Trustplutus monthly October1trustplutus.com/pdf/wealth...
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Transcript of Trustplutus monthly October1trustplutus.com/pdf/wealth...
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October 2012
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CONTENT
GLOBAL ECONOMIC CALENDAR
2
GLOBAL EQUITY MARKET
3
GLOBAL DEBT MARKET
5
INDIAN EQUITY MARKETS
7
INDIAN FIXED INCOME
10
CURRENCY UPDATE
12
COMMODITIES
15
INDIAN ECONOMY
17
REAL ESTATE & PRIVATE EQUITY UPDATE
18
MUTUAL FUND PERFORMANCE UPDATE
19
MUTUAL FUND NEWS
21
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GlobalEconomicCalendar
The U.S. Gross Domestic Product (GDP) grew by 2% Y-o-Y in the third quarter against 1.3% in the second quarter as a late burst in consumer spending offset the first cutbacks in investment in more than a year by cautious businesses. Surprisingly, the unemployment rate fell to 7.8% from 8.1%, the lowest level since January 2009. U.S. consumer sentiment rose to its highest in five years in October as consumers became more optimistic about the economy in a possible boost to President Obama's re-election hopes.
Euro zone sentiment improved for the second consecutive month in October with investors' expectations boosted by monetary easing from central banks and the approval for a new permanent bailout fund for the European currency bloc. Output at Euro zone factories grew more than expected in August, helped by summer demand for food and French car production. German exports rose unexpectedly in August, underscoring the continued resilience of Europe's largest and traditionally export-oriented economy despite the Euro zone crisis and suggesting a third quarter slowdown may be moderate.
China’s economy slowed down in July-September quarter to its slowest pace since the first quarter of 2009.
The GDP grew 7.4% Y-o-Y in the third quarter lower than 7.6% in the second quarter. China’s Consumer Price Index (CPI) rose 1.9% Y-o-Y in September against 2% witnessed in August. Moreover, the Producer Price Index (PPI) dropped 3.6% Y-o-Y in September, greater than the 3.5% fall recorded in August. Japan's exports tumbled by 10.3% in the year end to September, recording the sharpest decline since the aftermath of last year's earthquake. The Bank of Japan cut its outlook for local regional economies due to a row with China and weak global demand.
Key Global Economic Releases during the Month of October 2012 Release Date
Economic Event Country/Region
Period Actual Consensus Previous
01‐Oct USD ISM Manufacturing US September 51.5 49.7 49.6
02‐Oct Euro‐zone Producer Price Index (Y‐o‐Y) Europe August 2.70% 2.60% 1.60%
03‐Oct Euro‐Zone Retail Sales (Y‐o‐Y) Europe August ‐1.30% ‐1.90% ‐1.40%
04‐Oct GBP BOE Rate Decision UK October 0.50% 0.50% 0.50%
04‐Oct ECB Rate Decision Europe October 0.75% 0.75% 0.75%
05‐Oct Bank of Japan's Rate Decision Japan October 0.10% 0.10% 0.10%
05‐Oct USD Unemployment Rate US September 7.80% 8.20% 8.10%
11‐Oct German Consumer Price Index (Y‐o‐Y) Europe September 2.00% 2.00% 2.00%
12‐Oct CNY New Yuan Loans China September 623.2B 700.0B 703.9B
12‐Oct USD Producer Price Index (Y‐o‐Y) US September 2.10% 1.80% 2.00%
12‐Oct USD U. of Michigan Confidence (P) US October 83.1 78 78.3
15‐Oct CNY Consumer price Index (Y‐o‐Y) China September 1.90% 1.90% 2.00%
15‐Oct USD Advance Retail Sales US September 1.10% 0.80% 1.20%
16‐Oct GBP Consumer Price Index (Y‐o‐Y) UK September 2.20% 2.20% 2.50%
16‐Oct Euro‐zone Consumer price Index‐Core (Y‐o‐Y) Europe September 1.50% 1.60% 1.50%
16‐Oct German ZEW Survey (Economic Sentiment) Europe October ‐11.5 ‐14.9 ‐18.2
16‐Oct USD Consumer Price Index (Y‐o‐Y) US September 2.00% 1.90% 1.70%
17‐Oct GBP Jobless Claims Change UK September ‐4.0K 0.0K ‐14.2K
18‐Oct CNY real GDP (Y‐o‐Y) (3Q) China 3Q 7.40% 7.40% 7.60%
24‐Oct Euro‐zone Purchasing Manager Index Composite (A)
Europe October 45.8 46.5 46.1
24‐Oct FOMC Rate Decision US October 0.25% 0.25% 0.25%
25‐Oct GBP Gross Domestic Product (Y‐o‐Y) UK 3Q 0.00% ‐0.50% ‐0.50%
26‐Oct USD GDP (Annualized) US 3Q 2.00% 1.80% 1.30%
26‐Oct USD U. of Michigan Confidence (F) US October 82.6 83 83.1
30‐Oct German Unemployment Rate Europe October 6.90% 6.90% 6.90%Source: ICRA Online compilations, www.dailyfx.com
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GlobalEquityMarketsUnitedStates
• U.S. stocks commenced the month on a positive note following a batch of encouraging data. Better-than-expected ISM manufacturing survey indicated growth in the U.S. economy as it rose above 50. The appetite for risky assets was also supported by better-than-expected U.S. private sector employment, service sector and home prices data. According to ADP National Employment Report, employment in the non-farm private business sector rose by 162,000 in September. Stocks moved up after the U.S. unemployment rate dropped below 8% for the first time in almost four years and employers added 114,000 jobs in September. The market further took cues from the European Central Bank President’s reaffirmation on its bond-buying program.
• Shares suffered steep losses in the second week with Dow Jones, Nasdaq Composite and S&P 500 losing 2.07%, 3.26% and 2.21%, respectively. Though a slight recovery was witnessed over the remaining part of the month, the shares remained broadly weak. The enthusiasm sparked by encouraging data in the first week of the month faded, as investors became increasingly concerned about the elections, the looming fiscal cliff and European debt crisis. Market sentiments dampened after the World Bank cut its growth forecasts for the East Asia and Pacific region. Stocks recovered to some extent helped by positive reports on U.S. retail sales, industrial production, consumer prices and housing starts. However, tepid quarterly results from major tech companies limited the upside. Stocks lost momentum as the bleak Markits’ Composite Purchasing Managers’ Index (PMI) data for the Euro zone outweighed positive data on U.S. new home sales and weekly mortgage applications. The better-than-expected annual rate of growth for U.S. GDP for the third quarter capped losses. By the end of the month, markets took a hit on account of hurricane Sandy which caused a two-day hiatus. U.S. stocks finished the month in red, as the Nasdaq Composite, S&P 500 and Dow Jones plunged 5.40%, 1.98% and 2.53%, respectively during the month.
Europe
• European stocks remained mixed as uncertainty over Spain’s request for a bailout re-emerged and fears of such a bailout triggering credit downgrades took centre stage during the month. Other factors which weighed heavily on sentiments included the economic uncertainty in Spain and Greece and the World Bank’s lowering of economic forecasts for the East Asia and Pacific region. Despite the launch of Euro zone’s permanent bailout fund and positive German exports numbers, shares ended lower. Investors shunned risky assets amidst weak earnings results and dismal outlook from large corporate houses. The mood worsened as the borrowing costs in Spain rose after Standard & Poor’s downgraded five Spanish regions. Signs of discord between European Union leaders over tackling the region's debt-ridden banks pushed stocks lower.
