales contracted -0.2% y-o-y in Jul 11, after a downward-revised -0.7% contraction in Jun 11 UK’s Industrial production fell by -0.2% on a m-o-m basis in Aug 11, after a 0% growth rate in Jul 11 Bank of Japan (BOJ) held its target rate unchanged at a range between 0% to 0.1% in Sep 11 The Industrial production of Japan dropped 3% y-o-y in Jul 11 following a decrease of 2.8% in Jun 11Market OutlookUS markets continued to remain volatile in the month of September as well on account of Euro Zonedebt worries the mixed data of the US economy released, and the Fed’s weak assessment of the USeconomy. We are expecting the Fed to further lower the economic growth forecasts for the USeconomy, the Fed still expects 2.8% full year growth while our own forecast is 1.6% expansion for 2011.A better idea of the extent of the impact of Euro zone’s woes on corporate profitability will be known
  5. 5. Monthly Markets Update - India October 2011only once the result season starts this month. We continue to be positive on US equities for the nextthree years as the market re-rates to a higher multiple of earnings. On the other hand, the on-goingdebt crisis is having a negative impact on the sentiments and confidence of countries like Germany andthe Euro Zone in general. Finally, as far as the Japanese economy is concerned, the impact of theearthquake along with the problems in US and Europe are having a negative impact on their exports. Wecontinue to stick to our view that the Japanese economy will recover at a slower pace as compared toother regions and countries.
  6. 6. Monthly Markets Update - India October 2011 Asia Pacific (Ex Japan) Global Indices- Asia Pacific (Ex Japan) (MTD Returns) 0.00% South Korea (KOSPI) Indonesia (JCI) Australia (S&P/ASX 200) Hong Kong (HSI) Thailand (SET Index) Taiwan (Taiwan Weighted) Singapore (STI) Malaysia (KLCI) -2.00% -4.00% -6.00% -8.00% -10.00% -12.00% -14.00% -16.00%Events Singapore’s CPI for Aug 11 rose 5.7% y-o-y, after rising 5.4% y-o-y in Jul 11 Industrial production of Singapore for Aug 11 increased by 3.9% m-o-m, after an upward-revised 0.4% gain in Jul 11 CPI of Malaysia decelerated to 3.3% y-o-y in Aug 11 BNM maintained Overnight Policy Rate at 3.0% on 9 Sep 11 Bank Indonesia reference rate is unchanged for seventh months at 6.75% Headline inflation of Indonesia in Aug rose to 4.8% y-o-y compared to 4.6% in Jul The Bank of Korea (BOK) held its benchmark 7-day repo rate unchanged at 3.25% in Sep 11 Korea’s Consumer Price Index (CPI) grew at 5.3% y-o-y in Aug 11 compared to a 4.7% increase in Jul 11Market OutlookThe earnings estimate for Singapore has been downgraded on account of the gloomy conditionsprevailing in the international markets. However, we still believe that Singapore equities will delivermore than 20% annualized returns by the end of 2013. Inflation has come down for countries likeMalaysia and Indonesia and is expected to be on a downward trend on account of the easing ofcommodity prices. However, inflation continues to remain sticky for Thailand, as a result of which theCentral Bank hiked the interest rate in the month of August as well which was 9 times since theborrowing cost increased since June 2010.
  7. 7. Monthly Markets Update - India October 2011 BRIC (Ex India) Countries Global Indices- BRIC (Ex-India)- (MTD Returns) 0.00% Brazil (IBOV) China (HS Mainland 100) -5.00% Russia (RTSI$) -10.00% -15.00% -20.00% -25.00%Events IPCA Inflation rose to 7.2% y-o-y in Aug 11, up from 6.9% in Jul 11 Brazil’s Consumer confidence fell to 114.7 in Sep 11, 118.7 in Aug 11 Industrial production of Russia expanded 6.2% y-o-y in Aug 11, after a 5.2% y-o-y increase in Jul 11 Russia’s Consumer Prices gained 8.2% y-o-y in Aug 11, down from 9.0% in Jul 11 CPI of China rose 6.2% y-o-y in Aug 11 as compared with a 6.5% rise in Jul 11 China’s Industrial production grew by 13.5% y-o-y in Aug 11 as compared with a 14.0% y-o-y increase in Jul 11Market OutlookThe economic activity in the Brazilian economy decelerated on account of the uncertainties in the globaleconomies. Inflation continued to remain above the government’s estimate of 4.5% (Plus/minus 2%). Inspite of this, the Central Bank cut its benchmark Selic rate by 50 bps to reach 12% on the back ofdeterioration in the global economy. Brazil’s index has been affected by the global panic, European debtcrisis, slowdown in the US economy and the volatility in commodity prices. As for the Russian markets, itwas affected due to global panic and equity market sell-off along with the fears that the Europeandemand for oil will come down. Finally, for the Chinese economy, inflation continues to remain a threatand control in credit growth continues. We are of the view that China will loosen its monetary stance inthe second half of the year due to the ongoing crisis in Euro Zone. We believe that currently valuationsare attractive and we are positive on both Chinese A shares and Hong-Kong listed Chinese equities overthe next 3 years.
