Download - India Monthly Markets Update August 2010
Monthly Markets Update - India
August 2010
Prepared by: iFAST Research Team
Monthly Markets Update - India
August 2010
Key Points
• Internationally, most of the markets were weak through August. The Japanese Index witnessed the
maximum fall with a negative return of 7.48%. Developing markets like Thailand and Malaysia lead
the pack with positive return of 6.70% and 4.52% during the month.
• Indian Markets ended flat during the month with the Sensex delivering a return of 0.58%. This was
on the back of strong GDP numbers for 1Q FY 2010 – 11.
• Domestically, the BSE Consumer Durables index was the top performer during the month of August
rising by close to 7% during the month. Banking, FMCG and Auto also did well in August. The
broader markets continued to outperform with the BSE Mid-Cap and BSE Small-Cap indices
returning 2.55% and 2.05% respectively in August compared to just 0.58% return managed by the
BSE Sensex index over the same tenure.
• Foreign Institutional Investors (FIIs) continued to pump money into Indian stocks making a net
investment of INR 11,687 crores (about US$ 2.51 billion) into Indian equities during the month of
August. Domestic mutual funds continued to be net sellers with net sells to the tune of INR 2,817
crores in August.
• The dollar appreciated against most currencies during the month of August and the dollar index was
up by about 2.04% during the month. The rupee closed the month with a fall of 1.27%, even though
FIIs pumped in about US$2.5 billion during the month.
• Yields rose across the board but registered a sharp increase in the shorter end of the yield curve.
The yield on the benchmark 3 month and 6 month paper rose by 42 and 48 basis points respectively
during the month, while the yield of the benchmark 10 year paper hardened by 13 basis points
during the month of August and stand at 7.95%.
• The Indian Economy grew at the fastest pace in the last 2.5 years. GDP growth for the first quarter
which ended in June 2010 (FY2010-11) stood at 8.8% on a y-o-y basis and was in line with the most
economists’ expectation.
• Industrial production growth slowed to a 13 month low in June primarily due to a higher base and
registered a single digit growth of 7.10% y-o-y, lower than consensus estimate of 8.10%.
• Indian fund industry’s assets (average assets under management) increased by a 3.30 % in the
month of August.
• Actively managed diversified equity funds continued to outperform the benchmark index, Sensex on
m-o-m basis, delivering an average return of 2.32% in the month of August.
• Overseas, Speciality, Banking and diversified funds have topped the list for the equity segment and
pharma and diversified funds were the worst performing funds in the month of August.
Monthly Markets Update - India
August 2010
Equity Markets Update
International Markets (As of August 2010 end):
2010 2010 2009 P/E P/E Earnings Growth
Earnings Growth
MTD Return (%) YTD Return
(%) Return (%) Yr 2010 Yr 2011 2010 (%) 2011 (%)
Asia ex Japan (MSCI Asia ex Japan) -1.41% -1.11% 68.30% 13.2 11.9 29.4 11.6
Emerging Markets (MSCI EM) -2.15% -1.96% 74.50% 12.0 10.2 37.0 16.8
Europe (DJ Stoxx 600) -1.58% -1.02% 28.00% 11.0 9.4 37.8 16.2
Japan (Nikkei 225) -7.48% -16.33% 19.00% 15.3 13.8 103.9 10.9
USA (S&P 500) -4.74% -5.90% 23.50% 12.9 11.0 35.0 17.6
Australia (S&P/ASX 200) -1.99% -9.58% 30.80% 11.0 10.3 14.0 7.3
Brazil (IBOV) -3.51% -5.02% 82.70% 12.4 9.7 29.1 27.6
China (HS Mainland 100) -2.67% -6.32% 61.30% 12.9 11.2 23.7 15.3
Hong Kong (HSI) -2.35% -6.11% 52.00% 11.9 10.3 25.6 14.8
India (SENSEX) 0.58% 2.90% 81.00% 18.0 15.0 16.8 20.1
Indonesia (JCI) 0.41% 21.60% 87.00% 15.1 12.6 105.1 19.9
Malaysia (KLCI) 4.52% 11.76% 45.20% 15.3 13.7 12.0 12.0
Russia (RTSI$) -3.95% -1.62% 128.60% 7.4 6.3 68.2 18.4
Singapore (STI) -1.25% 1.82% 64.50% 14.5 12.9 20.0 13.1
South Korea (KOSPI) -0.94% 3.56% 49.70% 9.6 8.8 56.5 8.2
Taiwan (Taiwan Weighted) -1.86% -6.98% 78.30% 12.7 11.4 99.2 12.3
NASDAQ 100 (Technology Heavy) -5.18% -4.99% 53.50% 14.4 12.2 28.2 18.4
Thailand (SET Index) 6.70% 24.32% 63.20% 12.7 11.2 15.5 12.6
Source: Bloomberg, iFAST Compilations All returns are in respective local currency terms and MSCI Index returns are in USD
• Internationally, most of the markets were weak during the month, with the Japanese Index
witnessing the maximum fall with a negative return of 7.48%. Developing markets like Thailand and
Malaysia lead the pack with positive return of 6.70% and 4.52% during the month.
