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D e c e m b e r November 2009

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Magnum ConnectIssue No. XV November 2009

Monthly Magazine

Subscription :-Cover Price: Rs 30/-Annual Subscription (12 issues) : India Rs 300/-Overseas (Airmail) US$ 150(Cheque/D.D. drawn on Mumbai in favour of

Magnum Wealth Management Pvt. Ltd.Regd. Office :Mr. Piyush K. Upadhyay (Correspondent)Magnum ConnectD-13, Empire Mahal, 806, Dr. B. A. Road,Khodadad Circle, Dadar T.T.,Mumbai – 400 014.For General Enquiries Contact :+91-22-2415 8686E-mail : [email protected] : www.magnum.co.inPrinted at : HariOM Printers, Mumbai.

Dear Friends,

The passing month was the month of corporate results, though most companies performed on expected lines, there were lots of surprises too. Now it’s more than a year that we were gripped in the global economic slowdown. Our economy was largely hit by the external developments otherwise, our domestic conditions are still robust, well equipped to handle any eventualities and we have demonstrated our strength duly and that’s why policy makers and other rating agencies are optimistic about a good growth for the Indian economy. The stock markets have shown tremendous up move and have more than doubled in the last six months. Last year the Mahurat trading gave an indication of a recovery in the markets trend, this year the markets were already double their previous marks, so much can’t be expected but the overall scenario seems to sufficiently improving. In the first quarter, lots of companies came with a rebound in their results and in the second quarter the recovery has strengthened further with good outlook for the future.

The Reserve Bank of India (RBI), in its quarterly policy review, laid the groundwork for unwinding the monetary incentives, though it left the key rates, including the repo and reverse repo rates along with the cash reserve ratio (CRR) unchanged. It slightly hiked the SLR; the move however is unlikely to impact the liquidity conditions in the system as commercial banks have been maintaining some what similar SLR investments of their net demand and time liabilities (NDTL), net of liquidity adjustment facility. The apex bank further said that it would withdraw emergency liquidity measures and increased some loan provisioning requirements. But at the same time, finance minister Pranab Mukherjee said that the easy money policy was likely to continue until economic recovery was on solid footing. These statements were enough to assure the market and general sentiments that the government is very much concerned about the economic recovery.

The current issue is directed towards different aspects of the Indian banking sector, a sector that is still standing firm despite a lot of ups and downs in the global financial markets. Our banking system is highly regulated and works under close guidance of the RBI and the government itself, which is why it has weathered lots of evils and is still one of the best sector to invest and remain invested for long.

Jiten Chheda(Director)

Magnum Group

This document has been prepared by M/s Magnum Wealth Management Pvt Ltd and is being distributed in India byM/s. Magnum Wealth Management Pvt Ltd a registered broker dealer. The information in the document has been compiled by the research department.

Due care has been taken in preparing the above document. However, this document is not, and should not be construed, as an offer to sell or solicitation to buy anysecurities. Any act of buying, selling or otherwise dealing in any securities referred to in this document shall be at investor’s sole risk and responsibility.

This document may not be reproduced, distributed or published, in whole or in part, without prior permission from the CompanyM/s. Magnum Wealth Management Pvt Ltd

Subject only to Mumbai jurisdiction

IndexCover Story Banking Sector.................................................. 2Equity

Company Research........................................... 5 Stock Update..................................................... 7Corporate News................................................ 8Market Snapshot............................................... 10

EconomyEconomy Review.............................................. 12Economy News................................................. 16

StatisticsScorecard.........................................................18 Dividend Yield................................................. 20Sales................................................................21 High PE ........................................................... 22Low PE ............................................................ 23 Price Trend...................................................... 24

Mutual FundSectoral Mutual Fund Analysis......................... 25MF Scorecard................................................... 26

StudyHome Loan...................................................... 31Erratic vs rational equity market........................ 32

InsuranceLife Insurance .................................................. 34General Insurance ........................................... 36


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Cover Story - Banking

The Indian banking sector has played a commendable role in fuelling and sustaining growth in the economy. In the recent past a large part of the banking sector’s growth has been on the back of financing consumption, as reflected in the growth of retail banking. Over the post reform period of 1991 through 2008, total assets of the banking industry have grown at a compounded annual rate of growth of 11.5%. The induction of new private and foreign sector banks and private equity in public sector banks has brought about professional dynamism and vibrancy to the industry. High rate of economic growth since 2004 has placed the banking industry on an exponential growth path.

However, the recent slowdown in the economy, coupled with the drought like conditions in large part of the country, has threatened the sector regarding shrinking profits and rising non-performing assets (NPAs). In wake of increasing pressure on banks’ asset quality, the Reserve Bank of India (RBI) in its latest policy has also taken a few steps to ensure banks become more prudent as the economy improves. The purpose of this note is to visualise how these developments will impact the Indian banking industry in the near term.

Increase in NPAs in FY09After declining for years, NPAs of Indian banks showed some uptick in the last fiscal, primarily due to the sharp slowdown in global economy and its resulting impact on India. However, Indian banks were largely saved from the toxic assets that led to fall of some of the largest banks like Lehman Brothers and forced others to take government sponsored bailouts.

Nonetheless, banks did witness some uptick in bad loans, particularly in the industrial, small scale units segment and retail segment. Private sectors majors like ICICI and HDFC Bank pressed the brake pedal on retail loans immediately after the global financial crisis surfaced. However, private

banks as a group still were not saved from the rise in NPAs.

As is clear from the above exhibit, it is the new private sector banks (those which were licensed in 1990s), which currently show highest level of bad loans as a percentage of total assets. Maximum uptick is also observed in this segment, primarily due to aggressive marketing strategies followed by them. While in an absolute sense, NPAs are still quite manageable, in case the trend continues in the present fiscal, profitability may get a strong hit.

Impact of slowdown and loan restructuring While the increase in NPAs does not look huge from the above in itself, though the uptrend is visible, the actual impact on quality of banks’ assets is possibly much greater. Rise in NPAs is not immediately discernible to the full account primarily due to regulatory forbearance that has allowed banks to classify some of the weak loans as restructured standard assets in case these fulfil some norms.

In wake of the downturn and its resulting impact on debt servicing capacity of many companies, the RBI allowed banks to restructure loans based on certain conditions. The catch here is the prudential regulations relating to provisioning of NPAs and standard loans. Since NPAs need much higher level of provisioning, depending on the amount of delay in repayments, restructuring help banks keep their books clear, at least temporarily, and also register higher net profit due to lower provisions set apart.

In other words, weaker assets can still be classified and retained as the standard assets category, subject to certain conditions, as per regulations. Otherwise, provisioning would increase upon classification of such assets as NPAs. The banking regulator gave special permission to banks to take up restructuring of loans initially by January

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31, 2009; which was subsequently extended till March 31, 2009 and then to June 30, 2009.

We are not trying to say here that restructuring is a bad idea for either banks or the financial sector as a whole. In times of financial turbulence, restructuring becomes a handy tool for regulators to help banks keep their books clean as companies find it difficult to repay in time. However, some of the weak assets are bound to go bad in future thus hitting banks’ profit. The benefit of the strategy from macro perspective is that such a strategy helps cuts bad loans, and distributes the same over a longer period, thus saving banks from stress in the period of crisis. However, from a micro point of view, it may lead to a decline in profitability in the following quarters after restructuring of loans. As a result, we believe the restructuring process undertaken by banks, while has saved them from immediate stress, may impact profitability in following quarters.

Impact of poor monsoonThe most important challenge facing banks presently is the poor monsoon. India’s southwest monsoon rains have been nearly 23% below the long period average and crop sowing is about 15% down compared with last year. As a result, the kharif crop harvest is expected to fall by at least 15-18 million tonne according to the Planning Commission.

Deficient rainfall during this kharif crop season could lead to a rise in nonperforming assets from agriculture sector due to three reasons viz. (i) decline in rural income level (ii) rise in proportion of outstanding agricultural loans (iii) any relief package that the government may announce to help rain hit farmers.

It may be noted here that since current year’s monsoon failure has come on back of four consecutive good monsoons, farm loan waiver last year and record rabi harvest in 2008-09 season, the situation in the rural

areas is unlikely to be as bad as was in 2002-03 season when monsoon failed on back of three consecutive below average years of rains. In this wake, the absolute impact on rural income is not likely to be substantial at this stage. In fact the Planning Commission as well as the Prime Minister’s Economic Advisory Council (EAC) have, in their latest assessment, said that the negative impact of poor monsoon would not be as high as was earlier envisaged, thus cutting the downside impact on rural income. This also suggests that given that there is already a rural employment guarantee scheme in progress to provide for alternative employment, the government is unlikely to announce any major relief package concerning farm loans. Therefore, sans any unforeseen development, we do not expect poor monsoon to have strong negative impact on banks’ balance sheets.

Strong Capital Adequacy key factor in determining margin of safetyWhile the NPAs of banks do have a strong upside risk, strong Capital Adequacy Ratio (CAR) of banks would serve as a key factor in determining margin of safety from asset quality deterioration. As is seen from the adjoining exhibit, CAR of banks has continued to rise in the last fiscal too, and currently stands at very strong levels for all the bank groups.

Impact of Monetary Policy Review

The RBI released the second quarterly review of monetary policy for FY10 on October 27. While the review was much in line with the market expectations, it nonetheless marked the beginning of the exit from the ultra accommodative policy. The central bank left the key rates including the repo and reverse repo rates along with the cash reserve ratio (CRR) unchanged at 4.75%, 3.25% and 5%, respectively. It hiked or rather restored the SLR from 24% to 25%. The move however is unlikely to impact the liquidity conditions

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in the system as commercial banks have been maintaining SLR investments at 27.6% of their net demand and time liabilities (NDTL), net of liquidity adjustment facility.

Further, as was said above, the RBI rescued banks when the slowdown hit Indian economy in second half of the last fiscal. Now since the economy is seen improving, the RBI mandated in the policy review that all the banks should achieve a loan-loss coverage ratio of 70%. The banking regulator contended that it was prudent that with improving economy the banks start building a buffer for potential increase in bad loans going forward. Since the industry average of provision coverage ratio is at around 51%, some of the large banks like SBI having even lower coverage ratio, profitability of banks might be affected as they are forced to set aside more money from profits towards provisioning.

On an aggregate basis, would result in additional provisioning of Rs 13,000 crore for the banking industry (out of the profits) which would be spread over next four quarters. However, the banks have given a representation to the RBI asking it to include loan write-offs in the provisioning. The RBI is expected to issue a circular to clarify the norms soon. In case the apex bank adds the loan write-offs in the provisioning computations, there will

be no significant impact on banks’ bottom lines. However, if the provisioning is computed without the loan-write-offs, the banks will witness, as stated above, a hit of around Rs 13,000 crore on bottom-line over a period of next four quarters.

The RBI also refused to raise the cap on the hold-to-maturity (HTM) category which currently of 25%. Banks want a higher cap in HTM since they do not have to make any mark-to-mark provisions on securities held in this basket in case prices of securities fall. Since the provisions have to be made out of the profits, any mark-to-market losses should the rate of interest goes up may impact significantly banks’ bottom-line. However, the issue is unlikely to be played out in the near term.

Overall, the monetary policy was quite balanced and while the apex bank left key rates unchanged, meeting the main expectation of markets, it did signalled the start of monetary tightening going forward.

Outlook We believe banks may face some difficulties on the bottomline going forward, primarily due to rise in NPAs and also the potential tightening of monetary policy by the regulator. Lower growth in credit demand is also likely to impact banks margins although investment credit demand from the corporate sector is likely to improve in the second half of the fiscal. New provisioning norms are also likely to hit the industry and valuations may take a hit in near term.

From a medium term perspective however, there are no systematic risks with the Indian banking industry. Despite slight uptick in NPAs, absolute level of bad loans remains fairly low and very manageable. The regulator is already taking steps to ensure that sound asset quality is maintained. Although such steps may result in some decline in profitability immediately, these certainly provide more conviction to long term growth and stability of the industry.

Overall we believe that over the medium run, as the economy improves and the business cycle starts its upturn, banks should witness credit demand improving considerably which should help the bottom-line despite the potential tightening of monetary policy.

Magnum in Your Mobile For Details Visit : www.magnum.co.in

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Company Research

Dhanalakshmi Bank - BuyDhanalakshmi Bank was incorporated in 1927, It provides a suite of banking products and services to serve both resident Indians and non-resident Indians. The bank serves its customers, across the nation, through its network of 207 branches and 78 ATMs. The Bank is a leading player in dispensation of Micro Credit among Kerala-based Banks, both public and private. As at the end of March 2009, it had an outstanding of INR 124.40 crore under micro credit. Dhanalakshmi Bank is presently having 181 branches and 26 Extension Counters extended over the states of Kerala, Tamil Nadu, Karnataka, Andhra Pradesh, Maharashtra, Gujarat, Delhi and West Bengal has attained the national

Stock Data (as on 01/10/09)

Current Mkt Price (Rs.) 137.00

52 week High (Rs.) 178.00

52 week low (Rs.) 37.00

Mkt Cap (Rs. Cr.) 877.70

Return in last one Month (%) -20.27

Share Holding Pattern(as on June 30,09) %

Total Promoter 0.00

Institutions 26.00

Non Institutions 74.00

Key Ratios

P/E 15.91

Price/Book(x) 1.99

Dividend Yield (%) 0.73

ROCE(%) 6.49

ROE(%) 13.53

importance. Bank has obtained approval from the Reserve Bank of India to open 66 more branches and 380 ATMs across the country in the current fiscal. With this the number of customer outlets will increase from 279 to 725. The bank has also obtained the approval from RBI for the opening of 5 Regional Offices and 2 Central Processing Centers in Kerala. Management The management of the company is led by Gyanendra Nath Bajpai- Chairman. Amitabh Chaturvedi is the Managing Director. Other directors of the company include S Santhanakrishnan, Shailesh V Haribhakti, K Srikanth Reddy, Ghanshyam Dass and Sateesh Kumar Andra. Business Overview Dhanalakshmi Bank provides retail banking and commercial banking services to corporate, commercial, retail, and agricultural customers in India. It primarily offers deposit products, such as savings, current, term, re-investment, demand, and time deposit accounts. The company’s retail banking product portfolio includes housing loans, gold loans, auto loans, educational loans, and other personal loans. Its commercial banking products comprise agricultural loans, term loans, industrial advances, trade advances, letters of credit, guarantees, and import/export facilities. The Dhanalakshmi Bank also offers a range of general banking services, including debit cards, treasury operations, locker facilities, and cash management services; provides cheque collection services; and distributes life insurance and non-life insurance products, as well as operates as a depository participant. The company’s other services include foreign currency remittances, issue and purchase of traveler’s cheque, issue and purchase of foreign drafts/cheques/currency, extension of export credit both in Indian rupee and foreign currency, issue of foreign letter of credit, and the provision of import related services. The Bank has put the Real Time Gross Settlement (RTGS) and National Electronic Fund Transfer (NEFT) systems in place to facilitate large value payments and settlements online in real time, on a transaction-by-transaction basis. In an effort to provide NRIs with value-added services, the Bank has set up NRI Boutiques (Relationship Centres) at 9 locations in the states of Kerala and Tamil Nadu. The Bank also has plans to open specialized NRI outlets at potential locations, stressing on the highest quality of service. On the socio-economic front, the Bank plays a leading role in dispensing Micro Credit among private and public banks based in Kerala. As at the end of March 2009, the outstanding under micro credit were Rs.124.40 crore. This involvement is part of the Bank’s objective to act as a catalyst for the economic prosperity of the country Latest result analysis • Net profit of the bank declined by 28.70% to Rs 6.26

crore for the second quarter ended September 30, 2009, over the same period last year.

• Net interest income of the bank increased by 26.65% to Rs123.74 crore compared to Rs 97.70 crore in the quarter ended September 2008.

Performance in the last year

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Particulars Sept. Qtr-09 Sept. Qtr-08 Growth % FY09 FY08 Growth%Interest Income 123.74 97.70 26.65 408.41 318.29 28.31Total Income 151.12 108.10 39.79 487.77 354.52 37.58Other Income 27.38 10.40 163.27 79.36 36.23 119.04PBT 8.26 14.39 -42.60 79.66 38.68 105.95PAT 6.26 8.78 -28.70 57.45 28.46 101.86EPS (Dil) 0.98 1.37 -- 9.16 8.88 --

Company Research

• The other income component of the company increased by good 163.27% to Rs 27.38 from Rs 10.40.

• Total deposits of the Bank increased by 43.02% to Rs. 5,629.41 crore from Rs. 3,936.23 crore of corresponding previous quarter.

• The bank has posted an impressive 37.8% growth in total income of Rs. 286.72 crore for the half year ended September 30, 2009.

• During the half-year ended September 30, 2009, the bank has raised Rs 150 crore as Tier-II bonds by private placement.

• Its Capital adequacy ratio (CAR) was at 14.93% versus 15.56%.

• Its net NPAs (Non-Performing Asset) were at 0.86% versus 0.91%.

