Global equity markets rose slightly on hopes of further policy action by central banks. Asian markets underperformed due to slowing growth in China and India. Central banks in Asia cut rates to boost growth. Commodity prices increased. In Europe, markets gained on plans to support Spain's banks and Italy's debt sale. US markets finished marginally higher despite a drop in consumer confidence. Indian markets fell due to weak earnings and industrial production. Bond yields in India eased and the rupee strengthened against the dollar.
• Momentum halted US equities indices were in a +/-1% range, after Treasury
Secretary Geithner said the “vast majority” of banks have enough capital and
comments allayed concerns about next month’s “stress test” results, after an earlier
leak indicating otherwise. Big European banks also reported a brighter 1Q09 results or
guidance. Regional markets were mixed, with profit taking in Indonesia, Hong Kong
and Singapore, while Thailand and Malaysia were up.
• 14 painful years to breakeven at 5.4% p.a. Based on the available sample of MSCI
FExJ data, the long term capital returns for the MSCI FExJ markets works out to 5.4%
p.a. Including dividends, the total returns go up to 8.4% to 9.4%. The bad news is that
at this rate, it would take 14 miserable years before breakeven is achieved for
investments made at the October 2007 market.
• But 6.8% is probably more accurate The good news is that the 8.4% to 9.4% p.a.
returns is likely to be an underestimation of the potential returns of Asian equities. A
sanity check based on the historical cost of equity and the underlying ROE of the
countries under our coverage suggests that the long term returns are likely to be in the
10-18% range. Adding a trendline – albeit crude – to the FExJ index throws up an
implied 6.8% p.a. long term capital returns, or close to 12% total returns if dividends
are accounted for. This is also consistent with the long term returns of 10.7% that have
been documented for US equities.
• Juicing the returns beyond long term returns Returns are determined by the timing
of entry into the market. By definition, markets tend to oscillate around the long term
trendline. The FExJ index is currently below the trendline of its long term growth profile,
as expected. If investors are accurately discounting the GDP turning point that is
months away, risk tolerance should improve and equities should continue its march
upward. A reversion to the long term growth profile of the FExJ markets by the end of
this year implies an annualised return of 52%, while a less optimistic view of a
reversion only by the end of next year produces annualised returns of 24%. At 3.5x and
7.6x long term returns on conservative forecasts, the timing factor favours investors.
• Momentum halted US equities indices were in a +/-1% range, after Treasury
Secretary Geithner said the “vast majority” of banks have enough capital and
comments allayed concerns about next month’s “stress test” results, after an earlier
leak indicating otherwise. Big European banks also reported a brighter 1Q09 results or
guidance. Regional markets were mixed, with profit taking in Indonesia, Hong Kong
and Singapore, while Thailand and Malaysia were up.
• 14 painful years to breakeven at 5.4% p.a. Based on the available sample of MSCI
FExJ data, the long term capital returns for the MSCI FExJ markets works out to 5.4%
p.a. Including dividends, the total returns go up to 8.4% to 9.4%. The bad news is that
at this rate, it would take 14 miserable years before breakeven is achieved for
investments made at the October 2007 market.
• But 6.8% is probably more accurate The good news is that the 8.4% to 9.4% p.a.
returns is likely to be an underestimation of the potential returns of Asian equities. A
sanity check based on the historical cost of equity and the underlying ROE of the
countries under our coverage suggests that the long term returns are likely to be in the
10-18% range. Adding a trendline – albeit crude – to the FExJ index throws up an
implied 6.8% p.a. long term capital returns, or close to 12% total returns if dividends
are accounted for. This is also consistent with the long term returns of 10.7% that have
been documented for US equities.