  8. 8. Monthly Markets Update - India October 2011 INDIAEquity Market Outlook
  9. 9. Monthly Markets Update - India October 2011 India-Equity India Indices (MTD Sectoral Indices (MTD Returns) Returns) 0.00% 4.00% Nifty Index BSE MID CAP BSE SMALL CAP BSE Sensex -0.50% 2.00% -1.00% 0.00% BSE IT BSE-HC BSE CD BSE FMCG BSE CG BSE METAL BSE Oil & Gas BSE Realty BSE Bankex BSE AUTO BSE Power -1.50% -2.00% -2.00% -4.00% -2.50% -6.00% -3.00% -8.00% -3.50% -10.00% -4.00% -12.00%Events India’s Manufacturing Purchasing Managers’ Index was at 52.6 in Aug 11 as compared to 53.6 in Jul 11 Production at factories, utilities and mines rose 3.3% y-o-y in Jul 11, after an 8.8% gain in Jun 11 WPI inflation for Aug 11 was at 9.78% compared to 9.22% in Jul 11 RBI raised the Repo rate by 25 basis points on 16 September from 8% to 8.25%. In addition to this, Reverse Repo rate was automatically adjusted to 7.25% and the marginal standing facility rate to 9.25% The earnings growth for 2011-12 and 2012-2013 are 8.28% and 16.07% which translate to a forward P/E of 13.97X and 12.03X respectivelyMarket OutlookThe Indian markets ended in red by registering a negative return of 1.34% and 1.15% respectively. Someof the macro-economic numbers that came out during the month along with the uncertainties in theglobal markets contributed to the muted growth. Year-on-year growth in the index of IndustrialProduction for July 2011 came in at 3.3% against the Bloomberg consensus expectation of 6.2%. As perthe use-based classification, the Capital Goods and Intermediate Goods sectors contracted by 15.2% and1.1% respectively, while Basic Goods grew at 10.1%. On the other hand, the Consumer Durables andConsumer non-durables grew at 8.6% and 4.1% respectively. We believe that the volatile IIP numbersare a cause of concern for the policymakers, and the deceleration in this month can be attributed to thecontinuous rate hikes that RBI has been undertaking along with the slowdown in the global economy.On the other hand, the WPI Inflation rose to 9.78% in August as against the Bloomberg estimate of9.64%. Inflation has been in the range of 9%-10% since March 2010, and as a result, the RBI has
  10. 10. Monthly Markets Update - India October 2011increased the major policy rates 12 times since then. We are of the view that inflation continues to be anightmare for policymakers and until this data falls within the comfort zone of the Central Bank, it willcontinue with its hawkish monetary stance.The month of October is the results season and we are expecting more earning downgrades. We believethat the market will remain range bound on account of the negative short-term macro parameters andthe continuing gloomy atmosphere in the global environment.
  11. 11. Monthly Markets Update - India October 2011 INDIADebt Market Outlook
  12. 12. Monthly Markets Update - India October 2011 India-Debt 10 Year G-sec Curve 8.55 8.5 8.45 8.4 8.35 8.3 8.25 8.2 8.15 31-Aug-11 12-Sep-11 2-Sep-11 4-Sep-11 6-Sep-11 8-Sep-11 10-Sep-11 14-Sep-11 16-Sep-11 18-Sep-11 20-Sep-11 22-Sep-11 24-Sep-11 26-Sep-11 28-Sep-11 30-Sep-11 YieldsThe 10-year G-Sec yield hardened during the month of September as it increased from 8.32% in thebeginning of the month and ended at 8.5% .This was on the back of the increase in the major policyrates for the twelfth time since March 2010 in the Mid-Quarter Monetary Policy Review held on Sept 16.RBI has made it very clear that the future course of action will depend upon inflationary tendencies andglobal events. In short, we can expect some more rate hikes in the current fiscal itself before the centralbank presses the pause button on rates. In addition to this the Government also increased theborrowings to Rs. 2.2 trillion in the second half of the year, which was much above the expectations.Both these factors contributed to the increase in yields.We continue to advise investors to stay in short-term papers like FMPs Short Term Funds and UltraShort Term Funds as they continue to give higher post-tax returns as compared to Savings Accounts andUltra Short-Term Funds. In this scenario, we advise: Investors with a time horizon anywhere from 3 months to 24 months can lock-in their money in FMPs (available with varying maturities) at the prevailing high rates Investors with idle cash in the savings account should look at Ultra-Short Term Funds. The Recommended Funds in this category includes DWS Ultra Short Term Fund and Birla Sun-life Ultra short term Fund. The investment horizon that we suggest for such instruments is 1 month-3 months.
