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October 2011


Prepared by: iFAST Research Team
Monthly Markets Update - India
                                                                            October 2011

                                      Key Points



Despite the volatility witnessed, we continue to remain positive on the US equities for the next
three years.

As for the Chinese economy, although inflation continues to be a threat, yet we are of the
opinion 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 itself
before the central bank presses the pause button on rates.

The Indian mutual fund industry saw a decrease in its assets (average assets under
management) by 4.06% to Rs. 7, 17,129 crores in the third quarter (July – September) of 2011 in
comparison to the second quarter (April – June) of 2011.

A look at the performance of funds shows that all the Equity oriented categories have delivered
negative returns while the debt focused categories are in the positive territory in the month of
September.
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
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
         11

Market Outlook

US markets continued to remain volatile in the month of September as well on account of Euro Zone
debt worries the mixed data of the US economy released, and the Fed’s weak assessment of the US
economy. We are expecting the Fed to further lower the economic growth forecasts for the US
economy, 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
Monthly Markets Update - India
                                                                                   October 2011

only once the result season starts this month. We continue to be positive on US equities for the next
three years as the market re-rates to a higher multiple of earnings. On the other hand, the on-going
debt crisis is having a negative impact on the sentiments and confidence of countries like Germany and
the Euro Zone in general. Finally, as far as the Japanese economy is concerned, the impact of the
earthquake along with the problems in US and Europe are having a negative impact on their exports. We
continue to stick to our view that the Japanese economy will recover at a slower pace as compared to
other regions and countries.
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 11

Market Outlook
The earnings estimate for Singapore has been downgraded on account of the gloomy conditions
prevailing in the international markets. However, we still believe that Singapore equities will deliver
more than 20% annualized returns by the end of 2013. Inflation has come down for countries like
Malaysia and Indonesia and is expected to be on a downward trend on account of the easing of
commodity prices. However, inflation continues to remain sticky for Thailand, as a result of which the
Central Bank hiked the interest rate in the month of August as well which was 9 times since the
borrowing cost increased since June 2010.
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 11


Market Outlook

The economic activity in the Brazilian economy decelerated on account of the uncertainties in the global
economies. Inflation continued to remain above the government’s estimate of 4.5% (Plus/minus 2%). In
spite of this, the Central Bank cut its benchmark Selic rate by 50 bps to reach 12% on the back of
deterioration in the global economy. Brazil’s index has been affected by the global panic, European debt
crisis, slowdown in the US economy and the volatility in commodity prices. As for the Russian markets, it
was affected due to global panic and equity market sell-off along with the fears that the European
demand for oil will come down. Finally, for the Chinese economy, inflation continues to remain a threat
and control in credit growth continues. We are of the view that China will loosen its monetary stance in
the second half of the year due to the ongoing crisis in Euro Zone. We believe that currently valuations
are attractive and we are positive on both Chinese A shares and Hong-Kong listed Chinese equities over
the next 3 years.
Monthly Markets Update - India
                                 October 2011




          INDIA
Equity Market Outlook
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 respectively

Market Outlook

The Indian markets ended in red by registering a negative return of 1.34% and 1.15% respectively. Some
of the macro-economic numbers that came out during the month along with the uncertainties in the
global markets contributed to the muted growth. Year-on-year growth in the index of Industrial
Production for July 2011 came in at 3.3% against the Bloomberg consensus expectation of 6.2%. As per
the use-based classification, the Capital Goods and Intermediate Goods sectors contracted by 15.2% and
1.1% respectively, while Basic Goods grew at 10.1%. On the other hand, the Consumer Durables and
Consumer non-durables grew at 8.6% and 4.1% respectively. We believe that the volatile IIP numbers
are a cause of concern for the policymakers, and the deceleration in this month can be attributed to the
continuous 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 of
9.64%. Inflation has been in the range of 9%-10% since March 2010, and as a result, the RBI has
Monthly Markets Update - India
                                                                                     October 2011

increased the major policy rates 12 times since then. We are of the view that inflation continues to be a
nightmare for policymakers and until this data falls within the comfort zone of the Central Bank, it will
continue with its hawkish monetary stance.