• Juicing the returns beyond long term returns Returns are determined by the timing
of entry into the market. By definition, markets tend to oscillate around the long term
trendline. The FExJ index is currently below the trendline of its long term growth profile,
as expected. If investors are accurately discounting the GDP turning point that is
months away, risk tolerance should improve and equities should continue its march
upward. A reversion to the long term growth profile of the FExJ markets by the end of
this year implies an annualised return of 52%, while a less optimistic view of a
reversion only by the end of next year produces annualised returns of 24%. At 3.5x and
7.6x long term returns on conservative forecasts, the timing factor favours investors.
Indian equities surged in the month of March in a catch-up rally after months of range-bound trading on the back of easing inflation giving rise to expectation of lower interest rates, strengthening rupee and record foreign investor flows. Indian equities rose by 7.8 per cent during the month.
Read the full document to know more.
The Nifty 50 Index was up by 1.1%. The positive returns of the index hides the heightened volatility witnessed in the month
of April. This was reflected in India NSE volatility index which spiked by ~27%. The outcome of the ongoing general
elections, concerns around oil prices and global geo-political developments mainly weighed on the investor sentiments.
Read the full document to know more.
Interim Budget 2019, presented on Feb 1, held a few good surprises for the farmer community and the salaried classes but was largely in line with market expectations. Markets, which had already ended January 2019 on a flat note (up 0.5% for the month), remained largely unaffected by the Budget announcements. Read the document to know more.
Indian Equity Markets (Nifty 50 Index) inched higher (+1.5%) during the month outperforming its emerging market peers.
New set of positive reforms by the government on domestic front and expectations of resolution of US-China trade war on
the global front were the major contributing factors which lifted sentiments.
Read the full document to know more.
Indian equities ended a very volatile month of February down 1.1% from the previous month on account of the Interim Budget, a preemptive military strike by India, slow recovery in earnings growth over the last two quarters, buzz around general elections, and receding tensions between US and China.
Read the full document to know more.
Dear Investors,
The month of July has seen the heavens literally open their doors and shower their blessings on us. After a late start in June, the monsoon picked up
smartly and the country as a whole received abundant rainfall, bringing cheer to one and all and definitely a sense of relief. The same good cheer
seems to have percolated to the global equity markets as well. Having brushed off the Brexit issue, markets have continued their upward move
relentlessly through the month of July. The US benchmark index, the S&P 500 hit a new lifetime high earlier in the month on the back of good jobs
data and an optimistic view of growth in the US economy. Not wanting to be left out in any way, the Nifty set a new 52-week high and the Sensex
scaled 28,000.
The quarterly results have been a mixed bag so far. While there have been more hits than misses, the IT sector as a whole and some pharma
companies have been the major pockets of underperformance. Most of the private sector retail banks and NBFCs have shown a stellar performance,
while growth in public sector banks was stagnant due to liquidity and NPA issues. In the consumer space, lower costs have added to the profits of
several companies, but revenue growth and volume growth were disappointing. There is hope that these will see a significant pick up in the second
half of the financial year once the benefits of the 7th Pay Commission and a good monsoon kick in.
Indian equities surged in the month of March in a catch-up rally after months of range-bound trading on the back of easing inflation giving rise to expectation of lower interest rates, strengthening rupee and record foreign investor flows. Indian equities rose by 7.8 per cent during the month.
Read the full document to know more.
The Nifty 50 Index was up by 1.1%. The positive returns of the index hides the heightened volatility witnessed in the month
of April. This was reflected in India NSE volatility index which spiked by ~27%. The outcome of the ongoing general
elections, concerns around oil prices and global geo-political developments mainly weighed on the investor sentiments.
Read the full document to know more.
Interim Budget 2019, presented on Feb 1, held a few good surprises for the farmer community and the salaried classes but was largely in line with market expectations. Markets, which had already ended January 2019 on a flat note (up 0.5% for the month), remained largely unaffected by the Budget announcements. Read the document to know more.
Indian Equity Markets (Nifty 50 Index) inched higher (+1.5%) during the month outperforming its emerging market peers.