Performance of Major International Markets (as on October 31, 2012)
Indices Country Current Value
Returns (%)
1Mth 6 Mths 1 Yr 3 yrs
United States Nasdaq 100 US 2,647.92 ‐5.4 ‐2.8 12.2 58.8
S&P 500 US 1,412.16 ‐2.0 1.0 12.7 36.3
DJ Industrial Avg. US 13,096.46 ‐2.5 ‐0.9 9.5 34.8
Asia Pacific SET IDX Thailand 1,298.87 0.0 5.7 33.3 89.5
JSX COMPOSITE Indonesia 4,350.29 2.1 4.1 14.8 83.7
FTSE STRAITS TIMES Singapore 3,038.37 ‐0.7 2.0 6.4 14.6
KOREA SE KOSPI South Korea 1,912.06 ‐4.2 ‐3.5 0.2 21.0
HANG SENG Hong Kong 21,641.82 3.8 2.6 8.9 ‐0.5
NIKKEI 225 Japan 8,928.29 0.7 ‐6.2 ‐0.7 ‐11.0
TSEC 50 Taiwan 7,166.05 ‐7.1 ‐4.5 ‐5.6 ‐2.4
FTSE BURSA KLCI Malaysia 1,673.07 2.2 6.5 12.1 34.6
SHANGHAI SE COMPOSITE
China 2,068.88 ‐0.8 ‐13.7 ‐16.2 ‐30.9
BSE Sensex India 18,505.38 ‐1.4 6.9 4.5 16.4
S&P/ASX 200 Australia 4,517.00 3.0 2.7 5.1 ‐2.7
Europe FTSE 100 UK 5,782.70 0.7 0.8 4.3 14.6
CAC 40 France 3,429.27 2.2 6.7 5.7 ‐4.9
FSE DAX Germany 7,260.63 0.6 7.4 18.2 34.1
Other Emerging Markets RTS IDX Russia 1,433.96 ‐2.8 ‐10.0 ‐8.3 6.3
SAO PAULO SE BOVESPA INDEX
Brazil 57,068.18 ‐3.6 ‐7.7 ‐2.2 ‐7.3
Source: MFI Explorer & Reuters
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• During the month, markets did have moments of strength, especially after the European Central Bank announced that it was ready to start its bond-buying program to help troubled EU nations. The positive U.S. jobs data also pulled up stocks. Sentiments got a boost from German Finance Minister’s positivity about Greece’s future in the Euro zone and an austerity-focused Portuguese budget. Moody's status quo on Spain's investment grade rating also bode well for the stocks. Markets picked up following upbeat Chinese manufacturing data and a two-year extension given to Greece to meet the terms of its international bailout. Moreover, the U.K. economy grew 1% in the third quarter, marking its biggest quarterly gain since the third quarter of 2007. Overall key European markets posted gains for the month of October with FTSE 100, CAC 40 and FSE DAX gaining 0.71%, 2.22% and 0.62%, respectively for the month.
Asia
Asian shares traversed a mixed path in October. While large gains were witnessed during first and the third week of the month, losses accumulated during the rest of the weeks. At the outset, shares gained on better-than-expected data on U.S. services industry and private sector hiring, as well as the European Central Bank’s commitment to buy bonds of troubled Euro zone countries. However, shares suffered losses after the Chinese Government’s Purchasing Managers’ Index (PMI) fell short of expectations. The disappointing factory orders data from Germany and lingering worries over Europe's debt problems weighed on investor confidence. Risk aversion based sell-off accelerated after the World Bank lowered its 2012 growth forecast for Asia to 7.2% from its previous forecast of 7.6%. Shares sank deeper after U.S. companies reported disappointing earnings results and Japan posted a larger-than-expected trade deficit.
The market sentiment improved following additional liquidity infusion and monetary stimulus plans in China. Support also came from encouraging HSBC PMI data on China’s manufacturing and services sectors. As China’s exports grew by 9.9%, investors’ worries eased about the global consumer demand. This was further supported by a rise in Chinese consumer prices which raised expectations that the Chinese central bank would supplement monetary easing measures. The data on China’s GDP, industrial production and retail sales were received well. Shares posted gains in October as compared to previous month as risk appetite boosted with the HSBC flash Manufacturing PMI pointing to signs of recovery in the Chinese manufacturing sector. Though the growth in the sector contracted for the 12th consecutive month, output remained at a three-month high and the order book was the most robust since April.
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1.00
1.50
2.00
2.50
Oct‐11 Dec‐11 Feb‐12 Apr‐12 Jun‐12 Aug‐12 Oct‐12
(in %)
US 10 Year Treasury Yield
Source: Reuters
Movement during the Month
3
22
2
5
8
10 9
6
4
0
2
4
6
8
10
0.00
0.50
1.00
1.50
2.00
2.50
3.00
1 Month
3 Months
6 Months
1 Year
2 Years
3 Years
5 Years
7 Years
10 Years
30 Years
Change in bps
Yield (%)
US Treasury Yield Curve Shift (Month‐on‐Month)
Change in bps Oct‐12 Sep‐12Source: Reuters
8 10 107
4
‐1
‐25
‐41 ‐42
‐27
‐50
‐40
‐30
‐20
‐10
0
10
20
0.00
1.00
2.00
3.00
4.00
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3 Months
6 Months
1 Year
2 Years
3 Years
5 Years
7 Years
10 Years
30 Years
Change in bps
Yield (%)
US Treasury Yield Curve Shift (Year‐on‐Year)
Change in bps Oct‐12 Oct‐11Source: Reuters
GlobalDebtMarket
USTreasuryReview
U.S. Treasury yields increased, albeit witnessing volatility, influenced by better-than-expected macro-economic data such as employment, service sector report, housing data and stronger earning from large U.S. corporations. Moreover, some positive news and events in Euro zone like talk of aid for Spain and Moody’s affirmation of Spain’s investment grade rating triggered rise in Treasury yields. All these factors and hopes that Spain will request for a bailout reduced the demand for U.S. Treasury bonds. Some profit booking was seen after the Federal Reserve stuck to its monetary policy but the impact was short-lived.
Treasury yields dropped mostly in the second half of the month after four days of selloff attracted new buyers at higher yields. Worries over the pace of global growth, lackluster corporate earnings, concerns about the strength of the U.S. economic recovery and muted underlying U.S. inflation increased demand for bonds. Strong results in a 2-year debt sale also increased bond prices. Although yields dropped later during the month, the impact of Hurricane Sandy, ahead of jobs data and Presidential elections, was visible in a thinly-traded session.
After moving in the range of 1.616% and 1.831%, the 10-year Treasury yield went up 6 bps to close at 1.694% compared to the corresponding yield of the previous month. Although, bond yields increased across all maturities but the rise was higher at medium to longer end of the curve. At shorter end of the curve, i.e., maturities below 2-year paper, yields inched up in the range of 2 to 3 bps. At medium to longer end of the curve i.e., above 2-year maturity bracket, yields rose in the range of 4 to 10 bps.
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4.50
5.00
5.50
6.00
6.50
7.00
7.50
Oct‐11 Dec‐11 Feb‐12 Apr‐12 Jun‐12 Aug‐12 Oct‐12
(in %)
Spanish 10 Yr Treasury Yield
Source: Reuters
Movement during the Month
0.50
1.00
1.50
2.00
2.50
3.00
Oct‐11 Dec‐11 Feb‐12 Apr‐12 Jun‐12 Aug‐12 Oct‐12(in %)
German 10 Yr Treasury Yield
Source: Reuters
Movement during the Month
EuroDebt
Spanish bond yields started declining in the first half but dropped sharply during the middle of the month. Although this sharp drop was followed by a recovery later in the month but it helped keep the yields at much lower levels than the previous month’s close.