• Japan’s economy expanded 0.1% quarter-on-quarter which is equivalent to an annualised rise of
0.4% in the second quarter of 2010. It was much lower than the market consensus of 0.6% growth,
making the country the worst-performing developed economy in the quarter.
• In 2Q 2010 Thailand grew 9.1% year-on-year, which was much higher than analysts’ expectation of
8.0% growth. In absolute figures, GDP in 2Q 2010 reached a record high of 1.15 trillion THB
extending the evidence that the economy has moved out of recovery phase and is in a sure-footed
expansionary phase.
• Indian Markets ended flat during the month with the Sensex delivering a return of 0.58%. This was
on the back of strong GDP numbers for 1Q FY 10 – 11.
Monthly Markets Update
Domestic Markets (As of August 2010 end):
• Domestically, the BSE Consumer Durables index was the top performer during the
August rising by close to 7% during the month. Over a one year period (as of August 2010), the
BSE Consumer Durables index
72.04%.
• Banking, FMCG and Auto also did well in August,
indices delivering returns of 5.64%, 4.81% and 4.62% respectively during the month.
• The broader markets continued to outperform, with the BSE Mid Cap and BSE Small Cap indices
returning 2.55% and 2.05% respectiv
the BSE Sensex index over the same tenure.
• Consumer Durable sector was
performance by Videocon and Titan Industries which account for appr
the index and gave returns
expectation which lead to strong positive return from bank stocks during the month.
• Crude oil prices ended lower during the month (fell
slowdown would further erode oil demand. This lead to negative return by Oil and Gas Index.
Metal stocks also had a bad month due to weak market sentiments in the product segment and
excessive imports from china.
Monthly Markets Update - India
Domestic Markets (As of August 2010 end):
Domestically, the BSE Consumer Durables index was the top performer during the
August rising by close to 7% during the month. Over a one year period (as of August 2010), the
BSE Consumer Durables index has been the top performing domestic index surging by close to
Banking, FMCG and Auto also did well in August, with the BSE Bankex, BSE FMCG and BSE Auto
indices delivering returns of 5.64%, 4.81% and 4.62% respectively during the month.
The broader markets continued to outperform, with the BSE Mid Cap and BSE Small Cap indices
returning 2.55% and 2.05% respectively in August compared to just 0.58% return managed by
the BSE Sensex index over the same tenure.
Consumer Durable sector was the best performing sector of the month on the back of strong
performance by Videocon and Titan Industries which account for approx 15% and 40% weight in
of 21% and 5% respectively. Results from banking sector were above
expectation which lead to strong positive return from bank stocks during the month.
Crude oil prices ended lower during the month (fell by 8.90%) on fears that an economic
slowdown would further erode oil demand. This lead to negative return by Oil and Gas Index.
Metal stocks also had a bad month due to weak market sentiments in the product segment and
from china.
August 2010
Domestically, the BSE Consumer Durables index was the top performer during the month of
August rising by close to 7% during the month. Over a one year period (as of August 2010), the
the top performing domestic index surging by close to
with the BSE Bankex, BSE FMCG and BSE Auto
indices delivering returns of 5.64%, 4.81% and 4.62% respectively during the month.
The broader markets continued to outperform, with the BSE Mid Cap and BSE Small Cap indices
ely in August compared to just 0.58% return managed by
best performing sector of the month on the back of strong
ox 15% and 40% weight in
of 21% and 5% respectively. Results from banking sector were above
expectation which lead to strong positive return from bank stocks during the month.
by 8.90%) on fears that an economic
slowdown would further erode oil demand. This lead to negative return by Oil and Gas Index.