New set of positive reforms by the government on domestic front and expectations of resolution of US-China trade war on
the global front were the major contributing factors which lifted sentiments.
Read the full document to know more.
Indian equities ended a very volatile month of February down 1.1% from the previous month on account of the Interim Budget, a preemptive military strike by India, slow recovery in earnings growth over the last two quarters, buzz around general elections, and receding tensions between US and China.
Read the full document to know more.
Dear Investors,
The month of July has seen the heavens literally open their doors and shower their blessings on us. After a late start in June, the monsoon picked up
smartly and the country as a whole received abundant rainfall, bringing cheer to one and all and definitely a sense of relief. The same good cheer
seems to have percolated to the global equity markets as well. Having brushed off the Brexit issue, markets have continued their upward move
relentlessly through the month of July. The US benchmark index, the S&P 500 hit a new lifetime high earlier in the month on the back of good jobs
data and an optimistic view of growth in the US economy. Not wanting to be left out in any way, the Nifty set a new 52-week high and the Sensex
scaled 28,000.
The quarterly results have been a mixed bag so far. While there have been more hits than misses, the IT sector as a whole and some pharma
companies have been the major pockets of underperformance. Most of the private sector retail banks and NBFCs have shown a stellar performance,
while growth in public sector banks was stagnant due to liquidity and NPA issues. In the consumer space, lower costs have added to the profits of
several companies, but revenue growth and volume growth were disappointing. There is hope that these will see a significant pick up in the second
half of the financial year once the benefits of the 7th Pay Commission and a good monsoon kick in.
Valuations are not cheap, Business Cycle remains in the nascent stage. We believe, the current macro-economic scenario is much more conducive for a Business Cycle Recovery due to Global and domestic policy response.
We believe valuations are not cheap, but business cycle remains in the nascent stage. Prefer middle-of-the-road approach and recommend investing in schemes with higher flexibility.
A mutual fund is the money pooled in by a large number of investors and offers an opportunity to invest in a diversified and professionally managed basket of securities at a relatively lower cost. Read for more details.
Risk is a result or outcome which is other than what is / was expected. It is the amount of money that an investor can afford to lose in the interim, in his quest for certain return on investments. It is a state of uncertainty. Read more to find out how to access your risk appetite.
Asset allocation is an investment strategy. It helps to keep a balance between risk and return of any particular asset class. Asset allocation refers to investing a certain percentage of your investible surplus in respective asset classes, such as equity, debt, gold and real estate. Read to understand asset allocation in detail.
As you may be aware, life expectancy of individuals has increased; which brings with it rise in medical and living costs during old age. Therefore, it is imperative to make provision for expenses wisely. All of us want to maintain our standard of living during our old age as well, but to do so we need to actually start thinking and planning for our retirement right from the beginning of our career when we are young. This ppt aims to help you understand how you can identify and establish your financial goals.
As you may be aware, life expectancy of individuals has increased; which brings with it rise in medical and living costs during old age. Therefore, it is imperative to make provision for expenses wisely. All of us want to maintain our standard of living during our old age as well, but to do so we need to actually start thinking and planning for our retirement right from the beginning of our career when we are young.
This session aims to help you understand how you can identify and establish your financial goals.
An Investor Education & Awareness Initiative By Franklin Templeton Mutual Fund
In order to check your financial health, you need to ask yourself a few questions related to your finances. In this, learning session you will understand those questions which will help you plan you finances better.
An Investor Education & Awareness Initiative By Franklin Templeton Mutual Fund
The inflation bug as we learnt in our earlier learning ppt, "Are you Saving or Are you Investing", eats into our hard earned savings. So the value of our money reduces. Here in this learning session let’s learn more about “Time Value of Money”, which can help you manage your finances better.