The month of October is the results season and we are expecting more earning downgrades. We believe
that the market will remain range bound on account of the negative short-term macro parameters and
the continuing gloomy atmosphere in the global environment.
Monthly Markets Update - India
                                 October 2011




          INDIA
Debt Market Outlook
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
                                                                                                                 Yields


The 10-year G-Sec yield hardened during the month of September as it increased from 8.32% in the
beginning of the month and ended at 8.5% .This was on the back of the increase in the major policy
rates 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 and
global events. In short, we can expect some more rate hikes in the current fiscal itself before the central
bank presses the pause button on rates. In addition to this the Government also increased the
borrowings 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 Ultra
Short Term Funds as they continue to give higher post-tax returns as compared to Savings Accounts and
Ultra 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.
Monthly Markets Update - India
                                                                      October 2011

Investors with a time horizon between 6 - 9 months should consider Short-Term Funds. The
Recommended Funds in this category include Reliance Short Term Fund and Templeton India
Short Term Fund
Monthly Markets Update - India
                                 October 2011




     Mutual Funds
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 2011
900,000                                                                                            Q-o-Q Absolute Change % Change
800,000
700,000                                                                                            in Assets (INR in Crores) in Assets
600,000                                                              Deutsche Mutual Fund                   1677.29           15.13%
500,000                                                              JPMorgan Mutual Fund                   1023.57           27.48%
400,000
300,000                                                                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.
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 have
delivered negative returns while the debt focused categories are in the positive territory on
month-on-month basis. In the Hybrid funds segment, balanced funds delivered negative returns
while the Monthly Income Plans (i.e. MIPs) delivered positive returns. Global Funds category
was 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 the
benchmark 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 most
global markets in the month of September.

In the debt segment, all categories have delivered positive returns for the fifth consecutive
month. Floating Rate Funds followed by the Ultra Short Term funds have given the highest
returns close to 0.71% and 0.69% in the debt category.
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 Compilations



Large Cap Funds

Out of the 40 large cap funds analyzed, only the top two have managed to deliver positive returns in the
month of September. UTI Top 100 Fund and Franklin India Bluechip Fund are the top two large cap funds
delivering returns close to 0.15% and 0.08% respectively. Franklin India Bluechip Fund is our
recommended fund in the large cap category.

Multi Cap Funds

In the multi cap category, out of 44 multi cap funds analyzed, 91% of the funds have delivered negative
returns on month-on-month basis. IDFC India GDP Growth Fund was the top performer; the fund
Monthly Markets Update - India
                                                                                  October 2011

delivered close to 2.69% in this month. HDFC Growth Fund was the second best performer in this
category with returns close to 0.60%.

Mid Cap Funds

Both Reliance Growth Fund and Magnum Sector Funds Umbrella- Emerging Businesses Fund are the top
two performers in the midcap category with returns close to 1.35% and 0.26%, respectively. In this
category, out of 28 funds analyzed, 86% of the funds have delivered negative returns. Reliance Growth
Fund which was among the bottom two performers in the previous month is the top performer in the
month of September.

ELSS Funds

In the ELSS funds category, both the top two performing funds have managed to outperform the
benchmark CNX 500 which gave a negative return of 1.49%. IDFC Tax Advantage (ELSS) Fund was the top
performer 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 bottom
performing fund in the previous month is among the top performing funds in the month of September.

Global Funds

All the 25 global funds analyzed have delivered negative returns on month-on-month basis. Tata
Growing Economies Infrastructure Fund Plan A was the top performer during the month delivering
negative returns close to 0.32%.
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 Compilations



Large Cap Funds

In the large cap fund category, Birla Sun life Advantage Fund and Magnum Equity Fund were the bottom
two performing funds delivering negative returns of 3.23% and 2.24 % respectively. Both the funds have
underperformed the benchmark CNX Nifty which delivered a negative return of 1.15% this month.

Multi Cap Funds

Both the bottom performers i.e. AIG India Equity Fund and Magnum Multicap Fund have delivered
negative returns close to 2.52% and 2.42% respectively. Both the funds have underperformed the
benchmark CNX 500 which gave a negative return of around 1.49%. AIG India Equity Fund which was the
top performer in the previous month turned out to be the bottom performer in the month of
September.

Mid Cap Funds

In the mid cap space, Magnum Midcap Fund and Sundaram Select Midcap Fund appeared to be the two
bottom performing funds delivering a negative return of 3.56% and 3.38% respectively. Both the funds
underperformed the benchmark CNX Midcap which gave a negative return of 2.75%.
Monthly Markets Update - India
                                                                                October 2011

ELSS Funds

L&T Tax Saver Fund was the bottom performer during the month of September delivering a negative
return of 2.64% followed by Edelweiss ELSS Fund which delivered negative returns close to 2.40%.