The major concern which remained in the first half was uncertainty whether Spain will seek an international bailout to tackle its debt problems. The clarity on this was important as it will increase the prospect of potentially unlimited European Central Bank bond buying. Hence, it was difficult for investors to have selling positions on the Spanish sovereign debt market. Instead, any rise in yield was seen as an opportunity to buy back despite a downgrade to the country's credit rating by S&P.
Bond yields fell to a six-and-a-half month low after a successful debt sale. This reflected improvement of investors’ risk appetite towards the country following Moody's decision not to cut its credit rating to junk. However, yields bounced back soon because of differences within the European Union over support for its struggling banks. Bond prices fell later after Moody's downgraded five of the country's regions. The 10-year bond yield dropped 33 bps to close at 5.63% after moving in the range of 5.35% to 5.91% during the month.
After moving in a narrow range in the first half, bond yields surged sharply thereafter but subsequently declined till the end of the month. Finally, it closed slightly higher than the corresponding previous month’s close. German bond yields inched up as riskier assets and lower-rated Euro economies got benefited due to a couple of major factors. These include positive talks about Spain seeking a bailout, surprise improvement in the U.S. unemployment data and faster growth in housing starts. Speculation of supporting Spain by providing insurance for investors who buy its Government bonds also led to lower demand for bonds.
In the second half of the month, bond yields started falling but slowly on mixed cues. Buying was seen as data showed the economic downturn in the Euro zone appeared to be deepening. On the contrary, recovery in the British economy spurred demand for riskier assets. In addition, the European Central Bank's Joerg Asmussen said the bank would do everything possible to show that the euro was irreversible which in turn neutralized the gains in German bond prices.
After a slow start, yields declined continuously till the end of the month as weak corporate earnings numbers and record high Spanish unemployment prompted demand for safe-haven assets. Former Italian Prime Minister Silvio Berlusconi's threat to bring down the Rome Government improved demand for higher-rated economies. Strong auction of long-term German debt helped keep the yields lower. However, the 10-year bond yield increased by 6 bps to close at 1.48% after moving in the range of 1.45% to 1.63% during the month.
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7000
9500
12000
14500
17000
Nov‐09 May‐10 Nov‐10 May‐11 Nov‐11 May‐12 Oct‐12
BSE Mid cap BSE Small cap BSE Sensex
Growth of Rs 10,000 over Last 3‐Yrs
Source: MFI Explorer
5
10
15
20
25
30
Oct‐09
Dec‐09
Feb‐10
Apr‐10
Jun‐10
Aug‐10
Oct‐10
Dec‐10
Jan‐11
Mar‐11
May‐11
Jul‐11
Sep‐11
Nov‐11
Jan‐12
Mar‐12
Apr‐12
Jun‐12
Aug‐12
Oct‐12
BSE Mid cap BSE Small cap BSE Sensex
Domestic Benchmark Indices Trailing P/E
Source: BSE
IndianEquityMarkets
After a good performance in September, Indian equity markets ended the month of October in red. Markets fell mainly due to weak global cues and slowing FII inflows. Moreover, poor economic data from key economies and disappointing earnings reports also weighed on markets. The BSE Sensex and S&P Nifty declined by 1.37% and 1.47% respectively during the month. The BSE Mid-Cap index fell by 0.63% and the BSE Small-Cap index lost 0.41%.
Trading for the month began on a positive note, owing to falling crude prices, hopes of additional reforms measures by the Government and robust FII inflows. However, investors became worried about domestic growth after rating agency S&P (Standard & Poor's) expressed concerns over India’s high fiscal deficit and the possibility of credit ratings downgrade. Finance Minister’s assurance that there was no imminent threat of a ratings downgrade failed to cheer market participants.
Later, the indices inched higher after data showed India's industrial output grew by a higher-than-expected 2.7% in August against a contraction of (-) 0.2% in July. However, markets lost ground after Wholesale Price Index-based inflation, the main inflation gauge, accelerated to 7.81% for the month of September against last month’s reported figure of 7.55% due to rise in diesel prices. This dashed hopes of a rate cut by the RBI at the upcoming policy review meeting, scheduled later in the month.
Towards the end of the month, domestic bourses fell further after the RBI in its second quarter review of monetary policy 2012-13, left its key policy rates unchanged, but slashed the Cash Reserve Ratio (CRR) by 25 basis points from 4.50% to 4.25%. The CRR cut will lead to a liquidity infusion of Rs 17,500 crore into the system.
Although the RBI’s stance on interest rates was expected, but what spooked the markets was its higher forecast for the headline WPI inflation for March 2013 to 7.5% from its previously projected 7% and at the same time lowering its economic growth estimate to 5.8% for 2012-13 from 6.5% projected earlier.
As per data released by SEBI, Foreign Institutional Investors (FIIs) continued to remain net buyers in the equity segment during the month. FIIs bought equities worth Rs 11,364.2 crore compared to the net purchase of Rs 19,261.3 crore in the previous month. However, mutual fund houses turned net sellers of equities in October to the tune of Rs 2,519.7 crore.
Barring BSE FMCG and HC, all other indices ended the month in negative terrain. The BSE FMCG and HC index gained 3.27% and 1.22% during the month. Among the major losers, BSE Power Index, PSU, Realty and Metal indices fell by 4.72%, 4.20%, 4.08% and 3.60% respectively. FMCG stocks gained after large companies reported better-than-expected second quarter results. Metal stocks declined on the back of ongoing uncertainty in global markets. Capital goods stocks fell on worries slowdown in the economy could crimp new orders. Realty stocks plunged after the Reserve Bank of India left key policy rates unchanged.
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-14.7%
-11.4%
-7.7%
-7.0%
-5.9%
-5.9%
-1.9%
-1.0%
0.2%
4.2%
4.5%
5.2%
5.4%
5.5%
8.7%
13.0%
24.1%
35.4%
-36% -24% -12% 0% 12% 24% 36%
BSE METAL
BSE Power
BSE Realty
BSE Oil & Gas
BSE PSU
BSE Teck
BSE IT
BSE Capital Goods
BSE Small cap
BSE Mid cap
BSE Sensex
BSE Consumer Durables
BSE100
S&P Nifty
BSE AUTO
BSE Bankex
BSE Health care
BSE FMCG
One Year Returns as on October 31, 2012
Source: MFI Explorer
-4.7%
-4.2%
-4.1%
-3.6%
-3.5%
-3.4%
-2.9%
-1.5%
-1.5%
-1.4%
-1.4%
-1.0%
-0.9%
-0.6%
-0.4%
0.0%
1.2%
3.3%
-6% -4% -2% 0% 2% 4%
BSE Power
BSE PSU
BSE Realty
BSE METAL
BSE Oil & Gas
BSE IT
BSE Teck
S&P Nifty
BSE Bankex
BSE100
BSE Sensex
BSE AUTO
BSE Capital Goods
BSE Mid cap
BSE Small cap
BSE Consumer Durables
BSE Health care
BSE FMCG
Monthly Returns as on October 31, 2012
Source: MFI Explorer
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Jul‐11
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Apr‐12
May‐12
Jun‐12
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RH
S: F
igure
in IN
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r.)
LHS:Figure in INR (Cr.)
FII Investment & Sensex ‐ Last 24 Months
FII Net investment (LHS) BSE Sensex (RHS)Source: MFI Explorer
18000
18500
19000
19500
‐1000
0
1000
2000
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3‐Oct‐12
4‐Oct‐12
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22‐Oct‐12
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25‐Oct‐12
26‐Oct‐12
29‐Oct‐12
30‐Oct‐12
31‐Oct‐12
RHS: Figure in
INR (Cr.)