Industry Scenario The Indian banking sector has played a commendable role in fuelling and sustaining growth in the economy. In the recent past a large part of the banking sector’s growth has been on the back of financing consumption, as reflected in the growth of retail banking. Over the post reform period of 1991 through 2008, total assets of banking industry have grown at a compounded annual rate of growth of 11.5%. The induction of new private and foreign sector banks and private equity in public sector banks has brought professional dynamism and vibrancy to the industry. High rate of economic growth since 2004 place the banking industry on an exponential growth path. However, the recent slowdown in economy coupled with the drought like conditions in large part of the country has threatened the sector regarding shrinking profits and rising non-performing assets (NPAs). The purpose of this note is to visualise how the poor monsoon will impact asset quality of the banks. After declining for years, NPAs of Indian banks showed some uptick in the last fiscal, primarily due to the sharp slowdown in global economy and its resulting impact on India. From a longer term perspective, there are no systematic risks with Indian banking industry. Despite slight uptick in NPAs, absolute level remains fairly low. This, coupled with high capital adequacy ratio would ensure that asset quality of banks does not deteriorate beyond tolerable levels. Latest developments Dhanalakshmi Bank has garnered Rs 1.5 billion on private placement basis by issuing 10.30% unsecured redeemable subordinated non-convertible lower tier-II (series VIII) bonds.

Dhanalakshmi Bank has appointed Ogilvy & Mather (O&M) as its agency of record to chart out a new brand proposition and communication strategy for the banking business. O&M will help the bank to design and implement a comprehensive go-to market communication approach. Dhanalakshmi Bank is planning to float a venture capital fund and an asset management company next year. The bank is planning to launch its venture capital fund in the first-quarter of the next financial year, while the asset management company (AMC) will be floated in the last quarter of this fiscal. Dhanalakshmi Bank has lowered its deposit rates by up to 1%. Deposit rates have been trimmed across various maturities.Recommendation Factors Dhanalakshmi Bank, the 82 year old private sector bank in the last one year has adopted a three-pronged approach towards its transformation into a new age high growth bank. The bank is planning a brand transformation initiative and has hired London-based FITCH to roll out a new brand identity and retail design, a revamped brand identity will enable establishing deeper connect with the bank’s rapidly increasing customer base. Dhanalakshmi Bank recently announced a venture fund with Rs 2000 crore corpus, a move that will give it a better long-term investment view in selected companies. The Bank is also planning to enter the asset management business by buying an existing fund. This move will make it the first old private sector bank to hold stake in an AMC. The bank has obtained approval from the Reserve Bank of India to open 66 more branches and 380 ATMs across the country; this will help in expanding its reach beyond the southern part of the country. Gross NPA of the bank is continuously showing declining trend which can be attributed to the good recovery measures of the bank. Dhanalakshmi Bank is one of the oldest private sector bank in India, initially it was having is traditional customers based in Kerala but the bank is now on the way to transform itself and is taking all measures to right from revamping its brand identity to spreading its reach across India. The scrip is currently trading at Rs 137 with a P/E multiple of 15.76, we recommend a BUY on the stock at current levels with a price target of Rs 190, for a medium term out look as the NII and PAT of the bank are expected to grow at a CAGR of 22% & 38% over FY08 to FY11E.

(Rs. Cr.)

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Stock Update

F Union Bank of India has posted a net profit of Rs 505 crore for Q2FY10, a growth of 40% on a YoY basis and 14% sequentially from Rs 361 crore and Rs. 442 crore, respectively. The Interest Income posted a growth of 13% on a YoY basis and 1% sequentially standing at Rs. 3,205 crore. Interest expenditure of Rs. 2342 crore reported is 26% higher on YoY basis and 1.3% lower on a sequential basis from Rs. 1,855 and Rs. 2,373 crore respectively. The higher cost of borrowing has led to a decline in Net Interest Income by 11% on a YoY basis but a growth of 7% YoY basis.

F On the other hand, deposits growth has exceeded the credit growth bringing down the incremental credit-deposit ratio from 125% in Q2FY09 to 65% in Q2FY10. This resulted in deployment of surplus funds in low-yielding liquid assets bringing down the NII. Other Income grew by 96% on a YoY basis to the tune of Rs. 555 crore and by 5% on a QoQ basis helping the bank in maintaining the net profit level. The NIM for the last quarter is 2.34% up from 2.29% reported in Q1FY10 improving by 15 basis points sequentially and down by 116 basis points on YoY basis. The yield on funds stood at 7.95% compared to 8.75% as on Q2FY09.

F The gross NPA as a percentage of total assets was at 1.93% on a YoY basis and marginally lesser on a QoQ basis. Net NPA stood at Rs. 223 crore up from Rs 116 crore in September 08. As a % of net advances it was 0.14% in Q2FY09 and is currently at 0.23%. The bank is expecting a gross NPA to be around 2% by the end of FY10 in creating its provisions. The stock has relatively inexpensive valuation of 1.6 times FY10 BV given ROE above 20% and credit deposit ratio at 65%, to improve as deposit growth decelerates and credit growth accelerates. The stock looks under valued at current market price of Rs 262.15, its price may witness a surge of 8% to touch Rs 290.

Last Traded Price (as on 31/10/09) Rs 262.15 Price target Rs 280Market cap. (Rs cr.) 1324252 Week H/L 282/121Free Float 44.57%BSE code 532477

Union Bank: Buy

F HDFC Bank has posted a Q2 net profit surge of 30.21% to Rs 687.5 crore from Rs 528 crore on a year-on-year (YoY) basis. Its mainstream net interest income (NII) has grown 4.8% quarter-on-quarter (QoQ) to touch Rs 1,955.8 crore compared with Rs 1,866.4 crore. Other income surged 56.65% to Rs 1,007.4 crore from Rs 643.1 crore. During the last quarter the biggest profit driver was its treasury operations, contributing nearly 30%. Almost a same performance has been delivered in the quarter at nearly 28%. The bank is expected to get Rs 40 billion equity capital infusion in December this year from its parent HDFC that will boost its Tier-I CAR to 12.8% but is likely to bring down FY10 ROE by 140 basis points.

F The bank has posted a loan growth at 9.5% QoQ after two quarters of decline. The growth in the loan portfolio was mainly driven by corporate, rather than retail loans. Retail loan growth was rather modest at 2% QoQ. Consequently, the share of retail in total loans declined to 55%, from 59% at the end of the previous quarter. Core CASA ratio rose to over 47% from 44% in 1QFY10, consequently improving NIM. NII was up 57% YoY. This included profit on sale of investments (primarily G-sec) worth Rs 162.9 crore, compared to s loss of Rs 15.6 crore in 2QFY09. However, profit on sale of investments was down 36% QoQ and contributed 5.5% of total income, compared to 8.8% in the previous quarter. Core fee income growth, excluding treasury, was also strong at 28.8%.

F The bank’s gross non-performing loans (NPL) has also declined 6% QoQ and at 1.8% compared to 2.1% as at end-1QFY10. The total NPL coverage stood at 100%. Total restructured loans at end-2QFY10 were 0.6% of total loans, about half of which were standard assets. At the current market price of Rs 1621.30, the stock looks undervalued and has an upside potential of reaching Rs 1800 in near term.

Last Traded Price (as on 31/10/09) Rs 1621.30 Price target Rs 1800Market cap. (Rs cr.) 6928852 Week H/L 1737/774Free Float 81%BSE code 500180

HDFC Bank: Buy

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Corporate News

Tata Power forms JV with SN PowerTata Power Company, India’s largest integrated private power utility has signed exclusive partnership agreement with SN Power, Norway’s fast growing international renewable energy company. Together, these companies will develop hydropower projects in India and Nepal. This is the first time that Tata Power has entered into an exclusive partnership with another hydropower company. The partners aim to have 2,000 MW projects under construction or in operation by 2015 and a total of 4,000 MW by 2020. Tata Power and SN Power have already begun pursuing potential project opportunities based on vast reserves of renewable energy in the Himalayas.Aurobindo Pharma’s two more products get approval in South AfricaHyderabad-headquartered Aurobindo Pharma has received approval of the Medicines Control Council (MCC), South Africa for manufacturing and marketing of two more drugs in the country. The approvals have been received for anti-infective Auro-Ampicillin 500 mg and 1000 mg injections and for Auropidone 0.5 mg tablets. With these latest approvals, the company now has total 37 products approved by the South Africa’s drug regulator.Premier launches compact SUV- RiOPremier, India’s pioneering passenger car maker has launched its compact SUV- RiO, thus marking the company’s re-entry in the passenger vehicle segment. The RiO is focused between mid-size passenger cars and larger utility vehicles. RiO seats five people comfortably and is powered by a 1489 cc turbo diesel engine based on Peugeot technology, delivering close to 65BHP and fuel efficiency of about 16 km per litre.Accentia Technologies expands its presence in the European marketsMumbai-based healthcare solutions provider, Accentia Technologies, has expanded its presence in the European markets by starting its operations from United Kingdom. Through this initiative, the company is looking to tap the high potential markets in Northern Ireland, England and Scotland. For past two years, Accentia was delivering its services in these regions through its partners.L&T sells stake in VPTIL to JV partnerLarsen & Toubro (L&T) has sold its shares in Kolkata-based Voith Paper Technology India (VPTIL) to its long-term joint venture partner, Voith GmbH, and Heidenheim, Germany. The share transfer became effective on October 1, 2009. Prior to this transaction, VPTIL was 50:50 joint venture between the company and Voith Paper GmbH, Germany. L&T has been working with Voith for nearly 50 years, and a major part of the equipment to the paper industry has been supplied by L&T as part of the offering by the German firm to the Indian market.

RIL abandons first exploratory well of KGD9-A1Reliance Industries (RIL), India’s largest private sector company, has ended drilling operations at the first exploratory well Krishna Godavari (KG) basin block--KGD9-A1 in the deepwater KG-DWN-2001/1 (KG D9). The exploratory well KGD-A1 was drilled to a total depth of 4,875 m TVDRT (4,861 m subsea) to explore the Middle and Lower Miocene targets. The company has mentioned that the well encountered sands in both the upper and lower Miocennce target levels with some background gas.Gujarat Apollo to incorporate 100% Germany-based subsidiaryGujarat Apollo Industries, part of Apollo group of companies has announced incorporation a wholly owned subsidiary -- Apollo Maschinenbau GmbH -- in the Federal Republic Germany, near the port of Hamburg. The company will invest around Euro 3,000,000 in in the initiative over a period of 15 months. This 100% subsidiary will produce new products as well as some existing products with a strong back up of labour intensive assemblies from India.Tata Steel, MMTC ink pact for undertaking mining activitiesTata Steel, part of the salt-to-steel conglomerate Tata Group, has inked a pact with the India’s largest international trading company, MMTC to jointly undertake mining activities. Both companies have agreed to set up a 74:26 joint venture (JV) company for acquiring, development and operation of mines and processing of minerals and metals. Tata Steel will hold the majority stake in the JV while the rest will be with MMTC.Wipro inks long term partnership with DIALIT major Wipro and Delhi international Airport Private Limited (DIAL) have inked a ten-year total outstanding agreement to provide world class IT infrastructure and services for the Indira Gandhi International Airport (IGIA), New Delhi. The partnership assumes significance as IGI airport’s new integrated terminal (T3) will be the gateway for the Commonwealth Games, scheduled to be held in New Delhi. Terminal 3 at IGIA will be one of the largest airport terminals in the world. The parties signed an agreement to form a joint venture, which would be named Wipro Airport IT services. Wipro would hold 74% in the JV and DIAL will hold 26% stake. The JV would be the innovation partner for DIAL and will focus on emerging business models anfd technologies for airports.IBFSL receives R2 form for insurance JV from IRDAIndiabulls Financial Services’ (IBFSL) insurance joint venture with Sogecap has been issued R2 form by the Insurance Regulatory and Development Authority (IRDA). This is 74:26 joint venture under which 74% will be held


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by IBFSL and rest by Soncep. This insurance JV had received receive R1 clearance from IRDA earlier. Earlier Indiabulls Financial Services received special dispensation from the Reserve Bank of India (RBI) to hold up to 74% in this upcoming life insurance joint venture -- Indiabulls Life Insurance -- with Sogecap.Hispano Carrocera becomes 100% subsidiary of Tata MotorsTata Motors which had acquired 21% stake in Hispano Carrocera S A, Spain in 2005, has acquired the remaining 79% holding in Hispano by exercising its existing call option, through mutual agreement with the other shareholder, Investalia S A. Following the stake acquisition, Hispano Carrocera has become a 100% subsidiary of Tata Motors.The acquisition demonstrates Tata Motors’ ongoing commitment to Hispano Carrocera. The Indian auto major will further strengthen Hispano’s ongoing initiatives to improve operational efficiencies.CCEA clears Telenor’s move to hike in Unitech Wireless to 74%Norwegian telecom company Telenor, which has a mobile services joint venture (JV) with realty major Unitech, has received a nod from the Cabinet Committee of Economic Affairs (CCEA) to hike its stake to 74%. The overseas major had in August this year received Foreign Investment Promotion Board nod to increase stake to 74%. However, the approval was to be cleared by the CCEA as all foreign investments over $600 million (over Rs 2,800 crore) are to be approved by the CCEA. Telenor Asia (Singapore) will complete acquisition of the balance equity by the end of 2009 in two stages. In the first stage, the foreign partner would infuse Rs 2,800 crore to enhance its stake to 67.25% from the present level of 49%.CCEA clears 5% divestment in NTPC through a follow-on offerThe Cabinet Committee on Economic Affairs on Monday cleared divestment of 5% stake in state-owned power generation giant National Thermal Power Corporation (NTPC) and 10% holding in Satluj Jal Vidyut Nigam (SJVNL), an un-listed power generation joint venture between the Centre and the Himachal Pradesh government. The divestment is expected to garner around Rs 10,000 crore, according to commerce and industry ministry Anand Sharma. Following the 5% divestment, the government’s stake in NTPC will fall to 84.5%. The Centre holds 75% stake in SJVNL while the rest is held by the HP government. The company has a paid-up capital of Rs 4,108.81 crore and is engaged in hydro power projects.Logix Microsystems acquires US-based technology services providerLogix Microsystems, a global provider of enterprise business solutions, has announced the acquisition of US-based Performance Drive SVC, a business solutions provider

for the automotive industry. The acquisition was pegged at around $1.1 million and was routed through izmocars, the business solutions provider for the automotive industry owned by the company. Performance Drive SVC offers a technology platform that enables auto dealers to integrate online appointments into their websites and manage their service bays in a cost-effective manner.Welspun-Gujarat’s order book touches a record Rs 10,000 croreWelspun-Gujarat Stahl Rohren (Welspun), the flagship company of the $2,000 million Welspun Group and the second largest line pipe company in the world, announced that its order book has touched Rs 10,000 crore, including orders executed during in second quarter of FY 2009-10. This order book of Rs 10,000 crore from international and domestic market has reinforced company’s premium position in the oil & gas segment. With the current order, the company has significantly created revenue visibility for not only FY 2010 but also for the large part of FY 2011.Indiabulls promoted commodity bourse gets FMC nodCommodity markets regulator, Forward Markets Commission (FMC) has granted recognition to the Indian Commodity Exchange (ICEX) – promoted by government-owned trading entity MMTC and private sector major Indiabulls Financial Services. The new commex already 100 members and is in the process of registering another 100 members. The FMC is expected to take around one week to issue identification numbers to the 100 members that have been registered with the bourse so far.Siemens bags export order worth Rs 403 croreSiemens has become successful in bagging an export order worth Rs 403 crore from Ezdan International Housing Project, Qatar. The consortium of Siemens and Siemens AG has won this export order. The contract value for Siemens is Rs 342 crore and Siemens AG is Rs 61 crore. The project is scheduled to be commissioned by January 2011. The scope of work includes designing, engineering, installation and commissioning of substations and associated electrical network. Siemens Energy Sector will construct a new 220/66KV and three 66/11kV substations along with associated electrical networks at Ezdan International Housing Project at Wukhair area, Qatar.Tata Communications partners with MSSGTelecom operator, Tata Communications has partnered with Mahindra Special Services Group (MSSG), a strategic business unit under $6.7 billion Mahindra Group, to offer a complete suite of security services to Indian enterprises to enable security of their information assets and data. Both organizations have inked a major security services agreement for the same.


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The month of October brought some dismayed moments in the equities markets as enthusiasm over better-than-expected quarterly results gave way to worries about the pace of the recovery. Investors seemed to question the sustainability of the rally, or probably realised the rally in stocks since March’s lows was primarily on hopes that the global economic recovery will be faster and more significant than valuations were implying. Not only in the local markets, a high level of distress was also seen across the world as many market participants thought that valuations could be too optimistic, particularly if governments and central banks start moving back some of the stimulus measures they have endorsed over the last year or so. As far as earnings are concerned, after a smart upmove in September and a spate of positive economic reports seen off late, markets looked too sanguine in their assessments and that as a consequence even good results were greeted with a poor reaction.The 30-share Bombay Stock Exchange’s (BSE) Sensex dropped 1230.56 points or 7.18% to 15,896.28 in the month of October 2009, while the S&P CNX Nifty plunged 372.25 points or 7.32% to 4,711.70.