Global Funds

Both Mirae Asset China Advantage Fund and Birla Sun Life Commodity Equities Fund- Global Agri Plan
have delivered negative returns close to 14.07% and 12.68% respectively. Both the funds have
underperformed the benchmark i.e. MSCI World Index which delivered a negative return of 3.15%.
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 Compilations



Balanced Funds

In this category, out of 18 funds analyzed, only the top two have delivered positive returns in
September. Both the top performing funds Sundaram Balanced Fund and FT India Balanced Fund
delivering positive returns of 0.36% outperformed the benchmark Crisil Balanced Fund Index which
delivered a negative return of 0.58% on a month-on-month basis.

Monthly Income Plans

Both the top performing Monthly Income Plans i.e. DWS Twin Advantage Fund & JM MIP Fund delivering
returns of 1.01% and 0.80% outperformed the benchmark Crisil MIP Blended Index which delivered
returns of 0.13% on a month-on-month basis.

Income Funds
Monthly Markets Update - India
                                                                                    October 2011

In the income space, Birla Sun Life Medium Term Plan which was the bottom performer in the previous
month was the top performer in the month of September. The fund delivered month-on-month returns
of around 1.50%. Out of the 45 income funds analyzed, 91% of the funds have delivered positive returns.

Gilt- Long term Funds

Both Baroda Pioneer Gilt Fund & Mirae Asset Gilt Fund Investment Plan were the top performers in the
month of September delivering returns close to 0.59% and 0.56% respectively. Baroda Pioneer Gilt Fund
was the top performer on 1 month as well as 1 year basis.

Short Term Funds

All the funds in this category have delivered positive returns on month-on-month basis. BNP Paribas
Short Term Income Fund and Peerless Short Term Fund are the top two performers delivering returns
close to 0.78%.
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 Compilations



Balanced Funds

Canara Robeco Balance and ICICI Prudential Balanced Fund were the bottom two performing funds
delivering negative returns close to 1.57% and 1.42% respectively.

Monthly Income Plans

In the MIP category, Sundaram Monthly Income Plan Moderate Plan and Tata MIP Plus Fund are the
bottom 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 Funds

In the income funds segment, both the bottom performing funds i.e. Reliance Income Fund and ICICI
Prudential Income Opportunities Fund have underperformed the benchmark i.e. Crisil Composite Bond
Monthly Markets Update - India
                                                                                October 2011

Fund Index. The funds delivered negative returns close to 0.13% and 0.19% respectively, whereas the
benchmark delivered returns of around 0.32% on a month-on-month basis.

Gilt- Long term Funds

Both the bottom performing Gilt long term funds underperformed the benchmark i.e. I-BEX (I-Sec
Sovereign Bond Index) on a month-on-month basis. Kotak Gilt-Investment which was the bottom
performer during the month delivered negative return close to 0.17% whereas the benchmark delivered
close to 0.63%.

Short Term Funds

Both the bottom performing funds Reliance Short Term Fund and SBI Short Horizon Debt Fund-Short
Term delivered returns close to 0.42% and 0.49% respectively.
Monthly Markets Update - India
                                      October 2011




Recommended Portfolios Update
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 bond
funds 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 around
86% of the total portfolio returns and the equity part of the portfolio accounted for 14% of the total
portfolio returns.

In the debt segment, Short term funds accounted for close to 37% of the total portfolio returns while
the Floating rate funds have accounted for close to 33% of the total portfolio returns. Among the debt
funds, 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 returns
followed 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 bond
funds 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%
Monthly Markets Update - India
                                                                                              October 2011



  Portfolio Commentary:

The Moderately Conservative portfolio gave a return of 0.76% in September. The portfolio returned to
the positive territory after delivering negative returns in the previous month. The debt funds accounted
for around 58% of the total portfolio returns while equity funds contributed close to 42% of the total
portfolio returns.

In the debt category, floating rate funds accounted for 20% of the total portfolio returns and short term
funds accounted for around 23% of the total portfolio returns. Birla Sunlife Floating Rate Fund- Long
term Plan, Canara Robeco Floating Rate Fund and Templeton India Short Term Income Plan contributed
close 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 Bluechip
Equity Fund and UTI Dividend Yield Fund have delivered positive returns. The large cap funds which have
a 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 bond
funds 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 portfolio
returns.