Metal stocks also had a bad month due to weak market sentiments in the product segment and
Monthly Markets Update
Institutional Flows Into Indian Equity Markets
• Foreign Institutional Investors (FIIs) continued to pump in money into Indian stocks making a net
investment of INR 11,687 Crores (about US$ 2.51 billion) into Indian equities following a US$ 3.5
billion net investment made in the previous month.
• Over the past one year, FII net inflows have been positive every month, except in the months of
January 2010 and May 2010.
• So far this calendar year, FIIs have pumped in close to US$ 12.94
2010. In calendar year 2009, FIIs made a net investment of US$ 17.5 billion in Indian equities.
• Domestic mutual funds continued to be net sellers in the month of August 2010 to the tune of
INR 2,817 Crores.
• So far this calendar year, domestic funds have been net sellers to the tune of INR 15,630 Crores
till the end of August 2010.
Monthly Markets Update - India
Institutional Flows Into Indian Equity Markets
Foreign Institutional Investors (FIIs) continued to pump in money into Indian stocks making a net
investment of INR 11,687 Crores (about US$ 2.51 billion) into Indian equities following a US$ 3.5
on net investment made in the previous month.
Over the past one year, FII net inflows have been positive every month, except in the months of
January 2010 and May 2010.
So far this calendar year, FIIs have pumped in close to US$ 12.94 billion till the end of August
2010. In calendar year 2009, FIIs made a net investment of US$ 17.5 billion in Indian equities.
Domestic mutual funds continued to be net sellers in the month of August 2010 to the tune of
endar year, domestic funds have been net sellers to the tune of INR 15,630 Crores
till the end of August 2010.
August 2010
Foreign Institutional Investors (FIIs) continued to pump in money into Indian stocks making a net
investment of INR 11,687 Crores (about US$ 2.51 billion) into Indian equities following a US$ 3.5
Over the past one year, FII net inflows have been positive every month, except in the months of
billion till the end of August
2010. In calendar year 2009, FIIs made a net investment of US$ 17.5 billion in Indian equities.
Domestic mutual funds continued to be net sellers in the month of August 2010 to the tune of
endar year, domestic funds have been net sellers to the tune of INR 15,630 Crores
Monthly Markets Update
• The dollar appreciated against most currencies during the month of August and the dollar index
was up by about 2.04% during the month. The Thai
in August rising by close to 3% during the month whereas Euro was the weakest and fell by
almost 2.85%
• Thailand’s economy grew by 9.1% year
Strong economic growth coupled with an interest rate hike were positive catalysts for THB,
which emerged as one of the top performing currenc
• The rupee closed the month with a fall of 1.27%
billion during the month.
Monthly Markets Update - India
Currency Update
The dollar appreciated against most currencies during the month of August and the dollar index
% during the month. The Thai Baht gained the most against the greenback
in August rising by close to 3% during the month whereas Euro was the weakest and fell by
economy grew by 9.1% year-on-year much higher than analysts’ expe
Strong economic growth coupled with an interest rate hike were positive catalysts for THB,
which emerged as one of the top performing currencies in Asia for the month of August.
The rupee closed the month with a fall of 1.27%, even though FIIs pumped in about US$2.5
August 2010
The dollar appreciated against most currencies during the month of August and the dollar index
gained the most against the greenback
in August rising by close to 3% during the month whereas Euro was the weakest and fell by
year much higher than analysts’ expectation of 8.0%.
Strong economic growth coupled with an interest rate hike were positive catalysts for THB,
in Asia for the month of August.
, even though FIIs pumped in about US$2.5
Monthly Markets Update - India
August 2010
Fixed Income Markets Update
• Yields rose across the board, but registered a sharp increase in the shorter end of the yield curve
as liquidity remained tight throughout the month. The yield on the benchmark 3 month and 6
month paper rose by 42 and 48 basis points respectively during the month, while the yield of
the benchmark 10 year paper hardened by 13 basis points during the month of August and
stand at 7.95%.
• Reverse repo volumes continued to be negative for first half of the month of August, on account
of the liquidity squeeze, but turned positive towards the second half of the month and became
flat towards the end of the month. M3 (broad money) growth fell marginally to 14.8% on 13
August 2010.
• The Debt markets are likely to take cues from the tight liquidity condition owing to the
continuous borrowing programme and any further monetary action in the mid quarter
monetary policy review due on 16 September.