Worries over the economic recovery and uncertainty in global equities did persist in the markets; however, there wasn’t major panic among market participants as they were well aware that profit booking is part and parcel of any market, which has been moving up since a long time. There was a general belief among investors that any irrationality doesn’t exist for long and gets corrected over a period of time. The way markets behaved in the month gave a feeling that it was undoubtedly a case of stretched valuation being corrected.In fact, the corrective phase in the month tossed a lot of buying opportunities to investors in select stocks and sectors having strong long term fundamentals, as market players have a tendency of pausing to re-look at valuations after a bout of profit-taking. Investors were ready to bank on potential stocks and sectors after the government reiterated that the Indian economy remains a promising growth story. To withstand market volatility, many traders were seen reviewing their asset allocation and rebalancing their portfolio in tune with their risk profile. Also, foreign institutional investors (FIIs) emerging as net buyers of Rs 9077 crore in the month gives an indication that they possess huge confidence in India’s fundamental strength and deem that barring unforeseen global tragedy, the country’s growth is unlikely to be stalled.

BSE Sensex Monthly GainersPrev Price

(Sep 30’09)Last Price (Oct 30’09)

Change (%)

ITC 231.90 255.15 10.03Hindustan Unilever 262.85 282.95 7.65Mahindra & Mahindra 881.20 921.95 4.62Tata Power 1319.45 1343.20 1.80TCS 619.35 626.20 1.11

ITC announced its unaudited results for the quarter ended September 30, 2009. The company posted a net profit of Rs 1,009.91 crore during July-September 2009 quarter on the back of total income of Rs 4,413.72 crore. It had reported a net profit of Rs 802.72 crore and total income of Rs 3,973.12 crore in the same quarter of the last fiscal.

BSE Sensex Monthly LossersPrev Price


Change (%)

Reliance Comm. 308 175.95 -42.87Bharti Airtel 418.55 292.15 -30.20Grasim Industries 2768.35 2180.40 -21.24Maruti Suzuki India 1698.90 1403 -17.42DLF 438.00 370 -15.53

Taking a harsh note on alleged suppression of government revenue, Anil Dhirubhai Ambani Group (ADAG) firm Reliance Communications (RCom) has said that it did not have to pay any additional license or spectrum fee to the government. Further, it added that the company has never inflated its revenues. Reacting to preliminary review of government-appointed special auditor, RCom has said that that the auditor’s report estimating alleged additional liability of Rs 316 crore is incorrect, hopelessly biased, one sided and prejudiced.Among sectoral indices on the BSE, Realty down 15.13%, TECk down 12.43%, Oil & Gas down 9.94%, Capital Goods (CG) down 6.42% and Public Sector Undertaking (PSU) down 5.71% were the main losers in the month.

BSE Realty Monthly LosersPrev Price


Change (%)

Parsvnath Developers 144.85 105.15 -27.41Omaxe 131.90 97.95 -25.74Unitech 107.45 82.25 -23.45Ansal Properties 82.95 64.75 -21.94DLF 438 370 -15.53

The Reserve Bank of India (RBI) turned its attention on asset prices as a precursor to monetary tightening. The central bank raised the provisioning requirement for real estate loans from 40% to 100%, which would lead to a rise in cost of funds for the builders. The hike in provisioning means that the banks will now have to set aside more money for any loan given to a real estate project which means additional cost to the bank in terms of liquidity

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foregone and therefore higher rate of interest for such a loan. The RBI contended that the real estate sector was showing tendencies of a build-up of an asset bubble going forward and therefore it was essential to plug the flow of excess liquidity to the sector.The start of the month wasn’t much convincing. Optimism that companies would come up with decent earnings on positive economic reports and pessimism that equities have gotten too far ahead of the recovery generated huge volatility in the market, which restricted the markets from retaining its positive momentum. Dearth of positive triggers and uncertainty over the route markets would take in the near term, forced traders to book profits even at small spikes. Also, the gusto to buy stocks was considerably low as marketmen exercised vigilance ahead of the July-September quarter earnings of corporate India. Telecom stocks played a spoilsport on concerns of declining tariffs and mounting competition that will impact the sector’s profitability. Also, software exporters, who obtain more than half their revenue from the US, witnessed a major sell-off after rupee appreciated to its highest level in more than a year.Towards the middle of the month, the situation in the markets stabilised as investors bought front-line shares after a drop in the early part of the month. Apart from global cues being supportive, market-friendly corporate news, encouraging IIP numbers, impressive earnings reports and positive comments by the government relating to the economic growth came in at the right time to provide a boost to the equities. However, a certain level of vigilance existed as investors believed that first week of earnings, which was relatively good, may not essentially be indicative of how good or bad the rest of the earnings season would be or if corporate India has really come out of the hitch.India’s industrial activity has been expanding at a strong pace for some months now. For the month of August, Index of Industrial Production (IIP) surged at double digits recording a growth of 10.4% against 7.2% in the immediately preceding month and 1.69% in the same month a year ago. It was the highest level of IIP growth in 22 months, clearly indicating that the industry has put the past behind it. It also indicates that while inflation in the manufacturing segment may also pick up going forward, the downside risk to India’s overall economic growth from the farm sector is also likely to be neutralized by the industrial sector. As the month progressed, domestic markets again found themselves trapped by volatility exerted by weakness across global equities. Investors pondered that markets are poised for consolidation after a recent quick rally that took benchmark indices to their 17-month highs. Most earning reports by corporate India did meet market expectations, but there was a dearth supportive triggers that could play a unified role in taking the markets to the next level. The Reserve Bank of India (RBI) in its Second Quarter Review of Monetary Policy for the fiscal year 2009-10 released on October 27, 2009 left most the key policy and reserve rates, except the statutory liquidity ratio (SLR), unchanged. The repo and reverse repo rates therefore stand at 4.75% and 3.25% while the cash reserve ratio (CRR) stands at 5%. SLR, on the other hand, has been hiked by 100 basis points to 25%. However, not much should be read into the SLR hike in wake of the huge liquidity that banks have been parking with the apex bank

under the liquidity adjustment facility. Overall, the policy in terms of rates can be termed as being on expected lines. Further, the Indian monetary authority left the growth projection for the current fiscal unchanged at the 6% level with upside bias. The RBI while accepted that there could be a downside risk from the farm sector, it also noted that the industrial sector has surprised on the upside and might be able to offset the downside in agriculture sector. Towards the end of the month, markets suffered severely on the back of sustained weakness in the global equities on worries over economic recovery. Markets pondered that the worst may be over; however, there still aren’t any concrete signs yet that the global economy is making a big push. Investors resorted to cashing in on every high fearing that markets are bound to correct after a quick upmove in the recent months. Banking and realty stocks suffered severely after the RBI set a tightening tone at its policy review. Investors remained puzzled if the step-up seen in earnings is really self-sustaining or probably the result of the stimulus provided by government, which is now on the verge to fade. The International Monetary Fund has projected Asian countries to grow at an average of 2.8% in 2009, with the growth being driven primarily by China and India. With global scenario improving and export numbers likely to turn back into the positive soon, it expects the growth to improve to 5.8% next year. Emerging countries in Asia though would be able to maintain a stronger pace of expansion at 5.1% this year and should further improve to 7% in 2010, said the multilateral funding organisation in its latest report, ‘Regional Outlook for Asia and Pacific’, released late October. The growth though is coming primarily from the two Asian giants China and India and after excluding these, growth in emerging Asia would come down to (-) 0.8% in 2009 and 3.8% in 2010. The report however, maintained that overall, Asian economies had rebounded from the depths of the global financial crisis and were headed for a much faster recovery compared with most of their peers. The IMF concluded that the recovery appeared to be much more firmly rooted in Asian economies than in other regions of the world.

Performance of major world indices in SeptemberPrev Price


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2122.42 2045.11 -3.64

S h a n g h a i Composite

2779.43 2,995.85 7.79

Nikkei 10133.23 10034.74 -0.97Hang Seng 20955.25 21752.87 3.81FTSE 5133.9 5044.55 -1.74

Recession is finally over in the largest economy of world and while the development will help boost the global and Indian economy, the immediate beneficiaries in India will be the information technology (IT) companies, which will reap the benefit of improving business confidence in the US.


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The global economy continues to show improvements in terms of improving business and consumer sentiments, rising industrial output and reviving retail demand. The return of world’s largest economy into the green and deceleration in export decline of emerging economies have provided robust signs of recovery. However, there has also been some negative news flow over last one month including a decline in world trade in August and unexpected contraction in the UK economy signalling that the road to full recovery may not be easy going forward. In India, the economy continued strong with industrial output surging and promising to compensate for the potential decline in farm sector due to poor monsoon. GLOBAL ROUNDUPThe US economy showed the most robust signs of recovery as it recorded a positive growth for the quarter ended September 2009. According to the data released by the US government, the economy grew 3.5% in the July-September period, the best performance since 2007, marking an end to the longest recession since the Great Depression, at least technically so. There were more positive signs in the US economy. The lead economic indicators (LEI) rose for the sixth consecutive month and the coincident economic index increased in two of the last three months. Existing US home sales surged 9.4% in September as consumers scrambled to take advantage of an expiring tax credit for first-time buyers. While there remain a number of issues, which will have to be resolved before full recovery, like lingering credit demand, high unemployment etc, the sentiments would certainly take a boost from the green shoots. In case of Europe, a lot of positive economic data pointed out to a strong recovery taking shape in the Eurozone. Industry numbers remained strong while export figures from economies like Germany are seen improving. Purchasing Managers Index (PMI) for the region, compiled from surveys of around 2,000 companies, leapt to 52.3 in October from 50.9 in September, its highest since February 2008. However, the UK economy registered an unexpected decline of 0.4% when the economists were expecting a growth of 0.2%, suggesting that drive to stability would not be a smooth ride. In case of emerging nations, China’s export fall came down sharply in September indicating improvement in demand from the developed world. The government expects that given the decelerating pace of decline, exports should return back to the green territory in next one quarter. In India, factory output recorded fast growth in the last three to four months and reached double digit levels in August, indicating that the industry had bottomed out. While the world economy continues to witness green shoots and surprise on the upside, some negative data

has also been encountered hinting towards the probability of a much slower and painful recovery. Global trade went down 2% in August in contrast to expectations, suggesting the recovery in demand might not be as strong as expected. Also, apprehensions of another slowdown, once the impact of fiscal stimuli in the US and China fades, remain. Overall, we see that while tangible improvement in the global economy is being witnessed, some volatility going forward may not be ruled out. INDIAN SCENARIOThe Indian economy seems to have started recovering swiftly after having gone down to a five-year low in the December quarter. Despite the poor monsoon, the economy is expected to retain its title of the second fastest growing large economy, thanks to the splendid performance of its industrial sector and continuous improvement in consumer and producer sentiments. Real Economy IIP surges at double-digit paceIndia’s industrial output surged at double digits in the month of August, recording a growth of 10.4% against 7.2% in the immediately preceding month and 1.69% in the same month a year ago. While the strong momentum that the Indian industry has been exhibiting since May helped the growth, low base effect from last year also boosted the numbers.

The growth in the index was supported by all constituents with manufacturing activity growing by 10.2% against 1.8% last year while electricity production surged by 10.6% against 0.8% year-on-year, and mining output surging by 12.9% compared with 1.8% last year. Looking at the use based classification, production of consumer goods increased by 8.5% against 6.4% while intermediate goods were up by 14.2% against 5.5%%. Consumer goods recorded a strong expansion of 22.3% while non-durable expanded by 3.7%.

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As a result of strong growth in the last three months, April-August IIP growth now stands at 5.85 against 4.8% in the same period last year. Meanwhile, the government also revised the IIP growth figures for the previous month to 7.2% against 6.8% reported provisionally. Monsoon effect to be lower than expectedThe negative impact of poor rains on the agricultural sector was not likely to be as severe as was earlier thought to be, according to the Planning Commission. The Commission now believes that notwithstanding the droughts India was likely to growth at more than 6.3% in the current fiscal. As per the latest assessment by the Commission, the monsoon impact had not been as bad as was being anticipated and as a result there should not be much impact on the growth trajectory. India’s southwest monsoon has been nearly 23% below the long period average in the June-September season, which has resulted in doubts of substantial decline in farm output. The Planning Commission had earlier assessed that farm sector GDP would decline at least by 2.5%, which could increase in a worst case scenario to 6%. However, a late revival of rains and also uneven spread of deficiency has meant that the final impact in output may not be as much as apprehended. In this wake, the Planning Commission now expects around 1% decline in farm sector GDP, which would only translate into 20-30 basis points in terms of broader GDP. Government pegs Growth at 6.5% The Prime Minister’s Economic Advisory Council (EAC) has in its latest projections pegged the growth for current fiscal at 6.5% for the Indian economy. While the figure is slightly lower than last year’s growth at 6.7%, it is still much better than what was being anticipated after the country faced worst monsoon in decades. In fact the growth projections are 50-70% higher than what most agencies expected earlier. The upside seems to be coming from two factors, first, the faster-than-expected industrial recovery, and second, lower impact of the drought than what was being envisaged earlier. While industrial output according to the EAC would be close to 8.2%, substantially higher compared with 3.9% in the previous fiscal, services will register a marginally lower growth of 8.2% against 9.7% in 2008-09. After presenting the report to Prime Minister Manmohan Singh, chairman of the Council C Rangarajan said that it was unlikely that growth would be lower than 6.25%, but it might reach 6.75%. Monetary Economy RBI holds rates but marks beginning of exit India’s central bank - Reserve Bank of India (RBI) - announced the second quarterly review of its monetary

policy for 2009-10 on October 27, 2009. The review was set in the context of an improving global economy, rapidly recovering domestic economy characterised by higher-than-expected industrial growth and apprehensions of decline in farm output due to poor monsoon. The policy was very much on expected lines with not many surprises. The Indian monetary authority kept the key rates, except the statutory liquidity ratio (SLR), unchanged. But overall tone of the policy certainly sounded hawkish suggesting that while RBI was willing to help the case of faster growth, it was not willing to forgo the issue of price stability which it contended was its top duty. The central bank left key rates including the repo and reverse repo rates along with the cash reserve ratio (CRR) unchanged at 4.75%, 3.25% and 5%, respectively. It hiked or rather restored the SLR from 24% to 25%. The move, however, is unlikely to impact the liquidity conditions in the system as commercial banks have been maintaining SLR investments at 27.6% of their net demand and time liabilities (NDTL), net of liquidity adjustment facility.

The RBI also refused to tinker with the hold to maturity (HTM) cap. Presently, banks are permitted to hold SLR securities up to 25% of their demand and time liabilities in the HTM category of investments. Recently, there has been some demand from banks for raising this limit on the ground that such a relaxation will mitigate the upward pressure on G-Sec yields, and consequently on the overall interest rate regime. The RBI, however, maintained that as the HTM ratio was already higher than the prescribed SLR, it was not desirable to further raise the HTM ratio.Overall, the apex bank did signal that it was necessary to move from the ultra accommodative monetary policy to a more normal scenario and signalled the start of its exit strategy with some other measures as well. “The balance of judgment at the current juncture is that it may be appropriate to sequence the ‘exit’ in a calibrated way so that while the recovery process is not hampered, inflation expectations remain anchored. The ‘exit’ process can begin with the closure of some special liquidity support

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measures”, said the RBI. As such, the limit for export credit refinance facility, which it had raised to 50% of eligible outstanding export credit, has been returned to the pre-crisis level of 15%. The two non-standard refinance facilities: (i) special refinance facility for scheduled commercial banks and (ii) special term repo facility for scheduled commercial banks for funding to mutual funds (MFs) and non-banking finance companies (NBFCs) have been discontinued with immediate effect. Further, it did take a couple of steps to ensure that the banking balance sheets remain healthier despite glut of liquidity scouting the system. As such, it increased the provisioning requirement for advances to the commercial real estate sector classified as ‘standard assets’ from the present level of 0.40% to 1.0%. In a related move, the RBI advised the banks to augment their provisioning cushions consisting of specific provisions against NPAs as well as floating provisions in order to ensure that their total provisioning coverage ratio, including floating provisions, is not less than 70%. Inflation becomes a concern againAfter ending its negative streak, India’s wholesale inflation entered into the positive zone during the week-ended September 5. In the subsequent weeks, inflation has risen swiftly to 1.51%. The negative figures witnessed in the previous weeks though represented only the high base effect from the previous year. On a continuous or week-on-week basis, the WPI has been increasing since early this year itself.

In this wake, the RBI has substantially raised its inflation forecast given the build-up of inflationary tendencies at home and evolving global commodity price scenario. The Indian monetary authority had originally put the inflation estimate at 4% in its Monetary Policy Statement for FY10 released in April. In the First Quarter Review of July 2009 the RBI hiked the WPI inflation target for end-March 2010 at around 5%. The July review also indicated that the risk to this projection was on the upside. The upside risks on account of deficiency in monsoon rainfall indicated in July review have now materialised

as prices of food items have risen sharply. In fact even though the year-on-year WPI inflation stood at 1.21% as on October 10, 2009, it has already increased by 5.95% on a financial year basis. The base effect, which resulted in negative WPI inflation during June-August 2009, is now expected to work in the reverse direction accentuated by high food prices. Also, the RBI’s quarterly inflation expectations survey for households indicates that while inflationary expectations remain contained, a majority of the respondents expect inflation rate to increase over the next three months as also over the next year. In this wake, the RBI has raised the baseline projection for WPI inflation at end-March 2010 to 6.5% with an upside bias.Credit growth remains subdued The Indian monetary authority has maintained abundant liquidity in the Indian financial system for sometime now. However, while the money supply registered reasonable growth of 18.9% by October 9, 2009 riding on large market borrowing of the government, the growth in bank credit to the commercial sector has moderated substantially to 10.7% from the high level of 27.4% a year ago. In order to attain the growth projected by the RBI in its last monetary review at 20%, banks will need to expand credit by Rs.4,40,000 crore in the remaining part of the year, which looked difficult. Also, the access of corporates to non-bank sources of financing, both domestic and international, has eased, which could lead to substitution of bank credit. Keeping in view these factors, the RBI has scaled down the target growth in adjusted non-food credit to 18% from 20% set out in the July. The Indian monetary authority in its October policy review has also pulled down the money supply growth projection by 100 basis points to 17%. Consistent with this, growth of aggregate deposits of scheduled commercial banks has been projected to at 18%. Public Finance Government sees direct tax revenue exceeding Rs 4 lakh crore The Prime Minister’s Economic Advisory Council (EAC) has said that the government was likely to collect more than Rs 4 lakh crore as direct tax for the current fiscal year ending March 2010. The EAC said that there had been a recent surge in tax collection, which was likely to push the figure beyond the budgeted target. The government had set a direct tax revenue target of Rs 369,575 crore in the current fiscal, which would necessitate a growth of 9% across the fiscal. However, since the growth in first half has been much lower, collections would have to increase by more than 14% in the second half if the budgeted target is to be met.