In the debt portfolio, all the funds have delivered positive returns. Short Term Funds have accounted for
22% of the total portfolio returns, followed by Floating Rate funds which accounted for 19% of the total
portfolio returns.
Monthly Markets Update - India
                                                                                               October 2011

In the equity segment, the large cap funds which have a weightage of 30% accounted for 47% of the
total portfolio returns. On the contrary, the midcap funds attributed to negative 16% of the total
portfolio returns. Among the equity funds, ICICI Prudential Focused Bluechip Equity Fund accounted for
highest 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 bond
funds 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 the
positive 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- Long
term 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 Small
and Midcap Fund together accounted for most negative equity portfolio returns. ICICI Prudential
Infrastructure 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 funds
and 90% to equity funds.

                                                       Portfolio Absolute Return since inception:
          Total Investment:           INR 1,00,000            (Inception Date: 26 Feb 2010)           12.23%
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 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 Plan
have delivered positive returns. Reliance Short Term Fund accounted for most of the debt portfolio
returns.

In the equity space, mid cap funds i.e. HDFC Midcap Opportunities Fund and DSP Black Rock Small and
Mid cap Fund together accounted for most negative equity portfolio returns. ICICI Prudential
Infrastructure 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% in
domestic equity funds and 25% in global 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 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- Long
term 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 Small
and Midcap Fund together accounted for most negative equity portfolio returns. HDFC Midcap
Opportunities Fund followed by DSP Black Rock Small and Mid cap Fund lost the maximum during the
month.
Monthly Markets Update - India
                                                                                             October 2011

In the global equity funds, both the global funds i.e. Mirae Asset China Advantage Fund and Principal
Global Opportunities Fund have given negative returns. However Mirae Asset China Advantage Fund
alone 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% into
domestic equity funds and 31% into global 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 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 returns
continue 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 Plan
have delivered positive returns. Reliance Short Term Fund alone accounted for 85% of the debt portfolio
returns.

In the equity space, mid cap funds i.e. HDFC Midcap Opportunities Fund and DSP Black Rock Small and
Midcap Fund together accounted for most negative equity portfolio returns. ICICI Prudential
Infrastructure 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 Principal
Global Opportunities Fund have given negative returns. Both Mirae Asset China Advantage Fund and
Principal Global Opportunities Fund accounted for 62% and 38% of the negative global equity portfolio
returns respectively.

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Monthly Markets Update (India) - October 2011