An Investor Education & Awareness Initiative By Franklin Templeton Mutual Fund
Many people often misconstrue savings with investments. But let us tell you that there is indeed a difference between the two. Merely putting aside money under the mattress, or in a vault, bank locker or savings bank account after meeting your expenses and liabilities may not mean that money works for you. In times where the inflation bug is eating into your earnings, you need to move a step forward and invest. More importantly, invest wisely! By now many of you may have realized that there is indeed a difference between saving and investing. So let’s delve a little deeper and understand the difference between the two…which can help us march forward in our journey of wealth creation.
An Investor Education & Awareness Initiative By Franklin Templeton Mutual Fund
1. Market Review
WEEK ENDED JULY 13, 2012
International
Global equity markets managed to overcome the economic blues during the week on hopes that policymakers
will do more to stem the ongoing slowdown.The MSCI AC World Index finished 0.54% with emerging markets,
especially those in Asia underperforming, even as central banks in Asia/EM cut rates to boost growth.The Asian
Development Bank reduced its growth forecasts for the Asia ex-Japan region to 6.6% from 6.9% owing to
slowdown in exports and China/India. Global benchmark bond yields continued to ease while commodity prices
added gains. Crude oil prices moved up on the back of expectations of policy action and geo-political tensions
in the Middle East.This alongside gain in some other commodities helped the Reuters Jefferies CRB index add
2.45%. In currency markets, the euro recovered some ground after a successful Italian sovereign debt sale.
• Asia-Pacific: Regional equity markets underperformed global counterparts on concerns economic
growth was slowing down. However, fears of a sharp slowdown receded after China GDP growth came in
line with market expectations and select monthly economic indicators - new loans and fixed asset
investment growth - showed improvement. China’s economy grew by 7.6%yoy in Q2-2012 as against 8.1%
in the previous quarter. Bank of Japan left policy rates unchanged but increased the size of its asset purchase
programme by ¥5 trillion to ¥45 trillion ($564 billion). South Korea’s central bank unexpectedly cut
benchmark policy rate by 25 bps to 3% while Indonesia maintained status quo. In Australia, the jobless rate
rose by a tick to 5.2% as number of jobless increased by 27,000. Singapore GDP contracted 1.1%qoq,
annualized rate primarily due to weakness in manufacturing sector. On the M&A front, Dentsu is acquiring
UK based Aegis for about $5 bln and Superior Aviation Beijing is acquiring Hawker Beechcraft for close
to $1.8 bln.
• Europe: Regional markets got a boost from policy decisions to support Spain, hopes of policy support
for the global economy and successful Italian debt sale. German equities in particular notched strong
gains. Eurozone finance ministers agreed on more details about the Spanish bank rescue package and
envisaged the first €30 bln of the €100 bln aid to be disbursed by end of July. They also agreed to give
Spain an additional year for meeting deficit reduction targets as the Spanish government unveiled plans
to save €65 bln through tax increases and spending cuts. Italy managed to sell €5.25 bln debt, the higher
end of its planned issue, even after Moody’s downgraded its sovereign rating two levels to Baa2. For the
first time on record, France sold €7.7 bln of six-month t-bills at negative yields. In UK, the
manufacturing sector expanded at a faster-than-expected pace of 1.2%.
• Americas: A strong rally in financial stocks towards the close of week helped the S&P 500 and Dow
finish marginally higher. Tech dominated Nasdaq however ended lower. On the economic front, US
consumer confidence declined sharply and the US trade deficit by 3.8% to $48.7 bln narrowed due to
fall in oil prices. The minutes from US Fed’s last policy meeting indicated majority policymakers were
of the view that additional stimulus be provided if economic momentum deteriorates further. Brazil’s
central bank maintained a dovish policy stance and cut the benchmark Selic lending rate by 50 bps to
8%. The country’s retail sales declined raising concerns the slowdown was spreading to consumption
sectors. On the corporate front, JP Morgan reported a $4.4 bln trading loss but re-affirmed its positive
2. outlook for earnings this year. Intel is acquiring a 15% stake in Dutch company ASML for about $4 bln
and WellPoint offered to buy Amerigroup for close to $5 bln. CFTC is investigating Peregrine Financial
for defrauding clients and the company filed for bankruptcy.