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The Central Board of Direct Taxes (CBDT), however, believes it would be able to meet the even higher target set by it internally at Rs 4 lakh crore. It has said in a recently released report that an upturn in the economy in the second half of the current financial year would give a leg-up to the direct tax collections. External Sector Exports decline decelerates in AugustIndia’s exports continued to fall for the 11th consecutive month in August, as demand from the rich countries remain subdued despite some improvement in global economy. However, the pace of decline is coming down suggesting that the battered sector may see some positive news in the coming months. Total exports during the month of August stood at $14.3 billion, down by 19.7% compared with $17.8 billion worth exports in the same month last year. However, the decline was much lower compared with that in the previous month at over 28% and also compared with the cumulative decline during the first five months of the fiscal at 31.3%, indicating that improvements in global economic scenario were slowly translating into higher demand from the developed world. While some of the segments like rice, tobacco, fruits and vegetable, marine products, iron ore, man-made yarn, fabrics and ready made garments, some minerals like coal, etc, have started showing positive growth, many labour intensive sectors like gems and jewellery and leather goods continue to remain in the negative terrain. We expect that exports would continue to fall till September after which some improvement may be realised due to activation of low base effect from last year. India’s exports witnessed strong growth till September last year but plunged afterwards as the global credit crunch hit trade worldwide. Nonetheless, the improvement would only be statistical in nature and though positive growth would be visible in second half of fiscal, overall level exports during the current fiscal will at the most be flat compared with the same in last year.Rupee strengthens against the dollar After trading sideways in the Rs 47-48 per dollar for more than couple of months, the Indian rupee has started rising on a weakening dollar as well as rising capital inflows. The rupee rose to a one-year high to 46.14 a dollar on October 15 on strong capital flows. In the following days it showed some more strength and touched the peak of 45.8. Although the Indian Currency lost some ground from there, medium term trend in rupee seems to be one of strengthening and as long as there is no major reason for reversal in the direction of capital flows, we expect the uptrend to be followed in the medium term. In the near term, however, the rupee will face considerable resistance

at levels close Rs 45.5-46.5/dollar and sideways movement may be expected in near term. Outlook The global economy continues to show significant improvement and has been moving towards full recovery at a faster-than-expected than trajectory. The US economy has returned to growth a quarter ahead of analysts’ estimates raising hopes of an earlier rebound. Though there remain a number of issues including high unemployment in the rich countries and subdued consumer expenditure, significant improvement in sentiments on account of positive news flow has been witnessed in recent months. In case of India, industrial growth has really shown the way forward. Growing at double digit level, India’s factory output has raised (or at least restored) the projection for GDP growth for the current fiscal to more than 6% after getting hit by the monsoon blues. The downside from the agriculture sector now seems to be limited and the Planning Commission has cut its projection for decline in farm output from 2.5% to around 1%. There remain some concerns as yet including poor credit growth and lacklustre investment demand. However, the same are expected to improve over the second half of the fiscal. With world economy showing subtle improvement, exports are also expected to enter back into the green from October onwards. Overall, the economy seems to be poised well on the path to full recovery and after recording 6%-6.5% growth in the current fiscal, we expect growth to further rebound to around the 8% level next fiscal.

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Economy News

RBI not yet clear on ownership of 7 private banks The Reserve Bank of India (RBI) governor D Subbarao has said the bank and the finance ministry have not yet considered the issue of the status of the seven private sector banks categorized as foreign-owned under the new Foreign Direct Investment (FDI) norms and hence any resolution was awaited.The governor also said that the banking regulator was in constant touch with the government on the matter. Private sector banks like ICICI Bank, HDFC Bank, Yes Bank, IndusInd Bank, Federal Bank, ING Vysya Bank and Development Credit Bank have been categorized as foreign-owned as foreign investment holding in these institutions is in excess of 50%.Real estate to bear the brunt of monetary tightening The Reserve Bank of India (RBI) has turned its attention on asset prices as a precursor to monetary tightening. The central bank, in its monetary policy review, raised the provisioning requirement for real estate loans from 40% to 100%, which would lead to a rise in cost of funds for the builders. The hike in provisioning means that banks will now have to set aside more money for any loan given to a real estate project which means additional cost to the bank in terms of liquidity foregone and therefore higher rate of interest for such a loan.RBI releases status quo policy, holds all rates but SLR The Reserve Bank of India (RBI) in its Second Quarter Review of Monetary Policy for the fiscal year 2009-10 released on October 27, left most the key policy and reserve rates, except the statutory liquidity ratio (SLR), unchanged. The repo and reverse repo rates therefore stand at 4.75% and 3.25% while the cash reserve ratio (CRR) stands at 5%. SLR, on the other hand, has been hiked by 100 basis points to 25%.Further, the Indian monetary authority left the growth projection for the current fiscal unchanged at the 6% level with upside bias. The RBI while accepted that there could be a downside risk from the farm sector, it also noted that the industrial sector has surprised on the upside and might be able to offset the downside in agriculture sector.3G spectrum auction on January 14: DoT The much-awaited auction of 3G spectrum has got a new lease of life as the Department of Telecommunications (DoT) announced a fresh road map for starting 3G or third-generation mobile services likely to be auctioned from 14 January, 2010.The DoT has also said that the auction of 3G spectrum will be carried out in four stages, invitation of bids, pre-qualification, auction and grant of spectrum. In this wake, the DoT would conduct a pre-bid meeting on November

16, while a mock auction is to be conducted on January 11-12. Gems and jewellery export turn positive after 11 months India’s battered gems and jewellery sector is beginning to get the shine back as the Christmas season sparkles demand from overseas clients. After staying in the red for 11 consecutive months, the sector has finally seen positive year-on-year growth numbers in the month of September. The country’s total gems and jewellery exports in September touched $2.57 billion (Rs 12,429 crore) against $2.51 billion (Rs 11,433 crore) recorded in the same month last year, thus registering an overall growth of 2.2%, according to the data released by the Gem and Jewellery Export Promotion Council (GJEPC).FM upbeat on getting details of tax evaders from Swiss banks With an aim to strengthen bilateral taxation ties, finance minister Pranab Mukherjee has said the government would renegotiate the taxation treaty with Switzerland under the OECD Model Tax Convention. Concerned over the issue of parking black money in Swiss banks, the negotiations are expected to take place soon. India has been constantly asking for details of the tax evaders from Swiss government.Inflation data to be released on a monthly basis Keeping parallel with the best global practices, the government has approved a proposal involving the monthly release of wholesale prices index (WPI) based inflation data, instead of every week as is being done presently. The decision was taken by the Cabinet Committee on Economic Affairs (CCEA) on October 19. The government is also set to release a new WPI series with the base year 2004-05 compared with 1993-94 for the earlier series. The new series will also see substantial change in constituent goods aimed at reflecting the changes in product range and lifestyle that have taken place over the last decade or so. In fact, trials of the new series are already on and a final set of commodities to be included in it is likely to be finalised soon. DoT at loggerheads with TRAI over pay per second mandate The Department of Telecommunications (DoT) is likely to be at loggerheads with the TRAI over the latter’s proposal, in Geneva at global telecom event, to make at least one pay per second plan mandatory for every mobile operator. The DoT fears adverse impacts on potential 3G auction as bidders would not ignore the revenue implications of the TRAI’s move and their bids will be adjusted downwards accordingly.These issues are expected lead to a standoff as it carries the potential of placing 3G auction revenues at risk, which the UPA government holds under a key priority.


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Economy News

India becomes fastest growing telecom market, outsmarts China: Moody’s Report Embracing various innovative ways including infrastructure sharing and network management outsourcing, India has outsmarted China to become the world’s fastest growing market, according to Moody’s report. The report stated that India’s net additions of 10 million subscribers per month have beaten Chinese monthly rate of increase, lagging behind below eight million a month. However, China retained the slot as having the maximum number of new subscribers on a monthly basis two years ago. The report says emerging markets with relatively low penetration have been growing at above-average rates which generally tend to be slowing. However, this slowing trend has not yet seen in India, the report adds.Government likely to allow duty-free import of ATF The Centre might allow duty free import of aviation turbine fuel (ATF) as an empowered group of ministers appointed by the government to look into the pricing structure of jet fuel is likely to favour allowing the airlines to import at least a part of their fuel requirements. The move will help airlines cut their fuel costs as these will be able to save high sales tax levied by state governments, which varies between 12% and 23%. The aviation industry had asked the government to give aviation turbine fuel (ATF) a declared good status which would have resulted in fuel attracting only 4% uniform duty across the states. However, states had objected to this and therefore and easier way out would be to allow import of ATF by airlines. Union housing ministry hails PPP format for affordable housing The Union housing ministry has hailed the public-private partnership format to provide affordable housing and said that it is increasingly being seen as a commercial opportunity and not just a welfare programme.The ministry has highlighted the significance of this sector saying the urban housing segment is the largest chunk of the domestic housing market, and is distinguished by a steady and growing demand that will not shrink or fluctuate with the share markets or the global economy. Indian steel industry leads the world in performance India’s steel majors have topped the profitability charts of global industry as the slowdown-hit developed world awaits revival in demand. The global economic downturn did hit the Indian steel industry as well in the December quarter last year as demand went down sharply in wake of dismal outlook. However, riding on the stimulus package launched by the government and the easy money policy of the RBI, the country witnessed sharp recovery in steel consuming sectors like auto and infra, allowing the steel makers to turn around the downturn quickly in the current year. According to the data released by the steel ministry, India’s

steel consumption increased by 4% in August compared to same period last year. Total steel consumption in the month stood at 4.59 million tonne (MT) compared with 4.41 MT in August 2008. PE investment falls 70% in September quarter to touch $763 million Private Equity (PE) investment slipped by 70% to touch $763 million across 47 transaction activities in India in the quarter ended September 2009, according to a data by Venture Intelligence.PE investment during the latest quarter was significantly lower than the corresponding quarter last year, which saw deals worth $2,581 million investing across 132 transactions, showing a decline of nearly 70%. The September quarter figures are also lower than that of immediately preceding quarter, which saw deals worth $964 million across 47 transactions. Appreciating rupee likely to hurt near term IT industry outlook Even though analysts had indicated upgraded revenue guidance for IT companies, the appreciating rupee against the dollar may dampen the outlook for the industry. The appreciating rupee could hurt the upward guidance of the IT industry on their hedging positions. The current weakness in the dollar against other major global currencies could dampen the dollar revenues in the near term for non dollar billings. World Bank urges India to invest in road sector to ensure high growth The World Bank, in a recent study, has said that India would need to sharply hike investment in the road sector to ensure that transport bottlenecks do not hinder the country’s journey back to the high growth path it enjoyed for three to four fiscals preceding the global economic downturn. The study said that India will have to invest as much as Rs 87,440 crore within the next two to three years to achieve high growth rate. It also said that the government would have to focus on raising the industry capacity in this direction if it is to achieve the target level of road development.Government says no to loan waiver for now Despite the poor monsoon this season creating a drought-like scenario in nearly half of the country, the finance ministry has ruled out the need for any blanket loan waiver or similar restructuring program. Rather it is likely to leave the issue of restructuring loans to the public sector banks. India’s southwest monsoon has been nearly 23% below the long period average, which has resulted in widespread drought-like scenario in the country. According to estimates by the Planning Commission, the kharif output is likely to fall by at least 18 million tonne or about 2.5% of the farm sector GDP.


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Scorecard - Banking

Company Name

YearEnd

NOMEquity

Rs. Mn.FV Promoter

Stk % BVRs.

RONW(%)

Sales Rs. Mn.

Sales Var (%)

OPM(%)

NP Rs.Mn.

NP Var (%)

DIV (%)

CPS(Rs.)

Allahabad Bank Ltd 200903 12 4467.00 10 55.23 130.77 13.16 73647.28 17.28 14.61 7685.98 -21.15 25 17.21

Andhra Bank Ltd 200903 12 4850.00 10 51.55 75.20 17.91 53746.17 25.29 16.71 6530.51 13.46 45 13.46

Axis Bank 200903 12 3590.05 10 38.98 284.50 17.77 108354.80 54.68 25.70 18153.60 69.50 100 45.16

Bank Of Baroda Ltd 200903 12 3642.67 10 - 352.33 17.35 150915.80 27.75 22.15 22272.00 55.15 90 0.00

Bank Of India Ltd 200903 12 5251.75 10 64.47 224.38 25.52 163473.60 32.31 25.47 30073.50 49.66 80 57.26

Bank of Maharashtra 200903 12 4305.20 10 76.77 47.97 18.17 42915.60 21.21 11.91 3751.70 14.25 15 8.71

Bank of Raj 200903 12 1613.50 10 28.60 64.80 11.26 13836.13 31.84 12.51 1177.12 2.18 2 7.30

Canara Bank Ltd 200903 12 4100.00 10 73.17 244.87 20.64 171190.60 20.55 15.03 20724.20 32.42 80 50.55

CentralBank of India 200903 12 4041.42 10 80.20 135.97 8.91 104551.90 30.76 8.85 5712.40 3.83 20 14.13

City Union Bank 200903 12 320.00 1 - 20.65 18.48 8044.01 33.81 22.16 1221.35 20.06 75 3.82

Corporation Bank Ltd 200903 12 1434.38 10 57.17 341.37 18.23 60673.51 34.34 23.25 8927.70 21.47 125 62.24

Dena Bank Ltd 200903 12 2868.23 10 51.19 67.95 21.69 34475.00 27.21 15.71 4226.60 17.47 12 14.74

Devp Credit Bank 200903 12 1742.99 10 26.25 30.74 0.00 6452.05 12.38 -13.42 -880.96 - - -5.01

Dhanalakshmi Bank 200903 12 641.16 10 - 66.21 13.53 4084.10 28.31 19.50 574.50 101.86 10 8.96

Federal Bank 200903 12 1710.33 10 - 252.57 11.59 33153.80 31.80 23.92 5004.90 35.98 50 29.28

HDFC Bank 200903 12 4253.84 10 - 344.31 15.33 163322.70 61.47 20.20 22449.50 41.18 100 0.00

ICICI Bank 200903 12 11126.50 10 - 445.17 7.53 310925.50 0.99 16.46 37581.30 -9.61 110 33.75

IDBI 200903 12 7247.81 10 - 102.61 11.54 116316.20 45.02 8.47 8585.30 17.70 25 0.00

Indian Bank Ltd 200903 12 4297.70 10 80.00 127.52 21.18 68303.30 32.61 26.14 12453.23 23.45 50 28.98

Indian Overseas Bank 200903 12 5448.00 10 61.23 109.06 22.31 96414.03 21.00 20.27 13257.92 10.27 45 24.34

Indusind Bank 200903 12 3550.00 10 22.20 40.21 10.39 23094.70 20.27 9.85 1483.40 97.65 12.6 3.62

ING Vysya Bank 200903 12 1026.04 10 - 154.93 11.88 22398.90 33.29 13.15 1887.80 20.30 20 0.00

J&K Bank 200903 12 484.78 10 53.17 541.04 15.63 29881.20 22.75 21.15 4098.40 13.84 170 84.54

Karnataka Bank 200903 12 1215.75 10 - 128.18 17.12 19174.00 22.06 20.85 2667.00 10.33 60 21.93

Karur Vysya Bank 200903 12 539.52 10 3.68 250.26 17.47 14460.90 27.52 22.89 2358.40 13.21 120 43.71

Kotak Mahindra Bank 200903 12 3456.69 10 48.40 110.33 7.24 30651.44 20.90 13.90 2760.97 -6.07 7.5 7.96

Lakshmi Vilas Bank 200903 12 487.76 10 - 93.02 11.09 6576.11 29.95 12.39 502.95 99.04 25 0.00

Oriental Bank 200903 12 2505.40 10 51.09 295.50 12.23 88564.70 29.52 13.10 9054.20 7.67 73 36.14

Punjab National Bank 200903 12 3153.03 10 57.80 416.74 23.52 193261.60 35.48 24.67 30908.80 50.87 200 98.03

Scorecard Legends : NOM - Number of Months for which P& L a/c is prepared by the companies, Equity Rs.Mn - Latest Paid Up Capital of the Company, FV-Latest Face values of equity Shares, Promoter Stk % - Its promoter holding in the equity capital of the company as per latest shareholding pattern, BV Rs. - Book Value Per Share is calculated as (Equity + reserves ) / No of Equity shares, RONW - Return on Net Worth is calculated as {(Net profit - preference capital)/ Shareholder’s Fund }*100.Share- holders funds includes Equity Paid Up + Reserves excluding revaluation reserves - Misc Expenditures Not written off, Sales Rs. Mn - Sales , Turnover & Income from operations,Sales Var% - Percentage Change in Sales over previous period Sales, OPM% - Operating Profit after interest expended as a % of Interest income & income from operation, NP Rs. Mn - Net Profit as reported after Tax, NP Var% - Percentage Change in Net profit over previous period Net profits, Div% - Total % of Dividend Declared during latest Financial year.