LHS:Figure in INR (Cr.)
DII, FII Investment & Sensex ‐ October 2012
FII DII SensexSource: MFI Explorer
To sum it up, the overall market breadth during the month was weak and is expected to remain the same in the near term.
P a g e | 9
Amid global slowdown and uncertainty, the Indian economy remains sluggish, held down by slow investment, weakening consumption and declining exports. However, with some bold reforms measures announced by the Government, foreign investments are expected to flow into the economy, which might help boost growth. The local equity markets may remain under pressure in the medium term due to global headwinds. Going forward, changes in rupee levels, movement of crude oil prices and global cues will determine the trend of the equity market.
Meanwhile, the persistence of inflationary pressures remains a key challenge even though growth has moderated. The WPI numbers are still hovering above the central bank’s comfort level amid possibility to move up further. There is no near-term trigger visible, which might push the RBI to change its stance on interest rates soon.
Top 5 Gainers on BSE 500
Name
Closing Price (31‐Oct. 2012)
Closing Price (30‐Oct.‐2009)
3 Year CAGR (%)
TTK Prestige 3208 308.75 118.2%
Wockhardt Ltd. 1500.25 170.6 106.4%
United Breweries 772 132.35 80.0%
Strides Arcolab 894.35 156.55 78.8%
Kajaria Ceramics 213.15 40.25 74.3%
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7.80
8.00
8.20
8.40
8.60
8.80
9.00
9.20
Oct‐11
Nov‐11
Dec‐11
Jan‐12
Feb‐12
Mar‐12
Apr‐12
May‐12
Jun‐12
Jul‐12
Aug‐12
Sep‐12
Oct‐12
10‐Yr Benchmark Bond
Movement during the month
Source:Reuters
‐8
‐5
‐2
1
4
7
8.00
8.10
8.20
8.30
8.40
8.50
1 Yr 5 Yr 10 Yr 20 Yr 30 Yr
Change in bps
Yield (%)
India Yield Curve Shift (Month on‐Month)
Change in bps Oct‐12 Sep‐12Source: Reuters
‐70
‐65
‐60
‐55
‐50
8.00
8.25
8.50
8.75
9.00
1 Yr 5 Yr 10 Yr 20 Yr 30 Yr
Change in bps
Yield (%)
India Yield Curve Shift (Year‐on‐Year)
Change in bps Oct‐12 Oct‐11Source: Reuters
IndianFixedIncome
Bond yields moved in a narrow range in the first half of October, as investors remained on sidelines ahead of the release of macro-economic data and absence of any major trigger. In the second half, yields eased after the Government implemented some fiscal measures. Various factors like fall in crude oil prices, expectation from monetary policy, key industrial output data and wholesale price inflation data impacted the movement of bond yields in the second half of the month.
Yields declined further following expectations that the Reserve Bank of India (RBI) will step in to ease liquidity in the banking system through open market operations (OMO) after a gap of four months. However, yields bounced back after the central bank kept policy rates unchanged and instead cut CRR (Cash Reserve Ratio), which dashed hopes of bond purchases in the near term. The yields of 10-year benchmark bond increased 7 bps to close at 8.21% compared to the previous month’s close.
The RBI maintained status quo for the fourth consecutive time in its monetary policy review but chose to cut the CRR by 25 bps to 4.25% from 4.50% for the second time. With an eye on
inflationary pressures, the central bank preferred to keep the policy rates unchanged during the current policy review. The central bank also lowered its FY13 GDP growth projections to 5.8% from its earlier projection of 6.5% as both global and domestic risks have heightened. In the policy statement, the RBI suggested that there is a reasonable chance of further easing in the last quarter of FY13, subject to an evolving growth inflation dynamics.
Banks’ net average borrowings under the RBI’s repo window stood higher at around Rs. 67,000 crore in October compared to the previous month’s average figure of Rs. 48,000 crore. Liquidity condition in the banking system remained tight during the month due to festive season in the second half of October. To improve liquidity condition further, the RBI in its second-quarter monetary policy review, cut the Cash Reserve Ratio (CRR) by 25 bps, which will infuse approximately Rs. 17,500 crore into the banking system. Overnight rates were hovering at around 6.90-8.08% and were below the repo rate.
The Index of Industrial Production (IIP) for the month of August 2012 grew at 2.7% against drop of (‐) 0.2% (revised figure) recorded in the month of July 2012. The start of the festive season in September 2012 helped the overall index come out from the negative terrain. While the WPI inflation rose to 7.81% Y-o-Y in September from 7.55% in August and 10% during the same period last year. The rise was largely due to hike in diesel prices in the middle of September.
Indicators (Yield %) October 31, 2012
September 28, 2012
Call Rate 8.04% 8.03%
1 Mth NSE Mibor 8.45% 8.67%
10‐Yr benchmark bond
8.21% 8.15%
Reverse Repo 7.00% 7.00%
Repo 8.00% 8.00%
Bank Rate 9.00% 9.00%
CRR 4.50% 4.50%
Source: RBI, Reuters
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18
20
Oct‐10 Apr‐11 Oct‐11 Apr‐12 Oct‐12
Crore
%
M3 Supply Net BorrowingsSource: Reuters
Liquidity Monitor‐ M3 Supply and Net Borrowings
Yields on Government securities remained positive on most of the maturities. It declined on 3, 4, 13 and 19-year to 30-year maturities while rose on all other papers by up to 7 bps. The highest increase was seen on 10-year paper. In line with Gilt securities, corporate bond yields also inched up on the entire segment except on 1-year and 2-year maturities. It increased in the range of 2 to 5 bps with the highest change in 6-year paper. Spread between AAA corporate bond and Government security contracted on 1, 2, 10 and 15-year maturities, while expanded on all other papers by up to 4 bps.
Among regulatory updates, the Reserve Bank has eased norms for foreign investors by allowing FIIs to approach any bank to hedge the currency risk on their stock market investments. Earlier, only banks maintaining accounts of FIIs were allowed to act as market makers to FIIs for hedging their currency risk. In its second quarter monetary policy review, the central bank has also decided that the settlement cycle of primary auction in T-Bills would be reduced from T+2 to T+1 to bring standardization and to increase market efficiency. The change would come into effect from November 21, 2012.
India’s International Trade in Services released by the RBI,
showed exports and imports in August improved to $11,402 million and $6,608 million from $11,065 million and $6,500 million recorded in the previous month. The central bank has asked banks to set aside more money for every standard loan account that would be restructured. Accordingly, the banking regulator has raised the provisions for restructured standard accounts from 2% to 2.75% and also hinted that banks that do not comply with rules related to bad loans will have to face penalties.
The bond yields are likely to move in a range-bound manner in the absence of any major trigger. Investors and market players are hoping for a rate cut as the RBI in its second-quarter monetary policy review dropped hints to act on easing policy rates only in the fourth quarter, subject to an evolving growth inflation dynamics. Thus it also depends on industrial production and inflation data due around mid-November, which would act as key triggers ahead of the central bank's monetary policy review. The RBI will conduct auctions of dated securities worth Rs. 65,000 crore and Treasury Bills worth Rs. 40,000 crore in November.