  13. 13. Monthly Markets Update - India October 2011Investors with a time horizon between 6 - 9 months should consider Short-Term Funds. TheRecommended Funds in this category include Reliance Short Term Fund and Templeton IndiaShort Term Fund
  14. 14. Monthly Markets Update - India October 2011 Mutual Funds
  15. 15. Monthly Markets Update - India October 2011 Mutual Fund Industry Asset Trends India Fund Industry Assets (Amount in INR Top and Bottom Five AMCs - By Absolute Change in Assets (Q-o-Q), as Crores) of July- September 2011900,000 Q-o-Q Absolute Change % Change800,000700,000 in Assets (INR in Crores) in Assets600,000 Deutsche Mutual Fund 1677.29 15.13%500,000 JPMorgan Mutual Fund 1023.57 27.48%400,000300,000 IDFC Mutual Fund 778.83 2.73%200,000 Peerless Mutual Fund 700.44 14.27%100,000 JM Financial Mutual Fund 618.51 10.57% - Oct-09 Oct-Dec-10 Dec-09 Jan-10 Nov-09 Mar-10 May-10 Aug-10 Jul-10 Jan-Mar-11 Jun-10 Sep-09 Feb-10 Apr-10 Sep-10 July-Sept-11 Apr-June-11 Tata Mutual Fund -2372.39 -9.49% Birla Sun Life Mutual Fund -3261.01 -4.83% ICICI Prudential Mutual Fund -4570.15 -5.72% UTI Mutual Fund -6525.23 -9.44%Source: AMFI, iFAST Compilations Reliance Mutual Fund -9909.17 -9.71%(Average Assets Under Management) Source: AMFI, iFAST Compilations The Indian mutual fund industry saw a decrease in its assets (average assets under management) by 4.06% or by Rs. 30,350 crores to Rs. 7, 17,129 crores in the third quarter (July – September) of 2011 in comparison to the second quarter (April – June) of 2011. In absolute terms, Deutsche Mutual Fund had maximum average assets this quarter; the fund house assets increased by Rs. 1,677 crores. JP Morgan Mutual Fund became the second largest fund house in terms of addition in average assets of Rs. 1,024 crores. Peerless Mutual Fund which is a relatively new fund house also appeared among top 5 AMCs in terms of absolute change in assets; it added about Rs. 700 crores this quarter. Reliance Mutual Fund registered the largest drop in average assets; the fund house lost close to Rs. 9,909 crores this quarter. This was followed by UTI Mutual Fund which lost around Rs. 6,525 crores. Both ICICI Prudential Mutual Fund and Birla Sunlife Mutual Fund after registering an increase in assets for the first two quarters of 2011 witnessed a fall in the third quarter. While ICICI Prudential Mutual Fund lost close to Rs. 4,570 crores, Birla Sunlife Mutual Fund registered a drop of Rs.3, 261 crores in quarterly average assets.