Monthly Markets Update - India
August 2010
Economic Indicators
Economic Releases during the Month of August 2010
Event Period Consensus Actual Prior
India Local Car Sales July - - 158,764 141,184
Industrial Production YoY June 8.10% 7.10% 11.50%
Monthly Wholesale Prices YoY% July 10.40% 9.97% 10.55%
Qtrly GDP YoY% 2Q 8.80% 8.80% 8.60%
Exports YoY% July - - 13.20% 30.40%
Imports YoY% July - - 34.30% 23%
Source: Bloomberg, iFAST Compilations
• Exports growth slowed down dramatically to 13.20% Y-o-Y in July from 30.40% Y-o-Y growth in
the previous month. Whereas Imports grew to 34.30% Y-o-Y in July from 23% Y-o-Y growth in
the previous month.
• July Local car sales hit record high with sales increasing 38% on Y-o-Y basis and 12.45% on MoM
basis. The sales of all firms stood at 158,764 cars in the month of August. In the first four
months of the current fiscal year, car industry growth has averaged 35%.
• The Indian Economy grew at fastest pace in last 2.5 years. GDP for the first quarter ended June
2010 (FY2010-11) is at 8.8% on a y-o-y basis and is in line with the most economists’
expectation. Generally Q1 GDP growth of a financial year lags the Q4 GDP growth of the
previous financial year. However, this time the Q1 has exceed the growth of 8.6% in Q4 of 2009-
10.
• Industrial production growth slowed to a 13 month low in June and registered a single digit
growth of 7.10% Y-o-Y, lower than consensus estimate of 8.10% primarily due to high base. As
expected industrial production growth will continue to moderate in the second half of this year
due to high base effect and with RBI expected to continue its contractionary monetary policy.
• India’s wholesale price inflation fell to a single digit in July, The WPI rose 9.97% Y-o-Y in July
following a 10.55% rise in June. It was far lower than 10.4% which as forecasted by economists.
A year ago, inflation was negative 0.54%. On a monthly basis, WPI climbed 1% in July 2010. The
inflation would continue to trend lower provided the monsoon remains as per expectations.
Monthly Markets Update - India
August 2010
Mutual Fund Industry Asset Trends
• Indian fund industry’s assets (average assets under management) increased by 3.30 % in the
month of August after registering a marginal fall of close to 1.5% in the previous month.
• In absolute terms, HDFC Mutual Fund registered the largest addition in average assets, as the
fund house added about INR 5,550 Crores of assets during the month.
• For the second consecutive month, the largest drop in assets (in absolute terms) during the
month was suffered by LIC Mutual Fund, as the average assets of the fund house plunged by INR
3533 crore in the month of august registering a fall of INR 5,624 crores during the previous
month.
• In percentage terms, Motilal Oswal Mutual Fund saw the largest growth in average assets
(+88.41%) in August, while Deutsche Mutual Fund registered the largest drop in average assets
during the month (-28.40%).
Monthly Markets Update - India
August 2010
Fund Category Returns
Fund Category Returns (as of August 2010)
1 Month YTD 1 Year
Equity: Diversified 2.32 10.55 26.28
Equity: ELSS 2.10 10.34 25.66
Equity: Index 0.87 4.07 15.54
Equity: Overseas 1.36 .027 11.50
Balanced 1.48 8.60 20.57
Debt: MIP 0.49 3.75 7.43
Debt: Income 0.37 3.01 5.01
Debt: Gilt Short Term 0.32 2.53 3.56
Debt: Gilt Long Term 0.27 2.80 4.68
Debt: Floating Rate 0.42 3.14 4.75
Debt: Ultra Short Term 0.43 3.06 4.45
Debt: Short Term 0.36 3.02 4.94
Liquid 0.43 2.78 3.93
Fund of Funds: Overseas 0.16 -0.02 9.10 Source: MFI Explorer, iFAST Compilations
(Excludes Institutional Plans)
• Actively managed diversified equity funds continue to outperform the benchmark Sensex index
on month-on-month basis, delivering an average return of 2.32% in the month of August, while
the Sensex delivered 0.58% over the same tenure. Funds having higher exposure to mid and
small cap stocks outperformed during the month. Y-T-D, diversified equity funds category
delivered an average return of 10.55%, while the Sensex only managed a 2.90% return over the
same period. Meanwhile the BSE Mid Cap and BSE Small Cap indices have risen 13.08% and
14.15% respectively so far this calendar year.