  • 1. October 2011 Prepared by: iFAST Research Team
  • 2. Monthly Markets Update - India October 2011 Key Points Despite the volatility witnessed, we continue to remain positive on the US equities for the next three years. As for the Chinese economy, although inflation continues to be a threat, yet we are of the opinion 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 itself before the central bank presses the pause button on rates. The Indian mutual fund industry saw a decrease in its assets (average assets under management) by 4.06% to Rs. 7, 17,129 crores in the third quarter (July – September) of 2011 in comparison to the second quarter (April – June) of 2011. A look at the performance of funds shows that all the Equity oriented categories have delivered negative returns while the debt focused categories are in the positive territory in the month of September.
  • 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. 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 11 Market Outlook US markets continued to remain volatile in the month of September as well on account of Euro Zone debt worries the mixed data of the US economy released, and the Fed’s weak assessment of the US economy. We are expecting the Fed to further lower the economic growth forecasts for the US economy, 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. Monthly Markets Update - India October 2011 only once the result season starts this month. We continue to be positive on US equities for the next three years as the market re-rates to a higher multiple of earnings. On the other hand, the on-going debt crisis is having a negative impact on the sentiments and confidence of countries like Germany and the Euro Zone in general. Finally, as far as the Japanese economy is concerned, the impact of the earthquake along with the problems in US and Europe are having a negative impact on their exports. We continue to stick to our view that the Japanese economy will recover at a slower pace as compared to other regions and countries.
  • 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 11 Market Outlook The earnings estimate for Singapore has been downgraded on account of the gloomy conditions prevailing in the international markets. However, we still believe that Singapore equities will deliver more than 20% annualized returns by the end of 2013. Inflation has come down for countries like Malaysia and Indonesia and is expected to be on a downward trend on account of the easing of commodity prices. However, inflation continues to remain sticky for Thailand, as a result of which the Central Bank hiked the interest rate in the month of August as well which was 9 times since the borrowing cost increased since June 2010.
  • 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 11 Market Outlook The economic activity in the Brazilian economy decelerated on account of the uncertainties in the global economies. Inflation continued to remain above the government’s estimate of 4.5% (Plus/minus 2%). In spite of this, the Central Bank cut its benchmark Selic rate by 50 bps to reach 12% on the back of deterioration in the global economy. Brazil’s index has been affected by the global panic, European debt crisis, slowdown in the US economy and the volatility in commodity prices. As for the Russian markets, it was affected due to global panic and equity market sell-off along with the fears that the European demand for oil will come down. Finally, for the Chinese economy, inflation continues to remain a threat and control in credit growth continues. We are of the view that China will loosen its monetary stance in the second half of the year due to the ongoing crisis in Euro Zone. We believe that currently valuations are attractive and we are positive on both Chinese A shares and Hong-Kong listed Chinese equities over the next 3 years.
  • 8. Monthly Markets Update - India October 2011 INDIA Equity Market Outlook
  • 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 respectively Market Outlook The Indian markets ended in red by registering a negative return of 1.34% and 1.15% respectively. Some of the macro-economic numbers that came out during the month along with the uncertainties in the global markets contributed to the muted growth. Year-on-year growth in the index of Industrial Production for July 2011 came in at 3.3% against the Bloomberg consensus expectation of 6.2%. As per the use-based classification, the Capital Goods and Intermediate Goods sectors contracted by 15.2% and 1.1% respectively, while Basic Goods grew at 10.1%. On the other hand, the Consumer Durables and Consumer non-durables grew at 8.6% and 4.1% respectively. We believe that the volatile IIP numbers are a cause of concern for the policymakers, and the deceleration in this month can be attributed to the continuous 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 of 9.64%. Inflation has been in the range of 9%-10% since March 2010, and as a result, the RBI has
  • 10. Monthly Markets Update - India October 2011 increased the major policy rates 12 times since then. We are of the view that inflation continues to be a nightmare for policymakers and until this data falls within the comfort zone of the Central Bank, it will continue with its hawkish monetary stance. The month of October is the results season and we are expecting more earning downgrades. We believe that the market will remain range bound on account of the negative short-term macro parameters and the continuing gloomy atmosphere in the global environment.
  • 11. Monthly Markets Update - India October 2011 INDIA Debt Market Outlook
  • 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 Yields The 10-year G-Sec yield hardened during the month of September as it increased from 8.32% in the beginning of the month and ended at 8.5% .This was on the back of the increase in the major policy rates 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 and global events. In short, we can expect some more rate hikes in the current fiscal itself before the central bank presses the pause button on rates. In addition to this the Government also increased the borrowings 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 Ultra Short Term Funds as they continue to give higher post-tax returns as compared to Savings Accounts and Ultra 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. Monthly Markets Update - India October 2011 Investors with a time horizon between 6 - 9 months should consider Short-Term Funds. The Recommended Funds in this category include Reliance Short Term Fund and Templeton India Short Term Fund