  16. 16. Monthly Markets Update - India October 2011 Fund Category Returns Fund Category Returns (as of September 2011) 1 Month 1 Year Equity: Large Cap -1.32% -16.11% Equity: Multi Cap -1.12% -16.75% Equity: Mid Cap -1.37% -15.48% Equity: ELSS -1.21% -16.37% Equity: Index -1.30% -18.23% Equity: Global -7.36% -6.84% Hybrid: Balanced -0.81% -10.23% Hybrid: MIP 0.24% 2.58% Debt: Income 0.43% 6.35% Debt: Gilt Short Term 0.50% 5.91% Debt: Gilt Long Term 0.09% 5.07% Debt: Floating Rate 0.71% 8.15% Debt: Ultra Short Term 0.69% 8.08% Debt: Short Term 0.63% 7.67% Liquid 0.68% 7.74% Source: ACE MF, iFAST Compilations (Excludes Institutional Plans)A quick look at the fund category returns tells us that all the Equity oriented categories havedelivered negative returns while the debt focused categories are in the positive territory onmonth-on-month basis. In the Hybrid funds segment, balanced funds delivered negative returnswhile the Monthly Income Plans (i.e. MIPs) delivered positive returns. Global Funds categorywas the worst performer; it delivered negative returns close to 7.36% this month.The large cap funds category delivered negative returns close to 1.32% compared to thebenchmark index CNX Nifty which delivered negative return of 1.15%.Global funds category was the worst performer; it delivered negative returns of around 7.36%on month-on-month basis. This was mainly on the back of negative returns delivered by mostglobal markets in the month of September.In the debt segment, all categories have delivered positive returns for the fifth consecutivemonth. Floating Rate Funds followed by the Ultra Short Term funds have given the highestreturns close to 0.71% and 0.69% in the debt category.
  17. 17. Monthly Markets Update - India October 2011 Top and Bottom Performing Equity Funds in September Top Performing Equity funds on our Platform in September 2011 Sector 1 Month 1 Year UTI Top 100 Fund Large Cap 0.15% -11.81% Franklin India Bluechip Fund Large Cap 0.08% -11.30% CNX Nifty Index (Benchmark) -1.15% -18.02% IDFC India GDP Growth Fund Multi-Cap 2.69% -12.11% HDFC Growth Fund Multi-Cap 0.60% -14.80% CNX 500 Index (Benchmark) -1.49% -19.22% Reliance Growth Fund Midcap & Small Cap 1.35% -19.72% Magnum Sector Funds Umbrella- Emerging Businesses Fund Midcap & Small Cap 0.26% -0.69% CNX Midcap Index (Benchmark) -2.75% -22.59% IDFC Tax Advantage (ELSS) Fund ELSS 1.56% -14.47% Reliance Tax Saver (ELSS) Fund ELSS 0.61% -16.83% CNX 500 Index (Benchmark) -1.49% -19.22% Tata Growing Economies Infrastructure Fund- Plan A Overseas -0.32% -7.21% Birla Sun Life International Fund Equity Fund Plan A Overseas -0.80% 2.22% MSCI World Index (in INR) (Benchmark) -3.15% 1.96% Source: ACF MF, iFAST CompilationsLarge Cap FundsOut of the 40 large cap funds analyzed, only the top two have managed to deliver positive returns in themonth of September. UTI Top 100 Fund and Franklin India Bluechip Fund are the top two large cap fundsdelivering returns close to 0.15% and 0.08% respectively. Franklin India Bluechip Fund is ourrecommended fund in the large cap category.Multi Cap FundsIn the multi cap category, out of 44 multi cap funds analyzed, 91% of the funds have delivered negativereturns on month-on-month basis. IDFC India GDP Growth Fund was the top performer; the fund
  18. 18. Monthly Markets Update - India October 2011delivered close to 2.69% in this month. HDFC Growth Fund was the second best performer in thiscategory with returns close to 0.60%.Mid Cap FundsBoth Reliance Growth Fund and Magnum Sector Funds Umbrella- Emerging Businesses Fund are the toptwo performers in the midcap category with returns close to 1.35% and 0.26%, respectively. In thiscategory, out of 28 funds analyzed, 86% of the funds have delivered negative returns. Reliance GrowthFund which was among the bottom two performers in the previous month is the top performer in themonth of September.ELSS FundsIn the ELSS funds category, both the top two performing funds have managed to outperform thebenchmark CNX 500 which gave a negative return of 1.49%. IDFC Tax Advantage (ELSS) Fund was the topperformer during the month of September delivering a return of 1.56% followed by Reliance Tax Saver(ELSS) Fund which gave a return of 0.61%. Reliance Tax Saver (ELSS) Fund which was the bottomperforming fund in the previous month is among the top performing funds in the month of September.Global FundsAll the 25 global funds analyzed have delivered negative returns on month-on-month basis. TataGrowing Economies Infrastructure Fund Plan A was the top performer during the month deliveringnegative returns close to 0.32%.