• Balanced funds and Monthly Income Plans (MIP) categories returned 1.48% and 0.49%
respectively during the month of August.
• Though most of global markets were weak, but global thematic funds like Gold fund and
Commodity fund delivered good performance during the month of August with the Equity:
Overseas and Fund of Funds: Overseas categories returning 1.36% and 0.16% respectively
• In the debt segment, Gilt and Income funds underperformed Liquid and Ultra Short term fund
due to the rise in bond yields during the month. Long term gilt funds and Income funds
delivered returns of 0.27% and 0.37 during the month, while short term gilt funds and short
term debt funds delivered average returns of 0.32% and 0.36% respectively in August. Liquid
funds and Ultra Short term funds were the best performing category and they delivered an
average return of 0.43% in August.
Monthly Markets Update - India
August 2010
Top and Bottom Five Performing Equity Funds in August
Top Five Performing Equity Funds on Our Platform during the Month of August
Sector MTD
Returns YTD
Returns
BSL COMMODITY EQUITIES FUND GLOBAL PRECIOUS METALS PLAN- GROWTH Overseas 8.77% 6.31%
SUNDARAM BNP PARIBAS SELECT THEMATIC FUNDS ENTERTAINMENT
OPPORTUNITIES- GROWTH Speciality 7.61% 6.53%
SUNDARAM BNP PARIBAS FINANCIAL SERVICES OPPORTUNIES- GROWTH Banking 6.14% 27.23%
SUNDARAM BNP PARIBAS SELECT THEMATIC FUNDS PSU OPPORTUNITIES- Speciality 6.04% -
BSL INDIA GENNEXT FUND- GROWTH Diversified 6.03% 23.91%
Bottom Five Performing Equity Funds on Our Platform during the Month of August
Sector MTD
Returns YTD
Returns
JM BASIC FUND- GROWTH Infrastructure -1.61% -9.91%
FRANKLIN ASIAN EQUITY- GROWTH Overseas -1.62% -1.86%
BSL INDIA OPPORTUNITIES FUND- GROWTH Diversified -1.90% 4.63%
UTI PHARMA & HEALTHCARE FUND- GROWTH Pharmaceuticals -2.67% 14.14%
MAGNUM SECTOR FUND UMBRELLA-PHARMA- GROWTH Pharmaceuticals -2.68% 9.08%
Source: iFAST Compilations
• Overseas, Speciality, Banking and diversified funds have topped the list for the equity segment
in the month of August.
• The top performing fund from the equity segment was a overseas fund focusing on precious
metals called Birla Sun Life Equities Fund – Global Precious Metals Plan – Growth. The fund
delivered a good 8.77% return during the month of August, this good performance is due to the
run up in the Gold & other precious metals in August. Gold in USD terms went up by 5.63% in
August.
• Both of the media funds have done well in August but only the Sundaram BNP Paribas
Entertainment opportunity fund made it to the top 5 list. The good performance was due to the
regulator setting a deadline of December 31, 2013, for complete migration from analogue to
digital cable services.
• The bottom performing funds from the equity segment in the month of August comprised
primarily of pharma and diversified funds.
• As pharma sector has been one of the best performing sectors in 2010, the pharma stocks and
thus the pharma funds rallied in 2010. However, since July, Pharma stocks are witnessing profit
booking thereby leading to underperformance of Pharma funds.
Monthly Markets Update - India
August 2010
Top and Bottom Five Performing Debt Funds in August
Top Five Performing Debt Funds on Our Platform during the Month of August
Sector MTD
Returns YTD
Returns
CANARA ROBECO INDIGO- GROWTH Speciality 1.6% -
HDFC MF MIP LONG TERM PLAN- GROWTH MIP 1.4% 7.3%
MAGNUM MONTHLY INCOME PLAN- GROWTH MIP 1.1% 5.4%
RELIANCE MONTHLY INCOME PLAN- GROWTH MIP 1.1% 5.7%
Birla Sun Life MIP - Wealth 25 - Growth MIP 0.9% 4.5%
Bottom Five Performing Debt Funds on Our Platform during the Month of August
Sector MTD
Returns YTD
Returns
FIDELITY FLEXI BOND FUND- GROWTH Income -0.1% 1.1%
DSP BLACKROCK BOND FUND- GROWTH Income -0.1% 3.1%
KOTAK BOND REGULAR- GROWTH Income -0.4% 3.2%
KOTAK BOND DEPOSIT- GROWTH Income -0.5% 3.2%
FORTIS MONTHLY INCOME PLAN- GROWTH MIP -2.2% -0.3%
Source: iFAST Compilations
• The top performers from the debt segment during the month of August were Monthly Income
Plans (MIP), making up four of the top five spots. Most of these top performing MIPs in August
were aggressive MIPs, with higher exposure to equities ranging between 15-25% of the
portfolios.