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Scorecard - Banking

Latest Quarter TTM Market DataEPSRs.

SalesRs. Mn.

SalesVar (%)

OPM(%)

NPRs. Mn.

NPVar(%)

EndedEPSRs.

NPVar (%)

Price30/10/09

H52W L52W PEMkt. Cap(Rs. Mn.)

17.21 20466.91 10.87 22.28 3335.91 700.30 200903 17.21 -26.82 119.20 135.00 36.85 6.93 53246.64

13.46 15577.29 17.29 25.36 2739.72 69.61 200903 13.46 11.86 112.55 124.70 37.00 8.36 54586.75

45.16 28603.60 12.39 28.21 5316.40 31.95 200903 45.16 41.00 907.90 1048.00 278.50 20.10 325940.73

- 41354.20 16.46 22.13 6341.80 60.43 200903 - 35.55 509.15 548.00 180.50 - 185466.29

57.26 44889.90 13.28 13.45 3233.40 -57.61 200903 57.26 33.18 333.60 474.70 179.60 5.83 175198.48

8.71 11188.70 12.07 12.87 1017.90 118.29 200903 8.71 12.47 43.05 51.55 18.90 4.94 18533.89

7.30 3426.86 7.22 6.76 170.75 -44.78 200903 7.30 2.14 79.50 98.00 30.20 10.90 12827.33

50.55 47091.60 14.60 23.58 9105.20 71.98 200903 50.55 24.48 341.20 395.00 144.25 6.75 139892.00

14.13 29755.20 11.26 15.11 3139.30 226.50 200903 14.13 - 133.00 164.20 29.75 9.41 53750.82

3.82 2282.83 22.72 15.22 315.46 20.24 200903 3.82 16.71 26.95 31.60 11.10 7.06 8624.00

62.24 17695.47 22.14 24.96 2916.77 52.30 200903 62.24 17.67 422.95 480.00 155.00 6.80 60667.02

14.74 9627.50 16.19 16.62 1246.40 21.21 200903 14.74 14.87 59.45 80.80 25.10 4.03 17051.64

-5.01 1116.34 -35.39 - -169.32 - 200903 -5.01 - 33.50 48.65 13.55 - 5839.01

8.96 1237.40 26.65 6.68 62.60 -28.70 200903 8.96 50.46 136.90 178.40 37.00 15.28 8777.43

29.28 9010.70 8.81 - 1010.70 -11.56 200903 29.28 26.46 240.15 270.00 110.50 8.20 41073.57

- 39918.90 0.02 25.02 6874.60 30.21 200903 - 29.17 1621.30 1737.30 774.00 - 689675.24

33.75 66569.40 -15.04 20.49 10401.30 2.56 200903 33.75 -10.63 789.60 983.70 252.75 23.40 878548.20

- 37201.40 37.92 8.16 2537.40 56.16 200903 - 15.04 113.65 137.25 39.75 - 82371.41

28.98 19371.72 14.75 27.08 3719.84 31.48 200903 28.98 18.99 155.95 195.70 63.75 5.38 67022.63

24.34 25499.52 5.06 13.74 1760.43 -50.97 200903 24.34 9.31 101.25 141.00 37.55 4.16 55161.00

3.62 6550.30 19.12 17.78 778.20 131.19 200903 3.62 49.41 116.80 145.45 26.20 32.27 41464.00

- 5388.80 1.37 15.03 534.70 13.84 200903 - 16.87 282.10 326.70 103.25 - 28944.62

84.54 7753.70 19.03 22.73 1170.60 23.79 200903 84.54 12.16 565.80 706.00 210.00 6.69 27428.74

21.93 4943.70 9.08 0.28 163.50 -77.79 200903 21.93 9.36 130.45 174.35 55.15 5.95 15859.45

43.71 4339.70 21.23 21.69 909.00 46.06 200903 43.71 11.67 387.75 408.30 158.00 8.87 20919.73

7.96 7751.49 3.89 21.54 1259.09 163.05 200903 7.96 -6.46 713.90 838.00 208.05 89.67 246773.03

- 2227.76 47.73 15.01 220.01 217.70 200903 - 49.76 79.95 95.45 37.52 - 3899.66

36.14 24958.30 15.99 18.02 2708.00 14.31 200903 36.14 7.12 240.80 286.20 94.60 6.66 60329.96

98.03 54072.30 16.27 25.71 9269.60 31.10 200903 98.03 17.61 853.95 898.70 286.20 8.71 269252.57

CPS Rs. - Cash Profit per Shares, EPS Rs. - Earning Per Shares is calculated as Net Profit / Number of Equity Shares, Sales Rs. Mn - Sales ,Turnover & Income from operations for Latest Quarter, Sales Var% - Percentage Change in Sales for Latest Quarter over previous Corresponding Quarter Sales, OPM% - Operating Profit after interest expended as a % of Interest income & income from operation for Latest Quarter,NP Rs. Mn - Net Profit as reported after Tax for Latest Quarter,NP Var% - Percent-age Change in Net profit for Latest Quarter over Previous quarter Net profits, Ended - Trailing Twelve months Ended On, TTMEPS - Earning Per Shares is calculated as TTM Net Profit / Number of Equity Shares,TTMNP Var% - Percentage Change in TTM Net profit over Corresponding previous TTM Net profits, H52 - High Price during last 52 Week,L52 - Low Price during last 52 Week,PE - Market Price / TTM Earning Per Shares,Market cap Rs.Mn - Market Capitalisation is calculated as Latest price multiplied by No of Equity Shares outstanding.


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Dividend Yield

Company NameYear End

Price(Rs.)

(30/10)

Yield(%)

EPS(Rs.)

FV PE

TTM 52-WkHigh(Rs.)

52-WkLow(Rs.)

Year End

NPRs. ml

EPS(Rs.)

PE

Varun Shipping Company Ltd. 200903 53.50 9.35 8.19 10 6.54 200909 721.02 4.81 11.13 70.40 38.25

Navneet Publications (India) Ltd. 200903 38.90 6.68 6.18 2 6.29 200909 680.50 2.86 13.62 44.80 14.00

EID-Parry (India) Ltd. 200903 307.55 6.50 80.37 2 3.83 200909 1437.30 16.66 18.46 357.50 124.00

Shipping Corpn. Of India Ltd. 200903 130.40 4.98 22.21 10 5.87 200909 5398.10 12.75 10.23 153.60 67.00

NIIT Technologies Ltd. 200903 135.90 4.78 15.07 10 9.02 200909 710.70 12.10 11.23 154.25 42.50

Graphite India Ltd. 200903 63.05 4.76 12.81 2 4.92 200909 2261.40 13.23 4.77 70.90 20.55

Coromandel International Ltd. 200903 212.25 4.71 35.48 2 5.98 200909 3601.20 25.71 8.25 231.70 73.70

Indo Tech Transformers Ltd. 200903 266.20 4.66 36.70 10 7.25 200909 159.10 14.98 17.77 358.60 168.05

Karnataka Bank Ltd. 200903 130.45 4.60 21.93 10 5.95 200909 2288.10 18.80 6.94 174.35 55.15

IDBI Bank Ltd 200903 113.65 2.20 11.85 10 9.59 200909 9618.70 13.27 8.56 137.25 39.75

Tata Elxsi Ltd. 200903 155.45 4.50 18.66 10 8.33 200909 553.21 17.77 8.75 193.90 75.00

Indian Overseas Bank Ltd 200903 101.25 4.44 24.34 10 4.16 200909 11886.24 21.82 4.64 141.00 37.55

Andhra Bank Ltd 200903 112.95 3.98 13.46 10 8.39 200909 9440.93 19.47 5.80 124.70 37.00

Alok Industries Ltd. 200903 19.20 3.91 9.56 10 2.01 200909 2100.40 3.47 5.54 29.50 11.33

Federal Bank Ltd. 200903 240.15 2.08 29.26 10 8.21 200909 5555.10 32.50 7.39 270.00 110.50

PSL Ltd. 200903 139.20 3.59 20.12 10 6.90 200909 824.10 15.42 9.03 188.00 59.50

Allahabad Bank Ltd 200903 119.20 2.10 17.21 10 6.93 200909 12700.06 28.43 4.19 135.00 36.85

Bank Of Maharashtra Ltd 200903 43.05 3.48 8.71 10 4.94 200909 4464.60 10.37 4.15 51.55 18.90

Orient Paper & Inds. Ltd. 200903 43.35 3.46 10.37 1 4.18 200909 1797.53 9.32 4.65 61.25 16.90

Syndicate Bank Ltd 200903 86.90 3.45 17.49 10 4.97 200909 10024.10 19.20 4.52 105.40 37.65

Tata Investment Corpn. Ltd. 200903 434.50 3.45 54.06 10 8.04 200909 1861.38 45.02 9.65 511.00 182.15

Tata Steel Ltd. 200903 471.60 3.39 71.20 10 6.77 200909 36183.00 40.78 11.56 600.00 146.35

Mastek Ltd. 200906 297.65 3.36 35.56 5 8.60 200909 873.60 32.46 9.17 343.00 97.00

Puravankara Projects Ltd. 200803 96.15 2.08 9.88 5 9.73 200909 1025.80 4.81 20.00 136.50 25.60

JK Lakshmi Cement Ltd. 200903 122.85 3.26 29.19 10 4.21 200909 2857.80 46.71 2.63 149.45 31.00

Indian Bank Ltd 200903 155.95 3.21 28.98 10 5.55 200909 14484.22 33.70 4.63 195.70 63.75

Unichem Laboratories Ltd. 200903 255.50 3.13 34.60 5 7.38 200909 1224.72 33.96 7.52 283.05 132.15

Aftek Ltd. 200803 16.25 3.08 8.66 2 1.88 200909 -1025.05 -10.96 0.00 21.60 5.99

Electrosteel Castings Ltd. 200903 40.70 3.07 4.89 1 8.33 200909 2039.47 6.52 6.24 45.80 13.03

Kolte Patil Developers Ltd 200903 45.95 2.18 9.38 10 4.90 200909 290.41 3.85 11.93 64.90 18.50

Corporation Bank Ltd 200903 422.95 2.96 62.24 10 6.80 200909 10698.86 74.59 5.67 480.00 155.00

ICI India Ltd. 200903 572.00 2.80 77.38 10 7.39 200909 3078.00 83.16 6.88 600.00 360.00

Petronet LNG Ltd. 200903 64.70 2.70 6.91 10 9.36 200909 5334.24 7.11 9.10 82.40 29.65

Dalmia Cement (Bharat) Ltd. 200903 144.00 2.08 19.60 2 7.35 200909 1804.00 22.29 6.46 219.85 67.20

Dena Bank Ltd 200903 59.45 2.02 14.74 10 4.03 200909 4911.90 17.13 3.47 80.80 25.10

Gujarat Fluorochemicals Ltd. 200903 139.25 2.51 30.96 1 4.50 200909 2793.60 25.43 5.48 173.20 49.50

Ambuja Cements Ltd. 200812 88.95 2.47 9.21 2 9.66 200909 12261.30 8.05 11.05 111.50 50.15

Bank Of India Ltd 200903 333.60 2.40 57.14 10 5.83 200909 25902.00 49.32 6.76 474.70 179.60

Canara Bank Ltd 200903 341.20 2.34 50.55 10 6.75 200909 28861.60 70.39 4.85 395.00 144.25

Punjab National Bank Ltd 200903 853.95 2.34 98.03 10 8.71 200909 36304.00 115.14 7.42 898.70 286.20


Magnum

21

Sales

Company Name200909 Qtr 200809 Qtr

Change In Sales

% Change in Sales 200909 200809

Change In Net Profit

% Change in Net Profit

Shree Rama MultiTech 1824.21 163.87 1660.34 1013.21 -88.94 -61.97 -26.97 43.52Gammon Infra Project 439.11 74.54 364.57 489.09 35.69 46.70 -11.01 -23.58Orbit Corporation 1407.09 292.86 1114.23 380.47 252.00 57.79 194.21 336.06Artson Engg 336.26 87.41 248.85 284.69 18.64 2.20 16.44 747.27Zydus Wellness Ltd 648.70 172.80 475.90 275.41 85.10 15.30 69.80 456.21Sagar Cements 1280.83 351.49 929.34 264.40 112.16 -29.11 141.27 -485.30KIC Metalik 657.98 183.30 474.68 258.96 -17.86 -78.80 60.94 -77.34Dharan Sugars & Chem 1311.96 376.17 935.79 248.77 327.71 31.58 296.13 937.71Shree Glb Tradefin 1004.67 321.42 683.25 212.57 0.47 -3.99 4.46 -111.78MVL 505.95 169.97 335.98 197.67 41.28 25.22 16.06 63.68Horizon Infra 280.00 97.52 182.48 187.12 14.41 5.03 9.38 186.48Jindal Drilling 3366.70 1219.90 2146.80 175.98 205.70 65.50 140.20 214.05ITI 7950.20 3107.40 4842.80 155.85 -781.00 -1548.80 767.80 -49.57Kalpena Plastiks 218.93 86.97 131.96 151.73 0.18 0.34 -0.16 -47.06Diamines & Chemicals 200.23 82.28 117.95 143.35 64.61 9.79 54.82 559.96Lanco Infratech 14749.20 6388.05 8361.15 130.89 1273.80 398.75 875.05 219.45Manappuram Gen Fin 864.11 376.56 487.55 129.48 184.58 66.72 117.86 176.65Ausom Enterprises 217.51 95.24 122.27 128.38 -0.63 -14.91 14.28 -95.77Marg Ltd. 2058.20 908.80 1149.40 126.47 200.70 106.20 94.50 88.98Rei Agro 9697.92 4327.39 5370.53 124.11 489.16 181.37 307.79 169.70Rishabhdev Technocab 215.47 96.24 119.23 123.89 15.34 6.97 8.37 120.09Birla Cotsyn 713.65 324.18 389.47 120.14 15.45 2.22 13.23 595.95Guj State Petronet 2547.60 1185.93 1361.67 114.82 1100.55 283.81 816.74 287.78Educomp Solutions 2068.68 981.34 1087.34 110.80 504.05 253.89 250.16 98.53Mahindra Lifespace 635.20 303.20 332.00 109.50 173.40 112.00 61.40 54.82Malar Hospitals 153.39 74.48 78.91 105.95 9.23 3.56 5.67 159.27Petronet LNG 34066.60 16549.20 17517.30 105.85 1206.79 1033.65 173.14 16.75Jeypore Sugar 643.66 320.70 322.96 100.71 79.52 -59.22 138.74 -234.28Vinyl Chemicals 289.20 144.20 145.00 100.56 5.20 -8.40 13.60 -161.91AK Capital 374.56 190.49 184.07 96.63 120.14 60.23 59.91 99.47Bajaj Holding 3075.60 1601.10 1474.50 92.09 2989.20 1512.50 1476.70 97.63Modern India 793.89 414.83 379.06 91.38 92.32 25.86 66.46 257.00Geojit BNP Paribas 715.10 378.60 336.50 88.88 134.70 79.20 55.50 70.08Sakthi Sugars 4148.41 2219.55 1928.86 86.90 433.39 21.68 411.71 1899.03J Kumar Infraproject 1414.42 768.94 645.48 83.94 198.31 62.10 136.21 219.34Bafna Pharma 168.80 92.97 75.83 81.56 12.38 -2.37 14.75 -622.36Krypton Industries 94.82 53.29 41.53 77.93 11.68 5.54 6.14 110.83Suryachakra 537.70 302.92 234.78 77.51 6.31 4.35 1.96 45.06Spice Mobiles 2200.00 1258.90 941.10 74.76 164.00 -62.80 226.80 -361.15Hind Dorr-Oliver 2029.60 1164.30 865.30 74.32 156.40 79.80 76.60 95.99Tasty Bite Eatables 167.60 96.39 71.21 73.88 14.69 -1.43 16.12 -1127.27Datamatics Global 334.70 193.09 141.61 73.34 68.32 52.75 15.57 29.52Mukand Engineers 201.50 117.40 84.10 71.64 16.80 6.90 9.90 143.48Assoc Stone 238.33 139.63 98.70 70.69 -14.91 -29.38 14.47 -49.25Wim Plast 287.36 168.79 118.57 70.25 33.50 8.54 24.96 292.27Compucom Soft 176.72 104.02 72.70 69.89 28.39 29.37 -0.98 -3.34Shiv-Vani Oil 2637.63 1556.77 1080.86 69.43 216.68 299.47 -82.79 -27.65AMD Industries 204.29 120.86 83.43 69.03 9.25 -0.57 9.82 -1722.81Deep Industries 143.88 85.43 58.45 68.42 42.16 30.11 12.05 40.02Sumeet Inds 714.65 424.58 290.07 68.32 27.33 7.51 19.82 263.92