  19. 19. Monthly Markets Update - India October 2011 Bottom Performing Equity funds on our Platform in September 2011 Sector 1 Month 1 Year Magnum Equity Fund Large Cap -2.24% -15.25% Birla Sun Life Advantage Fund Large Cap -3.23% -21.23% CNX Nifty Index (Benchmark) -1.15% -18.02% Magnum Multicap Fund Multi-Cap -2.42% -23.74% AIG India Equity Fund Multi-Cap -2.52% -7.01% CNX 500 Index (Benchmark) -1.49% -19.22% Sundaram Select Midcap Fund Midcap & Small Cap -3.38% -13.85% Magnum Mid Cap Fund Midcap & Small Cap -3.56% -17.94% CNX Midcap Index (Benchmark) -2.75% -22.59% Edelweiss ELSS Fund ELSS -2.40% -13.89% L&T Tax Saver Fund ELSS -2.64% -22.72% CNX 500 Index (Benchmark) -1.49% -19.22% Birla Sun Life Commodity Equities Fund- Global Agri Plan Overseas -12.68% -11.52% Mirae Asset China Advantage Fund Overseas -14.07% -18.68% MSCI World Index (in INR) (Benchmark) -3.15% 1.96% Source: ACF MF, iFAST CompilationsLarge Cap FundsIn the large cap fund category, Birla Sun life Advantage Fund and Magnum Equity Fund were the bottomtwo performing funds delivering negative returns of 3.23% and 2.24 % respectively. Both the funds haveunderperformed the benchmark CNX Nifty which delivered a negative return of 1.15% this month.Multi Cap FundsBoth the bottom performers i.e. AIG India Equity Fund and Magnum Multicap Fund have deliverednegative returns close to 2.52% and 2.42% respectively. Both the funds have underperformed thebenchmark CNX 500 which gave a negative return of around 1.49%. AIG India Equity Fund which was thetop performer in the previous month turned out to be the bottom performer in the month ofSeptember.Mid Cap FundsIn the mid cap space, Magnum Midcap Fund and Sundaram Select Midcap Fund appeared to be the twobottom performing funds delivering a negative return of 3.56% and 3.38% respectively. Both the fundsunderperformed the benchmark CNX Midcap which gave a negative return of 2.75%.
  20. 20. Monthly Markets Update - India October 2011ELSS FundsL&T Tax Saver Fund was the bottom performer during the month of September delivering a negativereturn of 2.64% followed by Edelweiss ELSS Fund which delivered negative returns close to 2.40%.Global FundsBoth Mirae Asset China Advantage Fund and Birla Sun Life Commodity Equities Fund- Global Agri Planhave delivered negative returns close to 14.07% and 12.68% respectively. Both the funds haveunderperformed the benchmark i.e. MSCI World Index which delivered a negative return of 3.15%.
  21. 21. Monthly Markets Update - India October 2011 Top and Bottom Performing Debt/Hybrid Funds in September Top Performing Debt funds / Hybrid on our Platform in September 2011 Sector 1 Month 1 Year Sundaram Balanced Fund Balanced 0.36% -13.99% FT India Balanced Fund Balanced 0.36% -7.32% Crisil Balanced Fund Index -0.58% -10.04% DWS Twin Advantage Fund MIP 1.01% 4.33% JM MIP Fund MIP 0.80% 2.31% Crisil MIP Blended Index 0.13% 1.90% Birla Sun Life Medium Term Plan Income 1.50% 8.75% BNP Paribas Bond Fund Income 0.87% 7.66% Crisil Composite Bond Fund Index 0.32% 5.58% Baroda Pioneer Gilt Fund Gilt - Long Term 0.59% 8.43% Mirae Asset Gilt Fund Investment Plan Gilt - Long Term 0.56% 3.60% I-BEX (I-Sec Sovereign Bond Index) 0.63% 6.54% BNP Paribas Short Term Income Fund Short Term 0.78% 8.04% Peerless Short Term Fund Short Term 0.78% 12.16% Crisil Short-Term Bond Fund Index 0.54% 6.81% Source: ACF MF, iFAST CompilationsBalanced FundsIn this category, out of 18 funds analyzed, only the top two have delivered positive returns inSeptember. Both the top performing funds Sundaram Balanced Fund and FT India Balanced Funddelivering positive returns of 0.36% outperformed the benchmark Crisil Balanced Fund Index whichdelivered a negative return of 0.58% on a month-on-month basis.Monthly Income PlansBoth the top performing Monthly Income Plans i.e. DWS Twin Advantage Fund & JM MIP Fund deliveringreturns of 1.01% and 0.80% outperformed the benchmark Crisil MIP Blended Index which deliveredreturns of 0.13% on a month-on-month basis.Income Funds
  22. 22. Monthly Markets Update - India October 2011In the income space, Birla Sun Life Medium Term Plan which was the bottom performer in the previousmonth was the top performer in the month of September. The fund delivered month-on-month returnsof around 1.50%. Out of the 45 income funds analyzed, 91% of the funds have delivered positive returns.Gilt- Long term FundsBoth Baroda Pioneer Gilt Fund & Mirae Asset Gilt Fund Investment Plan were the top performers in themonth of September delivering returns close to 0.59% and 0.56% respectively. Baroda Pioneer Gilt Fundwas the top performer on 1 month as well as 1 year basis.Short Term FundsAll the funds in this category have delivered positive returns on month-on-month basis. BNP ParibasShort Term Income Fund and Peerless Short Term Fund are the top two performers delivering returnsclose to 0.78%.