  • 14. Monthly Markets Update - India October 2011 Mutual Funds
  • 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 2011 900,000 Q-o-Q Absolute Change % Change 800,000 700,000 in Assets (INR in Crores) in Assets 600,000 Deutsche Mutual Fund 1677.29 15.13% 500,000 JPMorgan Mutual Fund 1023.57 27.48% 400,000 300,000 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. 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 have delivered negative returns while the debt focused categories are in the positive territory on month-on-month basis. In the Hybrid funds segment, balanced funds delivered negative returns while the Monthly Income Plans (i.e. MIPs) delivered positive returns. Global Funds category was 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 the benchmark 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 most global markets in the month of September. In the debt segment, all categories have delivered positive returns for the fifth consecutive month. Floating Rate Funds followed by the Ultra Short Term funds have given the highest returns close to 0.71% and 0.69% in the debt category.
  • 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 Compilations Large Cap Funds Out of the 40 large cap funds analyzed, only the top two have managed to deliver positive returns in the month of September. UTI Top 100 Fund and Franklin India Bluechip Fund are the top two large cap funds delivering returns close to 0.15% and 0.08% respectively. Franklin India Bluechip Fund is our recommended fund in the large cap category. Multi Cap Funds In the multi cap category, out of 44 multi cap funds analyzed, 91% of the funds have delivered negative returns on month-on-month basis. IDFC India GDP Growth Fund was the top performer; the fund
  • 18. Monthly Markets Update - India October 2011 delivered close to 2.69% in this month. HDFC Growth Fund was the second best performer in this category with returns close to 0.60%. Mid Cap Funds Both Reliance Growth Fund and Magnum Sector Funds Umbrella- Emerging Businesses Fund are the top two performers in the midcap category with returns close to 1.35% and 0.26%, respectively. In this category, out of 28 funds analyzed, 86% of the funds have delivered negative returns. Reliance Growth Fund which was among the bottom two performers in the previous month is the top performer in the month of September. ELSS Funds In the ELSS funds category, both the top two performing funds have managed to outperform the benchmark CNX 500 which gave a negative return of 1.49%. IDFC Tax Advantage (ELSS) Fund was the top performer 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 bottom performing fund in the previous month is among the top performing funds in the month of September. Global Funds All the 25 global funds analyzed have delivered negative returns on month-on-month basis. Tata Growing Economies Infrastructure Fund Plan A was the top performer during the month delivering negative returns close to 0.32%.
  • 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 Compilations Large Cap Funds In the large cap fund category, Birla Sun life Advantage Fund and Magnum Equity Fund were the bottom two performing funds delivering negative returns of 3.23% and 2.24 % respectively. Both the funds have underperformed the benchmark CNX Nifty which delivered a negative return of 1.15% this month. Multi Cap Funds Both the bottom performers i.e. AIG India Equity Fund and Magnum Multicap Fund have delivered negative returns close to 2.52% and 2.42% respectively. Both the funds have underperformed the benchmark CNX 500 which gave a negative return of around 1.49%. AIG India Equity Fund which was the top performer in the previous month turned out to be the bottom performer in the month of September. Mid Cap Funds In the mid cap space, Magnum Midcap Fund and Sundaram Select Midcap Fund appeared to be the two bottom performing funds delivering a negative return of 3.56% and 3.38% respectively. Both the funds underperformed the benchmark CNX Midcap which gave a negative return of 2.75%.
  • 20. Monthly Markets Update - India October 2011 ELSS Funds L&T Tax Saver Fund was the bottom performer during the month of September delivering a negative return of 2.64% followed by Edelweiss ELSS Fund which delivered negative returns close to 2.40%. Global Funds Both Mirae Asset China Advantage Fund and Birla Sun Life Commodity Equities Fund- Global Agri Plan have delivered negative returns close to 14.07% and 12.68% respectively. Both the funds have underperformed the benchmark i.e. MSCI World Index which delivered a negative return of 3.15%.
  • 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 Compilations Balanced Funds In this category, out of 18 funds analyzed, only the top two have delivered positive returns in September. Both the top performing funds Sundaram Balanced Fund and FT India Balanced Fund delivering positive returns of 0.36% outperformed the benchmark Crisil Balanced Fund Index which delivered a negative return of 0.58% on a month-on-month basis. Monthly Income Plans Both the top performing Monthly Income Plans i.e. DWS Twin Advantage Fund & JM MIP Fund delivering returns of 1.01% and 0.80% outperformed the benchmark Crisil MIP Blended Index which delivered returns of 0.13% on a month-on-month basis. Income Funds
  • 22. Monthly Markets Update - India October 2011 In the income space, Birla Sun Life Medium Term Plan which was the bottom performer in the previous month was the top performer in the month of September. The fund delivered month-on-month returns of around 1.50%. Out of the 45 income funds analyzed, 91% of the funds have delivered positive returns. Gilt- Long term Funds Both Baroda Pioneer Gilt Fund & Mirae Asset Gilt Fund Investment Plan were the top performers in the month of September delivering returns close to 0.59% and 0.56% respectively. Baroda Pioneer Gilt Fund was the top performer on 1 month as well as 1 year basis. Short Term Funds All the funds in this category have delivered positive returns on month-on-month basis. BNP Paribas Short Term Income Fund and Peerless Short Term Fund are the top two performers delivering returns close to 0.78%.