Rs. in million

Net Sales Net Profit


Magnum

22

High PE

Company Name Year End Price (30/10) Rs. EPS FV PECairn India Ltd. 200903 263.50 0.29 10 921.40BF Utilities Ltd. 200809 784.60 1.23 5 638.74Golden Tobacco Ltd. 200903 82.10 0.14 10 576.81Marksans Pharma Ltd. 200903 4.86 0.01 1 486.00JM Financial Ltd. 200903 41.90 0.11 1 394.28Lok Housing & Constructions Ltd. 200903 32.55 0.10 10 321.92Godrej Industries Ltd. 200903 178.50 0.58 1 305.58GVK Power & Infrastructure Ltd. 200903 44.45 0.15 1 297.63Entertainment Network (India) Ltd. 200903 179.25 0.61 10 293.41Max India Ltd. 200903 178.15 0.98 2 181.79Radico Khaitan Ltd. 200903 113.25 0.64 2 176.95Aptech Ltd. 200812 181.60 1.02 10 174.62Future Capital Holdings Ltd 200903 236.10 1.47 10 161.13Reliance Natural Resources Ltd. 200903 63.65 0.43 5 148.77KEI Industries Ltd. 200903 30.15 0.20 2 147.35Kalyani Steels Ltd. 200903 109.65 0.76 10 144.80IRB Infrastructure Developers Ltd 200903 231.40 1.73 10 134.09Reliance Power Ltd 200903 138.55 1.04 10 133.42Edelweiss Capital Ltd 200903 465.70 3.52 5 132.46Karuturi Global Ltd 200903 13.35 0.11 1 119.70Bajaj Finserv Ltd 200903 311.65 2.86 5 109.02Jai Corp Ltd. 200903 164.90 1.58 1 104.37Nirlon Ltd. 200903 52.15 0.50 10 104.30Strides Arcolab Ltd. 200812 156.55 1.53 10 102.20Firstsource Solutions Ltd. 200903 34.45 0.35 10 97.65IVR Prime Urban Developers Ltd. 200903 123.05 1.34 10 91.94Kotak Mahindra Bank Ltd. 200903 713.90 7.99 10 89.35Alembic Ltd. 200903 44.80 0.53 2 84.40Advanta India Ltd. 200812 483.60 5.85 10 82.67Escorts Ltd. 200809 106.15 1.31 10 81.12Mindtree Ltd 200903 600.90 7.90 10 76.09Hindustan Oil Exploration Company Ltd. 200903 290.00 4.10 10 70.73Shree Renuka Sugars Ltd. 200809 185.75 2.70 1 68.76KSK Energy Ventures Ltd. 200903 195.70 2.99 10 65.37Geojit BNP Paribas Financial Services Ltd 200903 37.90 0.65 1 58.32Reliance Industrial Infrastructure Ltd. 200903 859.95 14.88 10 57.78Motherson Sumi Systems Ltd. 200903 112.15 1.96 1 57.22Sundram Fasteners Ltd. 200903 47.20 0.83 1 56.98UTV Software Communications Ltd. 200903 420.15 7.55 10 55.65Aditya Birla Nuvo Ltd. 200903 790.30 14.46 10 54.64Adani Enterprises Ltd. 200903 717.15 13.24 1 54.18

EPS Earning Per Shares is calculated as Net Profit / Number of Equity Shares (Rs)FV Latest Face values of equity Shares (Rs)PE Market Price / Trailing Twelve Months Earning Per Shares


Magnum

23

Low PE

EPS Earning Per Shares is calculated as Net Profit / Number of Equity Shares (Rs)FV Latest Face values of equity Shares (Rs)PE Market Price / Trailing Twelve Months Earning Per Shares

Company Name Year End Price (30/10) Rs. EPS FV PEPrithvi Information Solutions Ltd. 200803 61.20 46.27 10 1.32Amtek India Ltd. 200806 48.60 30.93 2 1.57Aftek Ltd. 200803 16.25 8.66 2 1.88Indage Vintners Ltd 200803 53.30 27.36 10 1.95Alok Industries Ltd. 200903 19.20 9.56 10 2.01Great Eastern Shipping Company Ltd. 200903 240.50 90.93 10 2.64Gujarat State Fertilizers & Chemicals Ltd. 200903 178.40 62.57 10 2.85Bharati Shipyard Ltd. 200903 157.55 48.36 10 3.26EID-Parry (India) Ltd. 200903 307.55 80.37 2 3.83Cranes Software Intl. Ltd. 200903 38.35 9.80 2 3.91Dena Bank Ltd 200903 59.45 14.74 10 4.03Kesoram Industries Ltd. 200903 339.95 83.83 10 4.06Indian Overseas Bank Ltd 200903 101.25 24.34 10 4.16Orient Paper & Inds. Ltd. 200903 43.35 10.37 1 4.18JK Lakshmi Cement Ltd. 200903 122.85 29.19 10 4.21Gujarat Alkalies & Chemicals Ltd. 200903 114.70 26.18 10 4.38Gujarat Fluorochemicals Ltd. 200903 139.25 30.96 1 4.50Heidelberg Cement India Ltd 200812 35.95 7.89 10 4.56Indiabulls Securities Ltd 200803 46.20 9.81 2 4.71Tamil Nadu Newsprint & Papers Ltd. 200903 73.60 15.52 10 4.74Kolte Patil Developers Ltd 200903 45.95 9.38 10 4.90Graphite India Ltd. 200903 63.05 12.81 2 4.92Bank Of Maharashtra Ltd 200903 43.05 8.71 10 4.94Syndicate Bank Ltd 200903 86.90 17.49 10 4.97UCO Bank Ltd 200903 50.60 10.15 10 4.99Lakshmi Energy & Foods Ltd. 200809 126.65 25.12 2 5.01Genus Power Infrastructures Ltd. 200903 163.00 32.88 10 5.01IFCI Ltd. 200903 44.20 8.60 10 5.163I Infotech Ltd. 200903 83.00 14.12 10 6.09ICSA (India) Ltd. 200903 179.20 33.69 2 5.32Man Industries (India) Ltd. 200903 47.70 8.90 5 5.36Geodesic Ltd. 200903 112.35 20.76 2 5.41Indian Bank Ltd 200903 155.95 28.98 10 5.55ABG Shipyard Ltd. 200903 186.55 33.60 10 5.55Sujana Towers Ltd. 200809 53.55 9.65 5 5.56MIC Electronics Ltd. 200806 37.20 6.54 2 5.69Ratnamani Metals & Tubes Ltd. 200903 90.10 15.82 2 5.69JK Cement Ltd. 200903 118.00 20.36 10 5.80Bank Of India Ltd 200903 333.60 57.14 10 5.83Nava Bharat Ventures Ltd. 200903 349.05 58.23 2 5.84Shipping Corpn. Of India Ltd. 200903 130.40 22.21 10 5.87


Magnum

24

Price Trends

Date Price Rs.30-Oct-09 16000.6530-Sep-09 15630.0031-Aug-09 15200.0030-Jul-09 14755.9030-Jun-09 14592.5030-May-09 14958.1529-Apr-09 14543.3530-Mar-09 15155.0028-Feb-09 15400.0030-Jan-09 14200.0030-Dec-08 13500.0028-Nov-08 13075.0031-Oct-08 11865.90

Silver

Crude

Gold

Currency

Date Price Rs.30-Oct-09 26441.7530-Sep-09 26100.0031-Aug-09 23681.0030-Jul-09 22137.4030-Jun-09 22364.1030-May-09 23364.0029-Apr-09 21100.0030-Mar-09 21978.0028-Feb-09 21500.0030-Jan-09 19588.3030-Dec-08 17789.7028-Nov-08 17314.4531-Oct-08 16500.00

Date Price Rs30-Oct-09 47.3230-Sep-09 47.9431-Aug-09 48.9130-Jul-09 48.3830-Jun-09 48.1031-May-09 47.1330-Apr-09 49.7330-Mar-09 51.1827-Feb-09 51.3330-Jan-09 48.8330-Dec-08 48.3228-Nov-08 49.5830-Oct-08 49.26

Date Price $30-Oct-09 77.4630-Sep-09 69.4531-Aug-09 69.9030-Jul-09 66.4630-Jun-09 69.4129-May-09 66.1230-Apr-09 50.7630-Mar-09 48.9527-Feb-09 43.6030-Dec-08 39.1428-Nov-08 53.9330-Oct-08 65.40

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Sectoral Mutual Fund Analysis

UTI-Banking Sector Fund (G)UTI-Banking Sector Fund (Growth) is an UTI Asset Management Company Private Limited managed open-ended, equity growth fund.The fund was launched on August 1, 2005 and its current net asset as on September 30, 2009 was Rs 125.89 crore. The benchmark index of the fund is CNX Bank and the custodian of the fund is Stock Holding Corporation of India Limited.The current net asset value (NAV) of the fund as on October 30, 2009 was Rs 30.92; while the 52 week high NAV was Rs 34.60 on October 16, 2009 and the 52 week low NAV for the scheme was Rs 13.74 on March 9, 2009. The minimum investment to the fund is Rs 5000 and additional investments can be made in multiples of Rs 1000.The investment objective of the fund is to provide capital appreciation through investments in the stocks of the companies/institutions engaged in the banking and financial services activities.The top five holdings of the fund are:

Being a purely banking and financial sector scheme the fund has the maximum contribution of 81.98% from the banking sector followed by finance with contribution of 6.07%.As far as market capitalization-wise companies are concerned, the scheme’s portfolio consists of 91.91% from Large-cap, 6.47% from Mid-cap and 0.67% from Small-cap companies.As on September 30, 2009 the major company that was included into the scheme was Dena Bank with a holding of 0.67%, while the major company that was recently excluded from the portfolio was Karnataka Bank with a holding of 0.17%.

The fund has given a return of 17.83% since inception and a return of 92.89% in last one year, while the category average in the same period has been 36.67% and 83.52% respectively.

OutlookUTI-Banking Sector Fund (Growth) is an open-ended scheme of UTI Asset Management Company being managed by Arun Khurana and Anoop Bhaskar. The scheme is one of the best performing schemes in its category. The fund is having all the good banks in its portfolio, who have been good performer during the last rally, that’s why the fund has given a return of 93% in last one year. The fund is having a high turnover ratio of 70.31 times that means that the fund managers are pretty aggressive in managing the portfolio. The fund has been performing well since its inception and as the banking sector is indicating its outlook is likely to remain healthy for quiet a good time and so will be the schemes performance.

Duration 1 Week % 1 Mth % 3 Mth % 6 Mth % 1 Year % 3 Year % 5 Year % Since Inc. %Scheme Return % -8.03 -4.95 11.54 55.93 92.89 17.75 NA 17.83Category Avg % -7.09 -3.22 12.25 58.71 83.52 21.62 33.06 36.67

Company ICICI Bank SBI HDFC

Bank Axis Bank

Central Bank of

India% Holding 18.02 15.87 12.85 8.61 6.38

Last one year NAV Graph

Market cap-wise Allocation StyleAverage Mkt Cap (Rs Cr) 30365.26Market Capitalization % of Portfolio Large 91.91Mid 6.47Small 0.67Note: Large-Cap = 5000 Crs. and above, Mid-Cap = 2000 Crs. to 5000 Crs. and Small-Cap = less than 2000 Crs.

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Magnum

26

MF Scorecard

Scheme NameNAV(Rs.)

InceptionDate

Absolute % CAGR % AUM

(Rs. cr)1 M 3 M 6 M 1 Y 3 Y 5 Y Since

Inception

Equity - DiversifiedBirla SL India Opportunities(G) 44.86 21-Jan-95 -2.56 13.14 65.78 79.94 -2.74 13.06 6.69Birla SL Special Situations(G) 8.66 15-Jan-08 -6.83 4.57 44.02 73.68 - - -8.49DSPBR Opportunities(G) 68.62 10-Apr-00 -3.53 7.57 49.90 81.22 9.66 26.44 22.57Fidelity Equity(G) 27.03 19-Apr-05 -3.68 7.94 47.99 77.05 12.09 - 24.97ICICI Pru Dynamic(G) 81.89 18-Oct-02 -2.32 9.80 44.16 78.00 11.34 30.89 35.11Kotak Opportunities(G) 38.27 25-Aug-04 -4.23 6.07 51.22 81.42 13.08 29.55 29.83SBI Magnum Comma(G) 20.38 25-Jul-05 -5.34 5.76 43.42 75.72 9.61 - 18.33SBI Magnum Multicap(G) 15.91 16-Sep-05 -4.04 5.85 44.37 69.19 2.28 - 12.44Reliance Equity Oppor-Ret(G) 24.81 7-Mar-05 -4.42 13.34 63.89 91.81 7.58 - 21.87Reliance Natural Resources(G) 9.56 30-Jan-08 -3.74 4.48 38.63 73.57 - - -3.49

Equity - ELSSBirla SL Tax Relief '96(D) 77.88 29-Mar-96 -1.43 1.98 11.32 15.04 2.65 14.45 28.95DSPBR Tax Saver(G) 13.65 26-Dec-06 -3.22 9.53 53.22 79.33 - - 10.41Fidelity Tax Advantage(G) 16.51 31-Jan-06 -3.51 8.48 48.98 78.08 12.68 - 14.34Franklin India Taxshield(G) 160.58 10-Apr-99 -2.38 7.27 43.06 69.20 9.45 24.00 30.06HDFC Long Term Adv(G) 105.20 27-Dec-00 -2.83 7.43 54.03 73.85 6.24 21.47 30.54Principal Personal Tax saver(G) 81.73 1-Jan-96 -1.61 2.67 14.36 19.87 9.02 18.51 25.27Reliance Tax Saver (ELSS)(G) 15.91 23-Aug-05 -3.96 5.46 44.74 68.85 5.37 - 11.97Sundaram Taxsaver(G) 13.27 31-Jan-05 -1.90 2.38 12.84 16.63 6.38 16.54 15.18

Equity - Large-capBirla SL Equity(G) 223.08 27-Aug-98 -3.82 7.40 53.37 78.72 10.31 28.21 32.00Birla SL Frontline Equity(G) 71.93 30-Aug-02 -3.64 7.36 50.73 86.03 14.98 28.59 33.35DSPBR Equity(D) 49.93 15-Apr-97 -2.02 5.38 24.60 32.91 9.77 19.15 19.01DSPBR Top 100 Equity(G) 83.14 21-Feb-03 -4.12 5.89 42.90 70.48 16.20 29.55 38.55JM Large Cap(G) 16.35 9-Jun-04 -9.73 0.43 24.45 28.00 0.62 7.79 9.65Kotak 30(G) 87.25 21-Dec-98 -3.72 7.10 41.41 64.75 10.96 27.27 34.25Magnum Equity(D) 31.06 30-Nov-90 -2.08 2.62 21.55 33.74 7.21 15.03 9.57Reliance Equity-Ret(G) 14.00 7-Mar-06 -6.38 1.84 36.61 53.24 8.17 - 9.65Reliance Vision-Ret(G) 223.84 7-Oct-95 -5.85 6.92 48.43 74.76 9.53 26.46 24.72Sundaram BNPP Growth(G) 78.24 15-Feb-97 -5.98 4.27 45.92 56.94 6.52 19.98 18.88

Equity - Mid-capBirla SL Midcap(G) 92.23 1-Oct-02 -1.20 13.78 80.63 109.71 14.56 29.34 36.86ICICI Pru Emerging S.T.A.R.(G) 26.31 25-Sep-04 -0.53 13.65 69.96 90.04 1.13 21.32 21.32JM Mid Cap(G) 23.51 9-Jun-04 -5.70 8.74 66.42 118.34 2.60 17.06 17.37Kotak Midcap(G) 19.17 28-Jan-05 -2.65 11.12 59.69 81.43 1.88 - 14.73Reliance Growth-Ret(G) 376.28 7-Oct-95 -4.34 8.18 54.92 80.31 14.61 33.05 29.41Reliance Reg Savings-Equity(G) 24.56 10-Jun-05 -4.36 7.26 59.11 90.47 18.24 - 22.66Sundaram BNPP S.M.I.L.E(G) 28.57 21-Jan-05 -2.57 15.15 79.45 116.70 16.97 - 24.71Sundaram BNPP Select Midcap(G) 117.52 19-Jul-02 -3.43 12.12 77.55 97.10 10.54 32.29 40.64

Returns as of 30th October, 2009


Magnum

27

MF Scorecard

Scheme NameNAV(Rs.)