  23. 23. Monthly Markets Update - India October 2011 Bottom Performing Debt / Hybrid funds on our Platform in September 2011 Sector 1 Month 1 Year ICICI Prudential Balanced Fund Balanced -1.42% -2.59% Canara Robeco Balance Balanced -1.57% -7.34% - Crisil Balanced Fund Index -0.58% 10.04% Tata MIP Plus Fund MIP -0.51% 0.63% Sundaram Monthly Income Plan Moderate Plan MIP -0.72% -2.03% Crisil MIP Blended Index 0.13% 1.90% ICICI Prudential Income Opportunities Fund Income -0.13% 5.57% Reliance Income Fund Income -0.19% 5.22% Crisil Composite Bond Fund Index 0.32% 5.58% DSP BlackRock Government Securities Fund Gilt - Long Term -0.13% 4.83% Kotak Gilt-Investment Gilt - Long Term -0.17% 4.86% I-BEX (I-Sec Sovereign Bond Index) 0.63% 6.54% SBI Short Horizon Debt Fund-Short Term Short Term 0.49% 7.31% Reliance Short Term Fund Short Term 0.42% 6.68% Crisil Short-Term Bond Fund Index 0.54% 6.81% Source: ACF MF, iFAST CompilationsBalanced FundsCanara Robeco Balance and ICICI Prudential Balanced Fund were the bottom two performing fundsdelivering negative returns close to 1.57% and 1.42% respectively.Monthly Income PlansIn the MIP category, Sundaram Monthly Income Plan Moderate Plan and Tata MIP Plus Fund are thebottom performers on month-on-month basis delivering negative returns close to 0.72% and 0.51%respectively. Both the funds have underperformed their category average as well as the benchmark i.e.Crisil MIP Blended Index which delivered positive returns of 0.24% and 0.13% respectively.Income FundsIn the income funds segment, both the bottom performing funds i.e. Reliance Income Fund and ICICIPrudential Income Opportunities Fund have underperformed the benchmark i.e. Crisil Composite Bond
  24. 24. Monthly Markets Update - India October 2011Fund Index. The funds delivered negative returns close to 0.13% and 0.19% respectively, whereas thebenchmark delivered returns of around 0.32% on a month-on-month basis.Gilt- Long term FundsBoth the bottom performing Gilt long term funds underperformed the benchmark i.e. I-BEX (I-SecSovereign Bond Index) on a month-on-month basis. Kotak Gilt-Investment which was the bottomperformer during the month delivered negative return close to 0.17% whereas the benchmark deliveredclose to 0.63%.Short Term FundsBoth the bottom performing funds Reliance Short Term Fund and SBI Short Horizon Debt Fund-ShortTerm delivered returns close to 0.42% and 0.49% respectively.