3.00
4.00
5.00
6.00
7.00
8.00
9.00
10.00
Oct‐08 May‐09 Oct‐09 Apr‐10 Oct‐10 Apr‐11 Oct‐11 Apr‐12 Oct‐12
Repo Reverse Repo CRR
Movements of Key Policy Rates in India
35
70
105
140
175
Oct‐11 Dec‐11 Feb‐12 Apr‐12 Jun‐12 Aug‐12 Oct‐12
10 Year Corporate Bond Spread (for AAA & AA bonds)
AAA Bond Spread (in bps) AA Bond Spread (in bps)
Source: Reuters
40
80
120
160
Oct‐11 Dec‐11 Feb‐12 Apr‐12 Jun‐12 Aug‐12 Oct‐12
5 Year Corporate Bond Spread (for AAA & AA bonds)
AAA Bond Spread (in bps) AA Bond Spread (in bps)
Source: Reuters
P a g e | 12
43
47
51
55
59
Oct‐11
Nov‐11
Dec‐11
Jan‐12
Feb‐12
Mar‐12
Apr‐12
May‐12
Jun‐12
Jul‐12
Aug‐12
Sep‐12
Oct‐12
Oct‐12
Rupee Versus Dollar during the quarter
CurrencyUpdate
INR
After two consecutive months of gain, the Indian Rupee (INR) weakened against the dollar in the month of October on the back of dollar demand from custodian banks and oil marketing companies. In addition, fall in domestic equities, weak euro and short covering in dollar added more pressure on the domestic currency. Globally, uncertainty over Greece and Spain also affected the currency.
However, some of the macro-economic events like industrial
productivity, inflation and monetary policy disappointed
investors who expected the RBI to start monetary easing. These
data affected the currency further. During the end of the month,
the currency contained some of its losses due to dollar selling by
custodian banks (on behalf of foreign institutional investors) and
tracking gains in the euro.
The INR extended its previous month gains and touched a five-
month high as market participants cheered the fiscal and
economic reforms announced by the Government. Investors were
upbeat after data showed current account
deficit turned into a little surplus during
September quarter from a record 4.5% in the
previous quarter.
The currency started slipping against the
greenback due to large outflows from a private
equity firm's stake sale. This was followed by
dollar demand from custodian banks and oil marketing
companies at regular intervals over the month.
Events that affected the currency included credit rating
downgrade warning by S&P. Other than this, modest growth
in industrial output in August seems not enough to end
sluggish growth. Stronger-than-expected inflation data
pushed the rupee to negative territory as it dented hopes of
rate cuts by the RBI. In its monetary policy meeting, the RBI
left rates unchanged and signaled no further policy easing
until the January-March quarter of next year.
Major reforms measures look unlikely in the interim as state elections are coming up. The winter session of
Parliament will start later in November. Market players are closely awaiting further developments in the
Euro zone as well as the Group of 20 nations' meeting over the weekend, where Europe and the U.S. will be
pushed to tackle their debt woes.
Performance of Various Currencies Versus U.S. Dollar (as of month‐ended October 2012) in %
Currency
1 Month
1 year
South Korean Won ‐2.08 ‐1.97
Philippine Peso ‐1.44 ‐3.66
Chinese Yuan ‐0.75 ‐1.85
Singapore Dollar ‐0.55 ‐2.75
Baht ‐0.39 0.03
Malaysian Ringgit ‐0.34 ‐0.73
Pound Sterling ‐0.22 0.25
New Taiwan Dollar ‐0.21 ‐2.28
Hong Kong Dollar ‐0.06 ‐0.24
Australian Dollar ‐0.04 ‐1.54
Brazilian Real 0.25 18.29
Rupiah 0.37 8.47
Euro 0.78 ‐6.48
Indian Rupee 1.82 10.49
Japanese Yen 2.39 1.99
Source: Reuters. Data sorted in descending order on the basis of 1‐Month return.
Movement of Major Currencies (denominated in Indian Rupee)
Currency
Value (as on 31‐Oct.‐12)
1 Month Ago
6 Months Ago
1 year Ago
US Dollar 54.12 52.70 55.81 48.87
Pound Sterling 87.08 85.71 87.67 78.11
Euro 70.15 68.15 68.45 68.36
Yen (Per Rs.100) 67.99 68.00 71.35 61.51 Source: RBI
P a g e | 13
Euro
During the month, the euro witnessed volatility against the dollar but closed marginally higher. The
movement of the currency showed that any upside for some days was immediately followed by equivalent
selling pressure. After reaching around a six-month high, the currency saw strong resistance and thus
remained in a broad range thereafter.
Strong macro-economic indicators in the Euro area and buying from sovereign investors boosted the appeal
of the currency. The main positive factor was stronger macro numbers from Europe’s largest economy,
Germany, which increased hopes of a turnaround. The currency gained after Spanish economy contracted
at a slightly slower rate than forecasted during the July-September period.
The currency rose further supported by ongoing talks that Spain may soon ask for a bailout. The euro
surged further after Moody's affirmed Spain's investment grade rating. Victory secured by Spain’s Prime
Minister in regional elections removed the potential obstacle for him in asking for a bailout.
The euro fell later due to concerns over global economy and company earnings. Concerns increased further
after the World Bank cut its growth forecasts for the East Asia and Pacific region. In addition, concerns over
the financial affairs of Greece and Spain weighed on investor sentiments.
The euro faltered after data showed U.S. unemployment rate hit its lowest level since January 2009.
Uncertainty over when Spain will apply for a bailout and the timing of bond purchases by European Central
Bank (ECB) majorly impacted the currency in the last week of the month. Investors were also concerned
whether Greece can agree on new austerity measures with its indebted lenders.
GBP
The GBP moved in a narrow range against the dollar but ended marginally weak after hitting a six-week
low. It started on a negative note as major economic data like the Purchasing Managers' Index, U.K.
mortgage lending activity, construction activity and British house prices disappointed investors.
Perceived riskier currencies like the pound came under pressure after a surprise drop in the U.S.
unemployment data and the U.K.’s grim economic outlook. Worries about a weak U.K. economy and the
possibility of more quantitative easing from the Bank of England weighed on the currency. Uncertainty
regarding when Spain may ask for a bailout weighed on the euro, which in turn affected the pound against
the dollar. Pressure on the GBP increased due to uncertainty whether Greece can agree to a deal on
austerity, while Spain continued to hold out on requesting a bailout.
Losses were restricted due to buying from sovereign investors. The pound got further support after the
number of Britons claiming unemployment benefits fell unexpectedly while employment hit a record high.
This triggered hopes that the economy may have staged a reasonable recovery in the third quarter after
three consecutive quarters of contraction. In addition, disappointing European data boosted the appeal of
the currency.
The currency added gains after the U.K. economy grew far more than expected in the third quarter. This
dented expectations of further monetary easing by the Bank of England.
P a g e | 14
By the end of the month, the currency recovered to some extent owing to better macro-economic data,
which increased chances of a sustained economic recovery in the U.K.
Yen
The yen weakened consistently, especially in the second half of the month, as expectations of additional
monetary stimulus from the Bank of Japan increased. Disappointing data from the Bank of Japan's
quarterly Tankan survey of business sentiment added to the woes. Data showed that the mood among
major manufacturers worsened in the latest quarter and was likely to stay gloomy.
The yen came under further pressure after Japanese mobile operator Softbank's $20-billion purchase of
U.S.’ third-largest wireless company, Sprint Nextel, encouraged dollar buying against the Japanese
currency. This has been the largest foreign acquisition ever by a Japanese firm.
The improvement in U.S. manufacturing sector, more-than-expected increase in U.S private sector jobs and
uptick in the U.S. services sector prompted investors to stay away from the safe-haven yen, causing it to
drift lower against the dollar.
Before the downside started, the currency gained to some extent due to the fall in perceived riskier
currencies like the euro. In the last week of the month, after touching a four-month low, the yen managed to
restrict some of the losses after the Federal Reserve stuck to its plan to keep stimulating the U.S. economy
until the job market improves.