InceptionDate



Inception

Equity - Small-capDSPBR Micro-Cap(G) 10.31 25-May-07 -4.31 16.49 83.67 83.29 - - 1.15HSBC Small Cap(G) 9.11 3-Mar-08 -2.84 12.46 60.76 70.82 - - -6.52ICICI Pru Child Care Plan-Gift Plan 43.93 6-Aug-01 -2.44 9.77 53.01 65.48 5.06 15.97 19.86Sundaram BNPP Select Small Cap(G) 10.30 24-Jan-07 -5.63 14.22 84.20 92.86 - - 1.26

Equity - Banks & Fin SrvsJM Fin Services Sector(G) 8.50 20-Nov-06 -7.21 1.67 34.63 17.43 -5.44Reliance Banking(G) 71.91 21-May-03 -1.47 16.40 64.52 98.63 25.50 33.06 35.78

Equity - ContriarianJM Contra(G) 5.17 14-Aug-07 -4.79 6.03 43.58 36.84 - - -26.43Kotak Contra(G) 17.75 1-Jul-05 -4.03 6.79 44.91 72.15 9.28 - 14.41Tata Contra(G) 14.11 25-Oct-05 -2.87 10.54 58.25 96.69 6.74 - 9.08UTI-Contra(G) 12.29 22-Mar-06 -4.58 3.45 42.08 72.84 8.31 - 5.01

Equity - Dividend YieldBirla SL Dividend Yield Plus(G) 63.91 7-Feb-03 -1.24 13.32 61.76 91.93 14.92 22.14 31.73Principal Dividend Yield(G) 18.32 27-Sep-04 -1.98 7.96 50.91 68.30 4.48 12.90 12.78Tata Dividend Yield(G) 24.48 27-Oct-04 -0.32 11.13 55.31 87.18 12.90 - 19.87UTI-Dividend Yield(G) 24.47 3-May-05 -2.74 9.00 45.83 74.02 16.70 - 22.35

Equity - Energy / PowerReliance Diver Power Sector-Ret(G) 72.52 15-Apr-04 -2.75 8.16 55.06 91.17 31.64 45.66 43.48Sundaram BNPP Energy Oppor(G) 7.86 11-Dec-07 -7.66 5.75 51.41 67.50 -13.30

Equity - FMCGFranklin FMCG(G) 48.29 31-Mar-99 8.93 9.73 42.93 66.42 10.66 26.36 16.38ICICI Pru FMCG(G) 49.67 5-Mar-99 6.18 10.80 49.79 67.12 8.54 30.97 16.34Sbi Magnum FMCG 19.06 3-Jul-99 3.09 8.20 27.40 43.47 6.73 16.54 9.33

Equity - GlobalFortis China-India(G) 8.02 1-Oct-07 -2.68 2.47 33.60 71.19 - - -10.26Birla SL Intl. Equity-A(G) 8.68 16-Oct-07 -0.99 6.67 19.62 25.58 - - -6.85Birla SL Intl. Equity-B(G) 8.28 16-Oct-07 -3.86 5.40 38.99 54.49 - - -8.99DSPBR Natural Res & New Energy-Reg(G) 11.62 31-Mar-08 -3.25 9.33 47.03 85.59 - - 10.44Fidelity International Oppor(G) 10.73 30-Apr-07 -2.63 10.05 48.75 71.49 - - 2.96Franklin Asian Equity(G) 9.77 18-Dec-07 -3.12 0.10 27.46 61.15 - - 1.60Mirae Asset Global Commodity Stock(G) 11.20 23-Jul-08 -0.42 12.01 49.08 92.54 - - 9.82Templeton India Equity Income(G) 15.77 20-Apr-06 -3.58 6.09 50.55 91.77 12.42 - 14.10

Equity - Pharma & HCFranklin Pharma(G) 41.64 31-Mar-99 3.03 24.44 68.66 94.27 14.06 17.45 15.24Reliance Pharma(G) 35.90 26-May-04 -0.09 26.57 79.08 107.00 22.12 26.09 26.71



Magnum

28

MF Scorecard

Scheme NameNAV(Rs.)

InceptionDate



Inception

Equity - InfrastructureBirla SL Infrastructure-A(G) 14.80 18-Feb-06 -6.03 4.67 56.78 90.88 9.56 - 11.42

DSPBR India T.I.G.E.R-Reg(G) 40.36 20-May-04 -5.60 2.57 40.25 77.26 10.47 29.19 29.70

ICICI Pru Infrastructure(G) 26.34 10-Aug-05 -5.96 3.25 31.37 73.83 15.70 - 25.06

Sundaram BNPP CAPEX Oppor(G) 21.52 5-Sep-05 -5.48 5.82 71.29 68.36 10.21 - 20.62

Equity - MediaReliance Media & Entertainment(G) 22.71 27-Sep-04 -8.11 13.32 46.89 65.73 4.39 17.85 17.56

Equity - MNCBirla SL MNC(G) 150.43 22-Apr-94 1.15 14.41 57.04 90.85 8.20 21.17 15.59

Equity - QuantReligare AGILE(G) 5.63 23-Nov-07 -2.93 5.43 19.53 43.12 - - -24.57

Reliance Quant Plus-Ret(G) 10.75 18-Apr-08 -6.86 2.76 38.18 74.66 - - 3.67

Equity - Service IndsICICI Pru Services Inds(G) 14.27 18-Nov-05 -4.93 5.16 46.36 68.63 2.73 - 9.50

Principal Services Inds(G) 12.84 31-Jan-06 -5.03 5.42 45.25 79.04 5.06 - 7.08

Tata Service Inds(G) 21.88 10-Mar-05 -3.87 11.53 77.84 98.34 8.51 - 18.68

Equity - TECkBirla SL New Millennium(G) 16.56 15-Jan-00 -8.25 6.98 48.92 58.12 -2.10 16.26 0.83

DSPBR Technology.com(G) 27.11 10-Apr-00 -5.12 13.07 68.67 78.38 10.46 24.07 11.11

Franklin Infotech(G) 46.75 22-Aug-98 -1.91 13.39 60.48 64.81 -2.30 12.76 15.54

ICICI Pru Technology(G) 12.09 28-Jan-00 -2.34 15.25 66.30 83.71 -1.37 15.26 1.98

JM Telecom Sector(G) 7.31 20-Nov-06 -24.49 -22.15 11.72 23.24 - - -10.26

Sbi Magnum IT 16.65 3-Jul-99 -2.88 7.83 36.94 32.71 -3.55 12.34 9.15

Equity - Sensex Linked IndexFranklin India Index-BSE Sensex(G) 44.78 27-Aug-01 -7.08 3.34 39.43 74.42 7.26 22.55 20.34

HDFC Index-Sensex Plus(G) 186.70 10-Jul-02 -6.03 6.61 43.52 72.21 10.47 25.32 27.13

HDFC Index-Sensex(G) 133.00 10-Jul-02 -7.21 3.08 37.50 67.69 3.07 19.72 21.35

UTI-SUNDER 494.65 11-Jul-03 -7.02 3.24 35.24 73.14 8.79 22.14 26.08

FOF - DebtBirla SL Asset Alloc-Cons(G) 18.81 23-Jan-04 -0.37 3.65 14.40 22.20 10.95 12.51 11.57

Floating Rate - Long TermBirla SL FRF-LT(G) 15.33 4-Jun-03 0.67 2.18 4.07 8.31 8.65 7.40 6.89

Sundaram BNPP Flexible-FIP-Reg(G) 13.58 24-Dec-04 0.43 1.75 3.22 6.93 7.24 - 6.52



Magnum

29

MF Scorecard

Scheme NameNAV(Rs.)

InceptionDate



Inception

Equity - Nifty Linked IndexBirla SL Index(G) 47.00 17-Sep-02 -7.55 2.87 34.98 73.34 6.39 20.53 24.28SBI Magnum Index(G) 40.23 16-Jan-02 -7.35 2.96 35.43 72.22 5.05 19.48 20.09Nifty BeES 472.74 18-Dec-01 -6.94 3.08 34.25 70.52 8.33 22.05 21.94Reliance Banking ETF 860.97 30-May-08 -4.25 13.99 66.18 98.95 - - 39.59

Arbitrage Funds ICICI Pru Eq & Deriv-Income Opt-Ret(G) 12.53 7-Dec-06 0.48 1.70 3.21 6.35 - - 8.14SBI Arbitrage Opportunities(G) 12.49 13-Oct-06 0.63 1.35 2.44 5.46 - - 7.65UTI-SPrEAD(G) 13.22 22-Jun-06 0.16 1.16 3.14 8.27 8.96 - 8.71

Balanced - Equity OrientedKotak Balance 21.80 25-Nov-99 -1.93 -0.24 12.96 20.52 4.85 15.63 13.87Sundaram BNPP Balanced(G) 40.96 25-May-00 -4.38 6.48 42.62 59.89 9.46 17.44 16.08

Balanced - Debt-OrientedHDFC Children's Gift - Savings 19.22 2-Feb-01 0.77 4.63 12.14 22.28 8.21 8.67 8.64ICICI Pru Child Care Plan-Study Plan 24.79 6-Aug-01 -0.32 2.08 14.53 21.92 9.52 11.40 11.75

FOF - EquityBirla SL Asset Alloc-Aggr(G) 28.75 23-Jan-04 -1.38 8.60 44.30 65.82 13.69 22.47 20.08FT India Dynamic PE Ratio FOFs(G) 34.59 31-Oct-03 -0.49 3.37 27.85 54.82 12.86 23.38 22.78ICICI Pru Advisor-Very Agressive(G) 28.75 28-Nov-03 -4.71 4.82 35.36 65.34 6.67 22.08 18.44Kotak Equity FOF(G) 31.22 19-Jul-04 -3.53 6.56 46.69 75.86 9.23 23.30 24.29

FOF - OverseasICICI Pru Indo Asia Eq-Ret(G) 8.83 21-Sep-07 -3.92 6.51 47.41 86.76 - - -5.42Sundaram BNPP Global Advantage(G) 9.97 31-Jul-07 -1.25 9.29 31.87 63.55 - - -0.15

Commodities - GoldGold BeES 1575.53 23-Feb-07 1.85 8.48 9.50 31.14 - - 21.24Kotak GOLD ETF 1573.91 4-Jul-07 2.82 8.12 9.13 30.66 - - 29.41DSPBR World Gold-Reg(G) 14.02 23-Aug-07 -2.97 8.90 20.42 99.70 - - 9.83Reliance Gold ETF 1531.38 1-Nov-07 1.86 8.12 9.25 30.35 - - 22.91UTI-Gold ETF(G) 1573.69 16-Mar-07 1.86 8.12 9.29 30.71 - - 21.75

Floating Rate - Short TermBirla SL FRF-ST(G) 14.86 4-Jun-03 0.40 1.21 2.49 6.03 7.53 6.83 6.38ICICI Pru FRF-Option A(G) 13.93 28-Mar-04 0.55 1.60 3.46 7.02 7.52 6.72 6.66LICMF FRF-STP(G) 14.80 29-Mar-04 0.45 1.34 2.88 7.22 8.56 7.61 7.28Magnum FRF-STP(G) 13.90 14-Jul-04 0.42 1.06 2.27 8.85 7.17 6.52 6.42

Gilt - Long TermBirla SL Gilt Plus-PF(G) 23.86 11-Oct-99 1.08 0.83 -1.11 6.63 5.24 5.38 9.03ICICI Pru Gilt-Invest(G) 31.21 9-Aug-99 -0.15 -1.83 -1.39 11.07 12.53 9.65 11.77



Magnum

30

MF Scorecard

Scheme NameNAV(Rs.)

InceptionDate



Inception

Gilt - Short TermBirla SL Gilt Plus-Liquid(G) 20.59 11-Oct-99 0.20 0.67 1.47 4.14 5.18 5.34 7.44

Liquid FundsBirla SL Cash Mgr-Ret(G) 22.10 14-May-98 0.32 1.04 2.26 6.04 7.40 6.67 7.16

Birla SL Cash Plus-Ret(G) 24.14 13-Jun-97 0.29 0.93 2.04 5.47 7.29 6.65 7.37

Kotak Liquid(G) 17.60 6-Oct-00 0.28 0.92 2.01 5.53 6.95 6.30 6.42

LICMF Liquid(G) 16.57 13-Mar-02 0.39 1.21 2.54 6.72 7.94 7.21 6.83

Magnum InstaCash-Cash(G) 20.13 19-May-99 0.27 0.93 2.03 5.81 7.31 6.64 6.90

Reliance Liquid-Cash(G) 14.84 4-Dec-01 0.20 0.58 1.07 3.06 5.33 5.26 5.12

UTI-Money Mkt(G) 2532.63 23-Apr-97 0.31 1.05 2.36 6.36 7.51 6.84 7.70

Ultra Short Term PlansBirla SL Savings-Ret(G) 16.82 26-Nov-01 0.35 1.07 2.34 6.25 7.48 6.97 6.79

DSPBR Money Mgr-Reg(G) 1249.42 18-Jul-06 0.28 0.78 1.73 6.14 7.10 - 7.09

ICICI Pru Flexible Income(G) 16.80 21-Sep-02 0.40 1.21 2.58 6.70 8.11 7.15 7.59

Principal Ultra ST-Reg(G) 11.62 6-Nov-07 0.37 1.11 2.43 6.55 - - 7.85

Long & Medium Term IncomeReliance Reg Savings-Debt(G) 12.26 10-Jun-05 0.69 1.94 2.18 6.80 5.54 - 4.69

UTI-Invest Bond-I(G) 10.39 31-Dec-07 -0.15 -0.31 -0.69 -0.30 - - 0.02

Monthly Income PlansBirla SL MIP II-Savings 5(G) 16.16 30-Apr-04 0.33 0.97 5.65 13.84 12.35 9.79 9.22

Birla SL MIP II-Wealth 25(G) 16.16 30-Apr-04 -0.18 1.88 10.60 31.50 6.69 9.45 9.22

Birla SL MIP(G) 23.96 10-Nov-00 0.24 1.50 5.71 23.45 8.20 8.87 10.26

Birla SL Monthly Income(G) 32.97 14-Jul-99 0.28 2.00 8.92 26.14 9.91 10.41 12.12

DBS Chola MIP(G) 18.21 1-Aug-98 -0.94 1.45 7.63 13.12 11.72 10.18 4.42

DSPBR Savings Mgr-Agg(G) 17.67 20-May-04 0.29 2.72 12.24 21.07 9.73 11.08 11.21

ICICI Pru Income Multiplier(G) 17.47 5-Mar-04 -1.03 1.01 10.23 31.61 7.68 11.31 10.50

Magnum Income Plus-Savings(G) 10.59 22-Oct-03 0.10 0.30 0.53 1.35 0.44 1.13 0.92

UTI-MIS(G) 17.82 11-Oct-02 0.26 2.31 8.72 20.87 9.29 9.26 8.54

Short Term Income PlansBirla SL ST-Ret(G) 16.35 19-Apr-02 0.35 1.07 2.28 6.07 8.21 7.09 6.74

DSPBR ST(G) 15.44 4-Sep-02 0.46 1.01 1.47 5.57 6.71 6.44 6.25

Sundaram BNPP Select Debt-STAP(G) 15.08 30-Aug-02 0.12 0.33 0.71 2.41 5.93 5.76 5.91

Real Estate SecuritiesICICI Pru Real Estate Sec-Ret(G) 9.99 14-Dec-07 - 4.28 9.97 16.18 - - -0.04



Magnum

31

Check your eligibility for a home loanHome loansPossessing a home is a cherished desire for any common person, but in today’s fast moving life and regularly esca-lating prices it is very difficult to own a house by paying a huge amount at one time, so we require a loan to fulfill our dream, a dream where one can relax after coming from the day’s long hectic schedule, a dream where one can spend time with the family.Home Loan is a secured loan offered against the secu-rity of a house/property, which is funded by the bank, the property could be a personal property or a commercial one. The Home Loan is a loan taken by a borrower from the bank, which is issued against the property/security in-tended to be bought by the borrower giving the banker a conditional ownership over the property i.e. if the borrower fails to pay back the loan, the banker can retrieve the lent money by selling the property.Types of Home LoanThere are different types of Home Loans available in the market to cater to the borrower’s different needs.

• Home Purchase Loan: This is the basic type of a Home Loan, which has the purpose of purchasing a new house.

• Home Improvement Loan: This type of Home Loan is for the renovation or repair of the home which is al-ready bought

• Home Extension Loan: This type of loan serves the purpose when the borrower wants to extend or expand an existing home, like adding an extra room, etc.

• Home Conversion Loan: It is that loan wherein the borrower has already taken a home loan to finance his current home, but now wants to move to another home. The Conversion Home Loan helps the borrower to transfer the existing loan to the new home that re-quires extra funds, so the new loan pays the previous loan & fulfills the money required for new home.

• Bridge Loan: This type of loan helps finance the new home of the borrower when he wants to sell the exist-ing home, this is normally a short term loan to the bor-rower & helps during the interim period when he wants to sell the old home & want to buy a new one, It is given till the time a buyer is found for the old home.

• Home Construction Loan: This type of loan taken when the borrower wants to construct a new home.

Documents required in Home LoanFollowing documents are required by financial institutions to process the loan application:

• Age Proof

• Address Proof

• Income Proof of the applicant & co-applicant

• Last six months bank account statement

• Passport size photograph of the applicant & co-appli-cant

In case of Salaried

• Employment certificate from the employer,

• Copies of pay slips for last few months and TDS certifi-cate

• Latest Form 16 issued by employer or bank state-ments

In case of Self-employed

• Copy of audited financial statements for the last two years

• Copy of partnership deed if it is a partnership firm or copy of memorandum of association and articles of as-sociation if it is a company

• Profit and loss account for the last few years

• Income tax assessment order

Eligibility Criteria for home loan by various banksSalary structure- It is one of the most vital thing considered by any bank in giving home loan. These days companies give higher perks than in hand salary, it may be good for the employee from the income tax perspective, however, banks don’t consider allowances higher than the basic sal-ary while considering a home loan. In fact some banks specify that one give his basic salary only and if the basic salary is low it would be hard to convince the bank that the allowances sum up to a considerable amount.