  25. 25. Monthly Markets Update - India October 2011Recommended Portfolios Update
  26. 26. Monthly Markets Update - India October 2011 Recommended Portfolios Update 1. Conservative Portfolio: Portfolio Objective:The portfolio aims to achieve long term capital appreciation by investing 90% into bond funds and 10%into equity funds. The target allocation may change depending on our views on financial markets.Currently, we hold a neutral position in equities and we target to have an exposure of 90% to bondfunds and 10% to equity funds. Portfolio Absolute Return since inception: Total Investment: INR 1,00,000 (Inception Date: 26 Feb 2010) 12.58% Portfolio Value: INR 1,12,580 September 2011 Portfolio Return: 0.69% Portfolio Commentary:The Conservative portfolio gave a return of 0.69% in September. The debt funds accounted for around86% of the total portfolio returns and the equity part of the portfolio accounted for 14% of the totalportfolio returns.In the debt segment, Short term funds accounted for close to 37% of the total portfolio returns whilethe Floating rate funds have accounted for close to 33% of the total portfolio returns. Among the debtfunds, Birla Sunlife Floating Rate Fund- Long term Plan accounted for the highest total portfolio returns.In case of equity funds, the trend reversed this month with equity funds delivering positive returns.Among the equity funds, UTI Dividend Yield Fund accounted for 8% of the total portfolio returnsfollowed by HDFC Top 200 Fund which accounted for 5% of the total portfolio returns. 2. Moderately Conservative Portfolio: Portfolio Objective:The portfolio aims to achieve long term capital appreciation by investing 70% into bond funds and 30%into equity funds. The target allocation may change depending upon our views on financial markets.Currently, we hold a neutral position in equities and we target to have an exposure of 70% to bondfunds and 30% to equity funds. Portfolio Absolute Return since inception: Total Investment: INR 1,00,000 (Inception Date: 26 Feb 2010) 11.57% Portfolio Value: September 2011 Portfolio Return: INR 1,11,565 0.76%
  27. 27. Monthly Markets Update - India October 2011 Portfolio Commentary:The Moderately Conservative portfolio gave a return of 0.76% in September. The portfolio returned tothe positive territory after delivering negative returns in the previous month. The debt funds accountedfor around 58% of the total portfolio returns while equity funds contributed close to 42% of the totalportfolio returns.In the debt category, floating rate funds accounted for 20% of the total portfolio returns and short termfunds accounted for around 23% of the total portfolio returns. Birla Sunlife Floating Rate Fund- Longterm Plan, Canara Robeco Floating Rate Fund and Templeton India Short Term Income Plan contributedclose to 10% each of the total portfolio returns.In the Equity segment, all the three funds i.e. HDFC Top 200 Fund, ICICI Prudential Focused BluechipEquity Fund and UTI Dividend Yield Fund have delivered positive returns. The large cap funds which havea weightage of 20% accounted for 27% of the total portfolio returns. 3. Balanced Portfolio: Portfolio Objective:The portfolio aims to achieve long term capital appreciation by investing 50% into bond funds and 50%into equity funds. The target allocation may change depending upon our views on financial markets.Currently, we hold a neutral position in equities and we target to have an exposure of 50% to bondfunds and 50% to equity funds. Portfolio Absolute Return since inception: Total Investment: INR 1,00,000 (Inception Date: 26 Feb 2010) 11.31% Portfolio Value: September 2011 Portfolio Return: INR 1,11,308 0.62% Portfolio Commentary:The Balanced portfolio gave a return of 0.62% in September. The debt funds accounted for around 51%of the total portfolio returns while the equity funds accounted for close to 49% of the total portfolioreturns.In the debt portfolio, all the funds have delivered positive returns. Short Term Funds have accounted for22% of the total portfolio returns, followed by Floating Rate funds which accounted for 19% of the totalportfolio returns.
  28. 28. Monthly Markets Update - India October 2011In the equity segment, the large cap funds which have a weightage of 30% accounted for 47% of thetotal portfolio returns. On the contrary, the midcap funds attributed to negative 16% of the totalportfolio returns. Among the equity funds, ICICI Prudential Focused Bluechip Equity Fund accounted forhighest returns close to 21% of the total portfolio returns. 