The currency trimmed losses to some extent after monetary easing steps from the Bank of Japan
disappointed investors, who expected increase in asset purchases.
P a g e | 15
70.00
90.00
110.00
130.00
Oct‐11 Nov‐11 Dec‐11 Jan‐12 Feb‐12 Mar‐12 Apr‐12 May‐12 Jun‐12 Jul‐12 Aug‐12 Sep‐12 Oct‐12
Movement of Commodity Prices Over 1 Year (Rebased to 100)
Gold (US$) Brent Crude Silver (US$)Source:Reuters
Commodities
After witnessing volatile movements, both the dollar-denominated commodities — Gold and Brent crude — settled the month of October on a lower note. Concerns over slowing global economic growth and Euro zone’s continuing debt crisis kept the entire commodity market under pressure, during the month.
BrentCrude
After witnessing volatility, Brent crude oil prices closed in red for the second month in a row and recorded a M-o-M loss of 0.95% in October. Brent crude oil prices fell initially during the month, tracking poor Chinese manufacturing data and disappointing economic data from Europe, which weakened the demand outlook of oil. However, increased geo-political tensions between Syria and Turkey increased supply concerns from the Middle East and helped oil recover marginally during the first week.
Oil prices recovered later and continued exhibiting an uptrend during the second week, aided by Iran's lingering dispute with the West over Tehran's nuclear program. This increased concerns over global supply disruption. However, oil prices reversed the trend and hovered around the negative zone mostly during the second half of the month. Growing apprehensions over global economic growth overshadowed relief that Spain avoided a ratings downgrade and optimism triggered by strong U.S. corporate results. Disappointing Chinese economic data, Europe's continuing debt crisis and increase in U.S. crude inventories, further added to the concern and pushed oil prices lower. Nevertheless, Brent witnessed marginal gains during the last few days of the month, following a positive Chinese PMI data which reflected a healthy recovery in the world's second-largest oil consumer. In addition, a better-than-expected U.S. GDP growth data also contributed to the oil's rally.
Gold
• Gold started the month with a positive note, following better-than-expected U.S. manufacturing data. The metal even hit 11-month highs after the European Central Bank (ECB) kept interest rates unchanged and declared that it was ready to buy Government bonds of debt-laden nations. This triggered a rally in the euro, which in turn pushed gold prices higher. However, the metal retreated off its earlier gains and dropped in the second week of the month, tracking a positive U.S. jobs data. The decline in U.S. unemployment rate signaled a better economic recovery in the country than Europe and Asia. Growing optimism over U.S. recovery strengthened the dollar but reduced the possibility of additional stimulus measures from the country's central bank in near future, thereby pushing gold prices lower. Renewed concerns over a worsening Euro zone debt crisis also dampened sentiments.
Performance of various commodities
Commodities Last Closing 31‐Oct.‐12
Returns (in %)
1Wk 1‐Mth 6‐Mth 1‐Yr
Crude Brent ($/Barrel)
110.75 2.16 ‐0.95 ‐7.02 1.62
Gold ($/Oz) 1720.05 1.06 ‐2.86 3.38 0.40
Gold (Rs/10 gm) 30931.00 0.51 ‐1.18 6.02 13.71
Silver ($/Oz) 32.21 1.74 ‐6.53 4.07 ‐5.71
Silver (Rs/Kg) 59130.00 1.12 ‐3.85 6.01 5.58 Source: Reuters
P a g e | 16
• The metal continued with its southward journey and dropped more in the second half of the month. A positive Chinese manufacturing data hinted at marginal recovery in the country's economy. This reduced the possibility of additional stimulus measures and demand for the precious metal dropped further. Gold prices also took a hit following the U.S. Federal Reserve's decision to stick to its plan to keep boosting growth till the job market sees marked improvement.
BalticDryIndex
• The Baltic Dry Index, which tracks shipping costs for dry bulk commodities, mostly remained on the positive terrain during the month under review. The index recorded a M-o-M gain of around 34%. The global shipping index largely depends on the movement of goods in China. Hopes of stimulus measures by the Chinese Government boosted demand for coal and iron ore fixtures and thus supported the index’s rally.
P a g e | 17
6.00%
7.00%
8.00%
9.00%
10.00%
11.00%
Sep‐10
Nov
‐10
Jan‐11
Mar‐11
May‐11
Jul‐1
1
Sep‐11
Nov
‐11
Jan‐12
Mar‐12
May‐12
Jul‐1
2
Sep‐12
Monthly WPI Movement )
Source: Officeof the Economic Adviser, Ministry of Commerce & Industry
‐20.00
‐15.00
‐10.00
‐5.00
0.00
5.00
10.00
15.00
20.00
25.00
1‐Au
g‐07
1‐Feb‐08
1‐Au
g‐08
1‐Feb‐09
1‐Au
g‐09
1‐Feb‐10
1‐Au
g‐10
1‐Feb‐11
1‐Au
g‐11
1‐Feb‐12
1‐Au
g‐12
IIP (%MoM) IIP (%YoY)Source: Reuters
IIP Movement
IndianEconomy
The RBI in its second-quarter monetary policy review left the interest rates unchanged but cut the Cash Reserve Ratio (CRR) for banks by 25 bps from 4.50% to 4.25%. The reduction in CRR will inject around Rs. 175 billion of primary liquidity into the banking system. In the calendar year 2012, this is the fourth time when the RBI has reduced the CRR.
The Wholesale Price Index-based inflation (WPI) stood at 7.81% for the month of September against previous month’s reported figure of 7.55% and 10% during the same period last year. Primary articles group posted growth of 8.77% Y-o-Y against last month’s figure of 10.08%. Fall of vegetable prices from 9.98% to -6.78% over the month dragged the food price index down from 9.14% to 7.86% on M-o-M basis. However, fuel inflation jumped to 11.88% during the month following hike in diesel prices. The manufacturing index also continued with the upward trend and reached to 6.26% against last month’s reported figure of 6.14%.
The Index of Industrial Production (IIP) for August grew by 2.7% against 0.2% (revised figure) recorded in July. The cumulative growth for the period April-August 2012-13 stood at 0.4% against 5.6% recorded in the corresponding period last year. Under sectoral classification, all the three sectors, manufacturing, mining and electricity posted growth of 2.9%, 2.0% and 1.9%, respectively and under used-based classification, barring capital goods, all the segments also posted growth. Capital goods fell by (-) 1.7% while basic goods, intermediate goods and consumer goods posted growth of 2.8%, 1.9% and 5%, respectively.
India's annual exports fell 10.78% to $23.7 billion in September, while imports rose 5.09% to $41.8 billion,
leaving a trade deficit of $18.08 billion. Oil imports for September stood at $14.09 billion, while total April-September exports stood at $143.7 billion. The exports declined mainly due to slowdown in the global markets.
As per Government data, India's fiscal deficit during the April-September period rose to Rs. 3,37,000 crore,
or 65.6% of the full fiscal year 2012- 13 target. During the same period in the previous fiscal year, the deficit was 68% of the budget target. The net tax receipts during the April- September period stood at Rs. 2,94,000 crore and the total expenditure was about Rs. 6,94,000 crore.
The growth in core sector industries more than doubled to seven-month highs of 5.1% in September on
sound production in coal, cement and petroleum refinery sectors. In the last month, the growth rate stood at 2.3%.