Repayment capacity - The borrower’s eligibility of getting a home loan depends upon his/her repayment capacity & the banks establish this repayment capacity by consider-ing various factors such income, spouse’s income, age, number of dependants, qualifications, assets, liabilities, stability and continuity of occupation and savings history.

Credit history- Apart from income, banks also consider expenses before sanctioning a loan. Other loans, includ-ing credit card payments, are also a part of expenses and may play a deciding factor in the loan decision. The chances of getting a home loan are increased if one has a good credit history, which is known by banks by checking the borrower’s Cibil score. Nowadays it is very hard to get a loan from another bank when you already have a bad debt with one bank.

Employing industry - In many cases banks consider the industry of the person seeking home loan, as the bank considers some sectors less risky while some highly risky and its loan eligibility will depend upon its internal assess-ment of the sector.

Home Loans


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Erratic vs rational equity market

Why do the equity markets move up/down at the moment?The stock markets with a gaze on strength of bullish and bearish forces, are subject to gauge in investor’s sentiments including aspirations, greed, discontent and apprehensions. Acting as the obvious reflection of these sentiments, the fluctuations are one of the permanent features of the equity markets, technically known as volatility. An investment pattern in equity markets essentially considers two time sensitive components, namely future projections and the past performances based on which an investor tries to fine tune the mis-match in securities prices in search of equilibrium.An either way spurt in the movement of the stock markets is directly dependent upon irrationalities of optimism and pessimism. The manner in which the investors react is of great subjectivity indicating a high degree of behavioral aspect. Consequently, the same pattern gets reflected into the markets driving the prevailing prices into a particular direction. Typically, long-term valuation is the main driver of stock performance, as companies that are trading at a discount to their intrinsic values tend to migrate up to a higher valuation over time. Inversely, companies trading above their intrinsic values tend to migrate down. If one is to attempt to quantify this, it appears that aggregate stock movement can be explained by long-term valuation adjustments roughly 75% of the time. The remaining 25% of markets are best identified as momentum markets, which simply imply that a short-term event has created an environment that makes investors less concerned with long-term value but more focused on short-term issues. This shift in investor preference has often led to a flight to quality or safe stocks, and in these markets one can witness out performance from a momentum-based strategy, which can be based on momentum of price changes or earnings forecasts.The rapid movement in the equities markets is a result of over reaction of investors, failing to demarcate between rational valuation and impulsive sentiments. Over reactions render no plausible way of reasoning being offered to explain the underlying movement in the markets. In such a scramble, investors tend to assimilate short term tones of the market outweighing the long term valuation prospects on frenzied buying or panic selling. By that time, the overall

taste and preference of the investing community shift towards irrational exuberance, which is unsustainable. A further breakdown of each individual valuation and momentum market needs to be carried out in order to have a better grasp over the spurt in the equity markets.Corporate earnings were growing at a fairly healthy pace until the real picture of the sub-prime crisis emerged out. Investors became more defensive due to the economic crisis in the Pacific Rim that spread ripples across other developed and developing economies. There was a growing feeling of disorder with future corporate growth rates and the stability of the global capital markets. During this shift, investors herded for deserting the equity markets and especially fled from the stocks that they deemed riskier. After the bankruptcy of Lehman Brothers in September last year, financial markets had to be put on artificial life support. This was a shock not only for the financial sector but also for the real economy. International trade was particularly badly hit. But the artificial life support worked, and financial markets stabilized. The economy gradually revived. From March 2009 onwards, the markets began to again focus on future growth and valuation. Once valuation started to take hold, investors began to flock to the fundamentals of the economy. Due to its significant overall out performance, it is believed that utilizing a trust-worthy valuation metric is an important starting point in investment screening. With that said, a simple valuation-only strategy can hinder the performance of portfolio when momentum-driven markets are at play. The phenomena of informational flows and herding cause the available public information flood the investors and induce them to behave identically. Typically, no market is free from herd behavior. The tendency of investors to simply follow the crowd and jump on the same investment bandwagon occurs because everyone else is moving in the same direction. With the increased liberalization of markets across the globe over the past few decades, the herding behavior has rather become a global setting. The charts below show that the investing community moved in tandem and behaved alike, both in the US and Indian markets. The touch of October low was evident from the collapse of financial behemoth Lehman Brothers spreading a new sense of unease indiscriminately. The 158-year old firm had to compulsorily file for bankruptcy

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Dow Jone Ind Avg


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protection following the announcement of financial results. Without the ability to trade and without investors prepared to bet on its long-term viability, Lehman Brothers effectively had no business. Feeling the panic on a worldwide basis, investors flouted the basic proposition of investment, that is, fundamentals of economy. Due to the herding behavior in the investing community, the worldwide equity markets met the common fate and behaved in sync with each other. We saw a flight to short-term quality that led long-term valuation to be overlooked.Herding is stronger in emerging markets than developed ones. Investors in emerging markets often find it too difficult or expensive to gather and collect the information required to conduct fundamental analysis, whereas observing and imitating other investors’ decisions is relatively easy and cheap. Herding of this speculative nature is, therefore, more common in emerging markets. Herding, like business, follows a cyclical pattern, with sudden events marking turning points in the cycles. In the long term, the trend is toward less herding and less volatility. Though herding is an inherent part of human behavior, this may change as investors become more informed and gain more experience.Market participants cannot possibly base their decisions on knowledge only but they have to anticipate the future also, and the future is contingent on decisions that people have not yet made. What those decisions are going to be and what effect they will have cannot be accurately anticipated. To guess correctly, people would have to know the decisions of all of other participants and their consequences, but that is impossible.Rational expectations theory sought to avoid this impossibility by claiming that there is a single correct set of expectations and people’s views will converge around it. That claim has no basis in reality, but it is the basis of stock market. In practice, participants are obliged to make their decisions in conditions of uncertainty. Their decisions are bound to be tentative and biased. That is the generic cause of price distortions.Occasionally, price distortions set in motion a boom-bust process. More often, they are corrected by negative feedback. In these cases market fluctuations have a random character. These days almost all stock markets seem to be falling relentlessly. But in more normal times

individual stocks are affected by valuation, which is the tendency for popular stocks to keep rising and for unpopular ones to keep falling. The phenomenon has been noted in a wide range of studies and has often been exploited by fund managers. It is hard to square with the idea that investors are rational. If it were easy to identify which shares were due to go up and which to go down by looking at their previous price movements, why would a rational investor be willing to sell the former group or buy the latter. Explanations for momentum have thus tended to focus on the idea that investors are irrational. For example, they may be slow to recognize that the fundamentals of a business having changed for the better or worse. A company may need to beat profits forecasts for two or three quarters before the market is willing to give the stock a premium valuation.A value driven movement is particularly related to the fundamentals of markets, which are sustainable over a longer period of time. A rise backed by valuation never produces sudden ripples in equities markets, instead ensures a ground for structural changes in the markets and assets pricing. The main value drivers in the markets are macroeconomic elements casting an influence on assets pricing including interest rate, foreign inflows, systematic risks and overall business confidence in the economy. On the other hand, the element of momentum induces a singular spurt in equities markets. Irrational factors in the markets bring in erratic movements due to unjustified emotions stemming out from investors perspective. At the time of momentum trades, price stability distorts abruptly due to herding behavior of the investors on looming uncertainties. The perceived sentiments are usually not correlated with the actual state of affairs of the economy incentivizing the volatility in the markets.As a result, equity markets get more inclined towards such momentum driven events deserting fundamental factors for a pity of time. In a nutshell, the crux is that the investors often fail to give a controlled response to such an event, delivering undue over-reaction instead of an obvious reaction to the markets. The normalization of equity markets is the matter of fundamental values and the time taken by the effects of such erratic events to subside.

Erratic vs rational equity market

Sensex

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SBI Unit Plus Child PlanIn the current market scenario everyone wants to reap the benefits of the rally in the stock markets, but at the same time, is worried about the volatile market scenario, so one needs to enter a plan which not only protects the investment, but also enables to get market related returns. SBI Life - Smart ULIP is the perfect answer to that need, which gives not only guarantee on select NAVs during the first seven years, but also gives the added attraction of participating in the market upside.Smart ULIP is a hybrid of premium guarantee and guaranteed return plan. The Smart ULIP product provides net asset value (NAV) guarantee of the highest of 168 fortnightly NAVs during first seven years or NAV at maturity, whichever is higher. In case of the unfortunate event of the death of the life insured during the policy term, the nominee receives the higher of fund value or sum assured.The plan also offers the convenience of a shorter premium paying term allowing customers to pay premium for limited period of either three or five years and avail tax benefits under Section 80 C and 10(10 D) of the Income Tax Act.The security of a guaranteed NAV with a relatively short (3/5 year) term of premium payment helps the customer once again to invest with confidence.SBI Life’s Smart ULIP works with Flexi Protect Fund and Money Market Fund.Key Features of the policy: • Guarantee of the highest of select NAVs, during the

first seven years on maturity

• Investment cum insurance plan giving market related returns.

• Convenience through shorter premium paying term, giving a choice between two premium paying terms (PPT).

• ‘Power of more’ - Guaranteed Maturity NAV, continues beyond the premium payment term

• Innovative structured investment fund -‘FlexiProtect Fund’.

• Hassle free plan - It manages the investment, giving maximum opportunity for growth while protecting investments against adverse market conditions.

• Attractive Tax benefits under the Income Tax Act, 1961

This plan is divided in four phases:Subscription phase: 12 months from launch date, during this time the plan is open for subscription (i.e. new policies can be issued during this time). Premium payment phase: 3/5 years from launch date, during this time the proposer needs to pay the premium.NAV build-up phase: Seven years from launch date. Accumulation phase: Ten years from launch date. Smart ULIP comes with a option of three or five years premium payment term. This policy comes with a guaranty of maximum NAV recorded at during the first seven years of policy term. This guaranty is applicable only in maturity benefit. That means if you decide to surrender the policy before the maturity date the guaranty does not apply.Premium paid, after deduction of premium allocation charges is automatically invested into the money market fund. On specific reset dates i.e. on 8th and 23rd of each calendar month (or next working day), the investment will automatically be moved to the flexi Protect Fund. The objective of this fund is to optimise the returns, while providing significant capital protection by adopting dynamic asset allocation strategy.Fund options:The two investment funds currently offered are FlexiProtect Fund and Money market Fund.

Life Insurance

Eligibility Criteria:Age at entry Min: 8 years Max: 60 yearsAge at Maturity Max: 70 YearsPremium Payment Terms 3 Years or 5 YearsPremium Mode Yearly/Half Yearly/ Quarterly/

Monthly

Minimum Premium (x100)

Yearly: Rs 50,000 Half yearly: Rs 25,000Quarterly: Rs 15,000 Monthly: Rs 5,000

Fixed Sum Assured 5*AP (Annualized Premium)

FlexiProtect FundAssets Minimum Maximum Risk Profile

Equity & Equity related instruments Nil 100%Low to Medium

Debt & Money market instruments Nil 100%

Money Market FundAssets Minimum Maximum Risk Profile

Debt Instruments Nil 20%Low

Money market instruments 80% 100%


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Benefits:Maturity benefit- On completion of the policy term, fund value will be paid to the policy holder. The fund value will be calculated based on NAV which is higher of:NAV as on date of maturityThe guaranteed maturity NAVDeath benefit- In case of the unfortunate event of death of the life insured during the policy term, the company will pay to the nominee, the higher of fund value or sum assured.Surrender- The policy will acquire a surrender value after payment of at least one full year’s premium in case of 5 year PPT and 6 months of premium in case of 3 year PPT, and will be payable after the completion of third policy year. The surrender value will be 100% of fund values less surrender charges applicable if any.Partial withdrawals- The company gives the flexibility to withdraw the money from 5th policy year onwards, to meet any sudden or unforeseen expenses. One can make one partial withdrawal per policy year.Discontinuance of premium:In case of unpaid premium during the first 3 policy years:If at least full year’s premium in case of 5 year PPT and 6 months premium in case of three year PPT is not paid then the premiums paid under the policy will be forfeited.If the unpaid premium pertains to any period in the first 3 policy years otherwise than as mentioned above, then:• Life cover lapses immediately• No further deduction of mortality charges• Fund management charges and policy administration

charges continue to be deducted.• Revival facility is available• If not revived, at the end of the revival period (2 years

from the first unpaid premium), surrender value is paid to the policyholder and the policy ends immediately.

Life Insurance

In case of unpaid premium after first 3 policy years (for PPT of 5 years)• Automatic life cover maintenance till the end of the

revival period, however if before the end of the revival period, fund value reaches an amount equivalent to one full year’s premium, the policy ends immediately and fund value is payable.

• All charges continue to be deducted• Revival facility is availableDifferent Charges associated with the policy:Premium allocation charges:Deducted as per %age of regular premium:-Year 1: 15%Year 2 and 3: 5%Year 4 and 5: 5% (if premium is paid) Policy administration charges: Rs 60 per month throughout the term of the policy. Recovered by canceling the units on a monthly basis. Additional annual charge of 0.5% of sum assured for the first three years. Fund management charges: About 1.5% per year. The maturity date will be ten years from the start of subscription period. Surrender charges applicable if policy is surrendered within five years:Year 1: 20 %Year 2: 12 %Year 3: 9 %Year 4: 2 %No surrender charges after five years.Exclusions under the policy:Suicide exclusion: If the life assured, whether sane or insane, commits suicide, within one year from the date of the issue of the policy, the policy shall be void. In such event, the fund value shall be payable and all benefits under the policy will cease.

For Further Detail Contact :MR. APURvA BhATT - 24158686, 24171742

MR. KEyUR PAREKh - 26184730/31


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Reliance Standard Fire & Special Perils Insurance PolicyAmong life’s many uncertainties, fire and allied perils often prove to be most damaging. Fire insurance is important because a disaster can occur at any time. There could be many factors behind a fire like arson, natural elements, faulty wiring, etc. Such an event not only causes damage and destruction of the assets, it also leaves a huge financial burden to bear. At such times, one needs the safety of the Fire and Special Perils Insurance policy while a corporate with large spread out business, needs comprehensive protection for its operation.Reliance General Insurance offers Reliance Standard Fire and Special Perils Policy with a combination of both standard and optional features offering a comprehensive coverage and provides financial support to recover from such sudden losses so that one can choose the cover, which best suits his business.The Reliance Standard Fire and Special Perils Policy is a specially designed plan that covers all the properties, which are normally exposed to the risk of fire and allied perils. Apart from this, it provides host of add-on covers with an option of deletion of storm, tempest group of perils and riot, strike group of perils.Property that can be covered under the Reliance Standard Fire and Special Perils Policy includes: Dwellings, offices, hotels, shops etc. located outside the compound of industrial / manufacturing risksIndustrial / manufacturing risksUtilities located outside the compound of industrial / manufacturing risksStorage risks located outside the compound of industrial / manufacturing risksTank farms / gas holders located outside the compound of industrial / manufacturing risks / immovable properties which have monetary valueThe policy covers loss due to:• Fire

• Lightning

• Explosion / implosion

• Aircraft damage

• Riot, strike and malicious damage (RSMD)

• Storm, cyclone, typhoon, tempest, hurricane, tornado, flood and inundation (STFI)

• Impact damage

• Subsidence and landslide including rockslide

• Bursting and/or overflowing of water tanks, apparatus and pipes

• Missile testing operations

• Leakage from automatic sprinkler installations

• Bush fire

• Architects’, surveyors’ and consulting engineers’ fees

up to 3% of claim amount

• Removal of debris up to 1% of the claim amountAdd-on coversOne can also select any of the following add-on covers on payment of extra premium.

• Earthquake (fire & shock)

• Architects’, surveyors’ & consulting engineers’ fees (in excess of 3% of claim amount)

• Debris removal (in excess of 1% of claim amount)

• Deterioration of stocks in cold storage

• Accidental power failure consequent to damage at the premises of power station due to an insured peril

• Change in temperature arising out of loss or damage to the cold storage machinery in the insured premises due to operation of insured peril

• Forest fire

• Impact damage due to insured’s own rail/ road vehicles, forklifts, cranes, stackers and the like and articles dropped therefrom

• Spontaneous combustion

• Omission to insure additions, alterations or extensions

• Spoilage material damage cover

• Leakage and contamination cover

• Temporary removal of stocks clause

• Loss of rent clause

• Insurance of additional expenses of rent for an alternative accommodation

• Start-up expenses

• Molten metal spillagePolicy optionsOne can choose up the following variant with regard to sum insured while opting for the Standard Fire & Special Perils Insurance PolicyFloater policy : This policy can be issued for stocks at various locations under one sum insuredDeclaration policy : Takes care of frequent fluctuations in stocks / stock values. Declaration policy can be granted subject to certain conditionsFloater declaration policy : This policy has the features of both floater and the declaration policiesPolicy tenureThe policy is issued for one year from the date of inception of the cover. However, policies for a period exceeding 12 months can be issued for ‘Dwellings’.Premium payablePremium depends upon the type of risk and is subject to the following:

• Discount for sprinkler block installation

• Discount for optional deletion of STFI and RSMD perils

General Insurance

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