4. Moderately Aggressive Portfolio:Portfolio Objective:The portfolio aims to achieve long term capital appreciation by investing 30% into bond funds and 70%into equity funds. The target allocation may change depending upon our views on financial markets.Currently, we hold a neutral position in equities and we target to have an exposure of 30% to bondfunds and 70% to equity funds. Portfolio Absolute Return since inception: Total Investment: INR 1,00,000 (Inception Date: 26 Feb 2010) 10.75% Portfolio Value: September 2011 Portfolio Return: INR 1,10,754 0.02% Portfolio Commentary:The Moderately Aggressive portfolio gave a return of 0.02% in September. The portfolio returned to thepositive territory after delivering negative returns in the previous month.In the debt category, all the funds have delivered positive returns. Birla Sunlife Floating Rate Fund- Longterm Plan followed by BNP Paribas Money Plus Fund accounted for most of the debt portfolio returns.In the equity segment, mid cap funds i.e. HDFC Midcap Opportunities Fund and DSP Black Rock Smalland Midcap Fund together accounted for most negative equity portfolio returns. ICICI PrudentialInfrastructure Fund followed by HDFC Midcap Opportunities Fund lost the maximum during the month. 5. Aggressive Portfolio:Portfolio Objective:The portfolio aims to achieve long term capital appreciation by investing 10% into bond funds and 90%into equity funds. The target allocation may change depending upon our views on financial markets.Currently, we hold a neutral position in equities we target to have an exposure of 10% to bond fundsand 90% to equity funds. Portfolio Absolute Return since inception: Total Investment: INR 1,00,000 (Inception Date: 26 Feb 2010) 12.23%
  29. 29. Monthly Markets Update - India October 2011 Portfolio Value: September 2011 Portfolio Return: -0.15% INR 1,12,229 Portfolio Commentary:The Aggressive portfolio gave a negative return of 0.15% in September. The portfolio returns continue toappear in the negative territory for second consecutive month.In the debt segment, both Reliance Short Term Fund and ICICI Prudential Gilt Fund- Investment Planhave delivered positive returns. Reliance Short Term Fund accounted for most of the debt portfolioreturns.In the equity space, mid cap funds i.e. HDFC Midcap Opportunities Fund and DSP Black Rock Small andMid cap Fund together accounted for most negative equity portfolio returns. ICICI PrudentialInfrastructure Fund followed by HDFC Midcap Opportunities Fund lost the maximum during the month. 6. Moderately Aggressive (Global) Portfolio: Portfolio Objective:The portfolio aims to achieve long term capital appreciation by investing 30% into bond funds, 46% indomestic equity funds and 25% in global equity funds. The target allocation may change dependingupon our views on financial markets. Currently, we hold a neutral position in equities and we target tohave an exposure of 30% to bond funds, 46% to domestic equity funds and 25% to global equity funds. Portfolio Absolute Return since inception: Total Investment: INR 1,00,000 (Inception Date: 26 Feb 2010) 8.61% Portfolio Value: September 2011 Portfolio Return: -2.02% INR 1,08,607 Portfolio Commentary:The Moderately Aggressive (Global) portfolio gave a negative return of 2.02% in September.In the debt category, all the funds have delivered positive returns. Birla Sunlife Floating Rate Fund- Longterm Plan followed by BNP Paribas Money Plus Fund accounted for most of the debt portfolio returns.In the equity segment, mid cap funds i.e. HDFC Midcap Opportunities Fund and DSP Black Rock Smalland Midcap Fund together accounted for most negative equity portfolio returns. HDFC MidcapOpportunities Fund followed by DSP Black Rock Small and Mid cap Fund lost the maximum during themonth.
  30. 30. Monthly Markets Update - India October 2011In the global equity funds, both the global funds i.e. Mirae Asset China Advantage Fund and PrincipalGlobal Opportunities Fund have given negative returns. However Mirae Asset China Advantage Fundalone accounted for 70% of the negative global equity portfolio returns. 7. Aggressive (Global) Portfolio: Portfolio Objective:The portfolio aims to achieve long term capital appreciation by investing 10% into bond funds, 59% intodomestic equity funds and 31% into global equity funds. The target allocation may change dependingupon our views on financial markets. Currently, we hold a neutral position in equities and we target tohave an exposure of 10% to bond funds, 60% to domestic equity funds and 30% to global equity funds. Portfolio Absolute Return since inception: Total Investment: INR 1,00,000 (Inception Date: 26 Feb 2010) 8.21% Portfolio Value: September 2011 Portfolio Return: -2.57% INR 1,08,213 Portfolio Commentary:The Aggressive (Global) portfolio gave a negative return of 2.57% in September. The portfolio returnscontinue to appear in the negative territory for second consecutive month.In the debt segment, both Reliance Short Term Fund and ICICI Prudential Gilt Fund- Investment Planhave delivered positive returns. Reliance Short Term Fund alone accounted for 85% of the debt portfolioreturns.In the equity space, mid cap funds i.e. HDFC Midcap Opportunities Fund and DSP Black Rock Small andMidcap Fund together accounted for most negative equity portfolio returns. ICICI PrudentialInfrastructure Fund followed by HDFC Midcap Opportunities Fund lost the maximum during the month.In the global equity funds, both the global funds i.e. Mirae Asset China Advantage Fund and PrincipalGlobal Opportunities Fund have given negative returns. Both Mirae Asset China Advantage Fund andPrincipal Global Opportunities Fund accounted for 62% and 38% of the negative global equity portfolioreturns respectively.

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