Economic releases in October 2012
Key Indicator Period Actual Previous
Repo Rate Oct. 8.00% 8.00%
Reverse Repo Oct. 7.00% 7.00%
CRR Oct. 4.50% 4.75%
Index of Industrial Production (IIP)
Aug 2.66% ‐0.18%
Wholesale Price Index Inflation(WPI)
Sept. 7.81% 7.55%
Export (Y‐o‐Y) Sept. ‐10.77% ‐11.68%
Import (Y‐o‐Y) Sept. 5.10% ‐6.44%
Source: RBI, MOSPI. Data in previous column as on previous month end
P a g e | 18
RealEstate&PrivateEquityUpdateRealEstate
Mahindra Life Spaces bids Rs. 260 crore for Chennai
property
Mahindra Life Spaces, part of the $15-billion Mahindra & Mahindra Group, has emerged the highest bidder for a 4.85-acre plot of Madras Race Club in Guindy with a bid in excess of Rs 260 crore.
Housing prices up 6.7% in Q1: RBI
The Reserve Bank of India's quarterly House Price Index, based on data for nine cities, indicates a Q-o-Q increase of 6.7% at the national level. The index takes into account price situation in nine cities — Mumbai, Delhi, Chennai, Bangalore, Ahmedabad, Lucknow, Kolkata, Jaipur and Kanpur.
Brys Group to build 300‐metre housing tower; to
invest Rs. 1,000 crore
Real estate firm Brys Group said it will develop a 300-metre tall residential tower in Noida, offering flats for up to Rs 9 crore a unit. The company has earmarked an investment of Rs 1,000 crore to develop 285 premium apartments over the next four years.
DMI Finance to raise Rs. 1,000‐crore
DMI Finance, a non-banking finance company, founded by former Citigroup employees Shivashish Chatterjee and Yuvraj C Singh, is in the process of raising Rs. 1,000 crore to invest in real estate sector.
Tata Realty launches mega project in Nagpur
Tata Realty and Infrastructure Ltd. launched a mega housing project in Nagpur. Tata Group, that started their first venture in Nagpur in 1877 in the form of a textile company, Empress Mills, will come back to the orange city after a gap of 125 years.
(Source: Economic Times)
PrivateEquity
Fidelity Growth Partners injects Rs 400 crore in
Trivitron Healthcare
Fidelity Growth Partners India (FGPI), India-focused private equity arm of Fidelity Worldwide Investment, has invested Rs 400 crore in Chennai-headquartered medical technology firm, Trivitron Healthcare. Trivitron will use the funding on acquisition of companies and technologies in Europe and the U.S. The funds will also be used to increase the company's distribution operations in South East Asia, Middle East and Africa.
Motilal Oswal Private Equity to raise Rs. 500‐crore real
estate fund
Motilal Oswal Private Equity, an India-focused risk capital firm, is raising Rs 500-crore real estate fund that will invest primarily in residential projects.
Kaizen buys stake in Altus Learning
Gujarat's first private equity deal in education sector, Kaizen Private Equity LLC, has picked up an undisclosed stake by investing Rs 25 crore ($4.5 million) in Ahmedabad-based Altus Learning Private Limited, which runs CalorX brand of schools. Altus, which is promoted by educationist Manjula Pooja Shroff, manages 16 schools at present, mostly in Ahmedabad.
NSR likely to buy 74% stake in Nandos Indage
Restaurants
Private equity firm New Silk Route (NSR) is likely to acquire a 74% stake in Nandos Indage Restaurants, a group company of the pioneering wine maker, Shamrao Chougule family, which controls the financially troubled, Indage Vintners. NSR has set aside $100 million to build a platform of restaurant assets and had acquired controlling interest in south Indian fast food chain, Adiga's earlier this year.
(Source: Hindustan Times and Economic Times)
P a g e | 19
MutualFundPerformanceUpdate
Indian equity markets witnessed consolidation throughout the month of October after recording sharp gains in September. Weak global cues and slowdown in FII inflows weighed on the markets. Poor economic data and mixed earnings reports from corporates further dampened investor sentiments. In the equity space, FIIs remained net buyers of equity to the tune of Rs. 11,364.2 crore. However, mutual fund houses turned net sellers of equities during the month of October to the tune of Rs 2,519.7 crore. Both large-cap and tax-saving funds delivered negative monthly returns. However, funds belonging to small-cap and mid-cap space posted marginally higher returns of 0.65%.
During the month, defensive sectors topped the list in terms of generating returns. FMCG and Pharmaceutical sectors delivered positive returns of 0.63% and 0.31%, respectively. The banking sector gained marginally by returning 0.18%. The gains were restricted after the RBI in its second quarter review of monetary policy 2012-13, left its key policy rates unchanged. The YTD returns of average banking category is 42.50%. The Power index was the top loser during the month as the major power companies reported subdued return in the month. Also shortage of coal and gas supplies and delays in environmental approvals for power and mining projects affected the sector heavily.
In the fixed income space, returns posted by Gilt long-term category significantly declined relative to returns posted by it three months before. The category delivered the lowest quantum of returns (5.68%) during the month under review. Short-term bond fund (8.96%) managed to get the first position in terms of monthly performance, followed by Ultra Short term and Floating rate fund that delivered 8.57% each. The YTD returns stood more than 9% for all the categories mentioned above.
Gold ETFs posted return of 1.20% during the month. The gold prices witnessed a downward movement in the world market and plunged by 2.86% over the month following improvement in U.S. jobs data and consumer confidence. However, some gains were seen due to upcoming festive season.
Segment
Return (%)
1‐Month YTD 1‐Year 3‐Years
Equity
Infotech ‐2.99 5.81 1.09 7.71
Auto ‐1.43 28.58 9.77 14.34
Large Cap ‐1.08 22.46 8.49 7.15
Banking/FinancialServices 0.18 42.50 14.53 12.23
Tax Savings ‐0.76 23.87 8.17 7.39
FMCG 0.63 32.35 20.01 19.29
Pharma 0.31 25.04 19.03 20.47
Infrastructure ‐1.79 19.65 ‐0.13 ‐1.09
Small/Mid Cap 0.65 33.24 13.38 11.47
Power ‐3.70 15.17 ‐5.78 ‐6.11
Debt
Ultra short‐term bond 8.57 9.29 9.27 7.43
Floating Rate Fund
8.57 9.29 9.27 7.43
Liquid 5.68 9.54 11.08 6.55
Short‐term bond 8.96 9.74 9.77 7.72
Gilt short‐term 8.04 7.84 8.21 5.99
Gilt long‐term 5.68 9.54 11.08 6.55
Others
ETF (Gold) 1.20 14.44 18.15 25.01
Source: MFI Explorer For Equity less than 1 year Absolute returns, for Debt less than 1 year Simple Annualized returns. Greater than 1 year Compound Annualized returns; only Growth and regular plans have been considered.
Percentage of Funds Underperforming their category Benchmark index (as of September 2012)
Fund Category
Category Benchmark
Index
1 Month
YTD
1 Year
Large Cap BSE 100 29.4% 47.1% 20.0%
Small/Mid cap CNX Midcap 18.4% 21.1% 21.1%
Tax Planning BSE 200 13.5% 51.4% 27.0%
Source: MFI ExplorerFor Equity less than 1 year Absolute returns, Greater than 1 year Compound Annualized returns.