  • 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 Compilations Balanced Funds Canara Robeco Balance and ICICI Prudential Balanced Fund were the bottom two performing funds delivering negative returns close to 1.57% and 1.42% respectively. Monthly Income Plans In the MIP category, Sundaram Monthly Income Plan Moderate Plan and Tata MIP Plus Fund are the bottom 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 Funds In the income funds segment, both the bottom performing funds i.e. Reliance Income Fund and ICICI Prudential Income Opportunities Fund have underperformed the benchmark i.e. Crisil Composite Bond
  • 24. Monthly Markets Update - India October 2011 Fund Index. The funds delivered negative returns close to 0.13% and 0.19% respectively, whereas the benchmark delivered returns of around 0.32% on a month-on-month basis. Gilt- Long term Funds Both the bottom performing Gilt long term funds underperformed the benchmark i.e. I-BEX (I-Sec Sovereign Bond Index) on a month-on-month basis. Kotak Gilt-Investment which was the bottom performer during the month delivered negative return close to 0.17% whereas the benchmark delivered close to 0.63%. Short Term Funds Both the bottom performing funds Reliance Short Term Fund and SBI Short Horizon Debt Fund-Short Term delivered returns close to 0.42% and 0.49% respectively.
  • 25. Monthly Markets Update - India October 2011 Recommended Portfolios Update
  • 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 bond funds 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 around 86% of the total portfolio returns and the equity part of the portfolio accounted for 14% of the total portfolio returns. In the debt segment, Short term funds accounted for close to 37% of the total portfolio returns while the Floating rate funds have accounted for close to 33% of the total portfolio returns. Among the debt funds, 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 returns followed 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 bond funds 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. Monthly Markets Update - India October 2011 Portfolio Commentary: The Moderately Conservative portfolio gave a return of 0.76% in September. The portfolio returned to the positive territory after delivering negative returns in the previous month. The debt funds accounted for around 58% of the total portfolio returns while equity funds contributed close to 42% of the total portfolio returns. In the debt category, floating rate funds accounted for 20% of the total portfolio returns and short term funds accounted for around 23% of the total portfolio returns. Birla Sunlife Floating Rate Fund- Long term Plan, Canara Robeco Floating Rate Fund and Templeton India Short Term Income Plan contributed close 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 Bluechip Equity Fund and UTI Dividend Yield Fund have delivered positive returns. The large cap funds which have a 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 bond funds 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 portfolio returns. In the debt portfolio, all the funds have delivered positive returns. Short Term Funds have accounted for 22% of the total portfolio returns, followed by Floating Rate funds which accounted for 19% of the total portfolio returns.
  • 28. Monthly Markets Update - India October 2011 In the equity segment, the large cap funds which have a weightage of 30% accounted for 47% of the total portfolio returns. On the contrary, the midcap funds attributed to negative 16% of the total portfolio returns. Among the equity funds, ICICI Prudential Focused Bluechip Equity Fund accounted for highest 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 bond funds 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 the positive 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- Long term 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 Small and Midcap Fund together accounted for most negative equity portfolio returns. ICICI Prudential Infrastructure 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 funds and 90% to equity funds. Portfolio Absolute Return since inception: Total Investment: INR 1,00,000 (Inception Date: 26 Feb 2010) 12.23%
  • 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 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 Plan have delivered positive returns. Reliance Short Term Fund accounted for most of the debt portfolio returns. In the equity space, mid cap funds i.e. HDFC Midcap Opportunities Fund and DSP Black Rock Small and Mid cap Fund together accounted for most negative equity portfolio returns. ICICI Prudential Infrastructure 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% in domestic equity funds and 25% in global 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 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- Long term 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 Small and Midcap Fund together accounted for most negative equity portfolio returns. HDFC Midcap Opportunities Fund followed by DSP Black Rock Small and Mid cap Fund lost the maximum during the month.
  • 30. Monthly Markets Update - India October 2011 In the global equity funds, both the global funds i.e. Mirae Asset China Advantage Fund and Principal Global Opportunities Fund have given negative returns. However Mirae Asset China Advantage Fund alone 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% into domestic equity funds and 31% into global 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 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 returns continue 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 Plan have delivered positive returns. Reliance Short Term Fund alone accounted for 85% of the debt portfolio returns. In the equity space, mid cap funds i.e. HDFC Midcap Opportunities Fund and DSP Black Rock Small and Midcap Fund together accounted for most negative equity portfolio returns. ICICI Prudential Infrastructure 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 Principal Global Opportunities Fund have given negative returns. Both Mirae Asset China Advantage Fund and Principal Global Opportunities Fund accounted for 62% and 38% of the negative global equity portfolio returns respectively.