Weekly Weekly
change (%) change (%)
MSCI AC World Index -0.54 Xetra DAX 2.29
FTSE Eurotop 100 0.83 CAC 40 0.38
MSCI AC Asia Pacific -2.79 FTSE 100 0.06
Dow Jones 0.04 Hang Seng -3.58
Nasdaq -0.98 Nikkei -3.29
S&P 500 0.16 KOSPI -2.44
India - Equity
A weak start to the earnings season and subdued IIP growth numbers led Indian equity markets to close the week
in the negative territory. Large cap stocks underperformed mid and small caps.The BSE IT index closed sharply
lower as index heavyweight Infosys stock lost ground after it delivered weaker-than-expected performance and
reduced growth guidance for the rest of FY13. On the other hand, peer Tata Consultancy Services fared relatively
well and this helped curb losses. FMCG and Healthcare stocks outperformed broad markets. FIIs bought equities
to the tune of $275 mln in the first four trading days of the week.
Trends in headline IIP index
%Yo
25.0
Y
20.0
15.0
10.0
5.0
0.0
-5.0
-10.0
May-07
Nov-07
May-08
Nov-08
May-09
Nov-09
May-10
Nov-10
May-11
Nov-11
May-12
Source: CSO, Citi Research
• Macro: India’s industrial production moved back into positive territory in May – output grew by 2.4% as
against a 0.9% decline in the previous month. The expansion was led by manufacturing (2.5%) and
electricity (5.9%) sectors, while mining output contracted by 0.9%. An analysis by user-based industries
indicated continued decline in investment activity while consumption held up well. The April numbers
were revised down to -0.9% from +0.1% growth reported earlier. Overall, the latest IIP data reiterates the
need for government policy action to alleviate headwinds facing industry. Even as growth remains
subdued, the central bank may not favour rate hikes due to elevated inflation levels and upside risks from
the weak monsoons.
3. Provisional data release indicates India’s trade deficit narrowed in June as a sharp drop in oil import costs
helped overcome impact of a 5.45% drop in exports.
As per latest data, growth in gross indirect and direct tax collections for the June quarter was below targeted
levels. Indirect tax collections, comprising customs, excise and service tax, increased by 13.8% as against
full-year targeted growth rate of 27%. Gross direct tax collections increased by 6.8% vis-à-vis the targeted
15% growth, mainly due to a slowdown in corporate tax collections (up 3.5%yoy). However, at a net level,
direct tax collections reported a 47.2% rise as government slowed disbursement of refunds. It is important
the government takes steps to both augment revenues and curb expenditure in order to return to the fiscal
consolidation path. Implementation of Goods & Services Tax and Direct Tax Code would be significant
steps towards boosting tax collections.
Weekly change (%)
BSE Sensex -1.75
S&P CNX Nifty -1.69
S&P CNX 500 -1.60
CNX Midcap -1.08
BSE Smallcap -1.25
India - Debt
Indian benchmark bond yields at the medium to long end of the curve eased as IIP recorded only a modest
increase and April data was revised downwards. Lower-than-expected yields at bond auctions also helped long-
dated bonds gain.
• Yield Movements: Yield on the 10-year and 30-year Indian benchmark treasury bond eased about 6 bps from
last week’s level while that on the 1-year paper firmed up 6 bps. Consequently the yield curve flattened and
spreads between short (1-year) and long dated (30-year) gilt yields decreased to 55 bps from 68 bps.
• Liquidity/ Borrowings: Liquidity situation remained easy – overnight call money rates eased to about 8%
from 8.2% levels earlier and repos averaged Rs.49,359 crore as against Rs. 43,117 crore.
Interbank Liquidity Trend
Source: RBI, Bloomberg, Morgan Stanley Research