P a g e | 20
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Oct‐11
Nov‐11
Dec‐11
Jan‐12
Feb‐12
Mar‐12
Apr‐12
May‐12
Jun‐12
Jul‐12
Aug‐12
Sep‐12
Large cap (%) Mid cap (%) Small cap (%)
Monthly Market Cap Allocation of Diversified Equity Funds
7.42% 7.62%7.90%
6.83%
5.69% 5.74%5.38%
6.42%
5.28%5.68%
5.23%
4.41%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
Oct‐11
Nov‐11
Dec‐11
Jan‐12
Feb‐12
Mar‐12
Apr‐12
May‐12
Jun‐12
Jul‐12
Aug‐12
Sep‐12
Monthly Cash Holding of Diversified Equity Funds (in %)
Source MFI Explorer
Portfolio Analysis of Diversified Equity Funds
Monthly Sector Exposure of Diversified Equity Funds (in %)
Month
FI
Industrial Production
Media & Entertainment
Software & Consultancy Services
Telecom Services
Utilities‐Gas, Power
Consumer Durables
Healthcare Services
Power Generation
Oct 2012 2.37 2.39 3.97 9.85 2.36 2.63 2.10 1.99 2.33
Aug 2012 2.24 2.39 3.66 10.23 2.39 2.45 2.20 1.89 2.41
Jul 2012 2.43 2.30 3.66 9.18 2.75 2.45 2.36 1.62 2.20
Jun 2012 2.32 2.46 3.50 9.95 2.93 2.51 1.83 1.60 2.08
May 2012 2.19 2.62 3.43 10.40 3.00 2.51 1.85 1.75 2.05
Apr 2012 2.23 2.70 3.44 9.94 2.89 2.56 1.90 1.51 2.18
Mar 2012 2.23 2.72 3.43 10.37 3.19 3.18 2.00 1.32 2.17
Feb 2012 2.43 2.66 3.51 10.24 3.31 3.16 1.87 1.00 2.13
Jan 2012 2.38 2.54 3.60 9.88 3.68 3.24 1.85 0.92 2.12
Dec 2011 2.12 2.67 3.72 10.91 3.69 3.46 1.81 1.16 2.23
Nov 2011 2.26 2.80 3.52 10.18 3.88 3.45 1.96 1.60 2.32
Oct 2011 2.03 2.93 3.27 9.57 4.06 3.54 1.82 1.13 2.45
Sep 2011 1.99 2.92 3.12 9.29 4.26 3.51 1.87 1.86 2.46
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MutualFundNews
TheAAUMofthemutualfundindustryrisesOn the back of good inflows into debt funds, the AAUM of the mutual fund industry witnessed a rise during the quarter ended September 2012. It edged up by 7.86% Q-o-Q to Rs. 7.47 lakh crore. Of the 44 fund houses, 32 witnessed rise in their AUMs during the period. In terms of gain in average AUM size, UTI MF recorded the highest increase of Rs. 9,860 crore, followed by Reliance MF (Rs. 5,738 crore), Birla Sun Life MF (Rs. 5,709 crore), HDFC MF (Rs. 5,199 crore) and Kotak Mahindra MF (Rs. 5,024 crore). ICICIPrudentialMutualFunddecidedtochangefundmanagementresponsibilitiesICICI Prudential Mutual Fund has changed the fund management responsibilities for ICICI Prudential U.S. Bluechip Equity Fund. Accordingly, Mr. Avinash Jain will manage the Indian debt portion of the aforesaid scheme. BNPParibasMutualFundhasmadechangesunderitsschemesBNP Paribas Mutual Fund has set the minimum amount/units of redemption/switch out from BNP Paribas Bond Fund, BNP Paribas Short Term Income Fund, BNP Paribas Flexi Debt Fund, BNP Paribas Money Plus Fund and BNP Paribas Overnight Fund (surviving plans/schemes) at Rs 1000 and in multiples of Rs 1 thereafter or a minimum of 100 units (unless redemption request is for all units). SBIMutualFundrevisesexitloadunderSBIShortHorizonDebtFund‐ShortTermFundSBI Mutual Fund has revised the exit load structure under SBI Short Horizon Debt Fund-Short Term Fund. Accordingly, an exit load of 0.25% will be charged if units are redeemed or switched out within 75 days from the date of allotment. The above change in the load structure will become effective on all prospective investments made on and after October 5, 2012. IDFCMutualFundrevisesexitloadunderIDFCSuperSaverIncomeFund‐ShortTermIDFC Mutual Fund has revised the exit load structure under IDFC Super Saver Income Fund-Short Term. Accordingly, an exit load of 0.50% will be charged if units are redeemed or switched out within 3 months from the date of allotment. The revised exit load structure has become effective from October 8. ICICIPrudentialMutualFundrevisesexitloadunderICICIPrudentialMediumTermPlanICICI Prudential Mutual Fund has revised the exit load structure under ICICI Prudential Medium Term Plan. Accordingly, an exit load of 0.50% of the applicable Net Asset Value will be charged if units are redeemed or switched out within 1 month from the date of allotment. The revised exit load structure has become effective from October 11, 2012.
JPMorganMutualFundrevisesexitloadforitsschemesJPMorgan Mutual Fund has revised the exit load structure under JPMorgan India Equity Fund, JPMorgan India Smaller Companies Fund, JPMorgan JF Greater China Equity Off-shore Fund, JPMorgan JF ASEAN Equity Off-shore Fund and JPMorgan Emerging Europe, Middle East and Africa Equity Off-shore Fund, Accordingly, an exit load of 3% will be charged if units are redeemed or switched out within 6 months from the date of allotment, 2% will be charged if units are redeemed or switched out up to 12 months and 1% will be charged if units are redeemed or switched out within 18 months from the date of allotment. The revised exit load structure has become effective from October 12, 2012.
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PrincipalMutualFundannounceschangeinFundManagerforitsschemePrincipal Mutual Fund has changed its fund management responsibilities under Principal Retail Equity Savings Fund, with effect from October 15. Accordingly, the new fund manager will be Mr. P.V.K. Mohan. INGMutualFundrevisesexitloadunderitsschemeING Mutual Fund has revised exit load structure of ING Short Term Income Fund. Accordingly, an exit load of 0.50% will be charged if units are redeemed or switched out within 6 months from the date of allotment and nil if redeemed after 6 months from the date of allotment. The revised exit load structure has become effective from October 15, 2012. BirlaSunLifeIncomePluschangesexitloadBirla Sun Life Mutual Fund has revised the exit load structure under Birla Sun Life Income Plus, an open-ended income scheme. Accordingly, an exit load of 1% will be charged if units are redeemed or switched out within 180 days from the date of allotment and nil if redeemed after 180 days from the date of allotment. The revised exit load structure has become effective from October 19, 2012. GoldmanSachsMutualFundlaunchesGoldmanSachsIndiaEquityFundGoldman Sachs Mutual Fund has launched Goldman Sachs India Equity Fund, an open ended equity scheme. The face value of the scheme is Rs. 10 per unit. The issue opened for subscription on October 17, 2012 and closed on October 31, 2012. The investment objective of the scheme is to seek to generate long-term capital growth from an actively managed portfolio, primarily of equity and equity-related securities. The performance of the scheme will be benchmarked against S&P CNX 500 Index and will be managed by Mr. Prashant Khemka. Mr. Aman Batra will manage investments in foreign securities. IndiabullsMutualFundchangesKeyPersonnelMr. Aviral Gupta of Indiabulls Mutual Fund has ceased to be the fund manager of Indiabulls Bluechip Fund and key personnel of the asset management company. This has become effective from October 26, 2012. ICICIPrudentialMutualFundmadevariouschangesunderitsschemeICICI Prudential Mutual Fund has made certain changes under ICICI Prudential Medium Term Plan, with effect from October 29, 2012. Accordingly, the name of the scheme will be ICICI Prudential Dynamic Bond Fund and its benchmark will be CRISIL Composite Bond Fund Index.
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