• The top performing fund from the debt segment in August was surprisingly a debt speciality
fund called Canara Robeco InDiGo Fund – Growth, which had concluded its NFO in July. This fund
is an income fund with 10%-35% exposure to gold and since gold has given 5.63% returns in
August, this debt fund has performed well.
• The bottom performing debt funds during the month of August were mostly Income funds. This
can be attributed to the AAA yields going up especially in the securities that will mature in the
next one year.
• The bottom performing debt fund in August was MIP called Fortis Monthly Income Plan –
Growth, which is a moderate MIP fund having about 10% exposure to equities, and in spite of
broad equity market giving positive return the fund deliver a negative return of 2.2% during the
month.
Monthly Markets Update - India
August 2010
Recommended Portfolios Update
1. Conservative Portfolio:
Portfolio Objective:
The portfolio aims to achieve long term capital appreciation by investing 90% into bond funds and 10%
into equity funds. The target allocation may change depending upon our views on financial markets.
Currently we have an overweight position in equities and we target to have an exposure of 80% to bond
funds and 20% to equity funds.
Total Investment: INR 1,00,000 Portfolio Absolute Return since inception:
(Inception Date: 26 Feb 2010) 5.69%
Portfolio Value:
INR 1,05,690
August 2010 Portfolio Return:
0.96%
Portfolio Commentary:
The portfolio gave a return of 0.96% in the month of August. Being overweight on Equity helped
improve the returns on the portfolio, where two equity funds contributed around 66% of the total
portfolio returns during the month. In the Debt segment MTD returns were better than the previous
month but overall the returns in this segment remained low due to the rise in the bond yields during the
month.
All debt funds gave positive returns in the range of 0.31% to 0.57%. The yields on the benchmark 3
month and 6 month paper rose by 42 and 48 basis points respectively during the month, thereby
affecting the returns from short term funds. The debt funds in total contributed 34% of the overall
portfolio return in July.
2. Moderately Conservative Portfolio:
Portfolio Objective:
The portfolio aims to achieve long term capital appreciation by investing 70% into bond funds and 30%
into equity funds. The target allocation may change depending upon our views on financial markets.
Currently we have an overweight position in equities and we target to have an exposure of 60% to bond
funds and 40% to equity funds.
Total Investment: INR 1,00,000 Portfolio Absolute Return since inception:
(Inception Date: 26 Feb 2010)
7.78%
Portfolio Value:
INR 1,07,780
August 2010 Portfolio Return
1.30%
Monthly Markets Update - India
August 2010
Portfolio Commentary:
The portfolio gave a return of 1.3% in the month of August. Overweight position on Equity contributed
to better performance of the portfolio. All Equity funds in the portfolio have outperformed the
benchmark Sensex which delivered only 0.58% on a month-on-month basis. The equity funds
contributed 84% of the overall portfolio returns in August.
In the debt segment all the funds gave positive returns including ICICI Prudential Long Term Plan, which
was in negative territory in the previous month. The best performing funds in the month were floating
rate funds and liquid funds. Also the percentage allocation to floating rate funds and liquid funds is only
20% but each account for 37% returns of the debt portfolio. The debt funds contributed only 16% of the
overall portfolio returns in August.
3. Balanced Portfolio
Portfolio Objective:
The portfolio aims to achieve long term capital appreciation by investing 50% into bond funds and 50%
into equity funds. The target allocation may change depending upon our views on financial markets.
Currently we have an overweight position in equities and we target to have an exposure of 40% to bond
funds and 60% to equity funds.
Total Investment: INR 1,00,000 Portfolio Absolute Return since inception:
(Inception Date: 26 Feb 2010) 10.21%
Portfolio Value:
INR 1,10,210
August 2010 Portfolio Return
1.70%
Portfolio Commentary:
The portfolio gave a return of 1.70% in the month of August, where Equity funds contributed close to
90% of the portfolio returns and only 10% was from the debt segment. In the equity segment, Sundaram
Select Midcap Fund continued to be the best performing fund during the month with a return of 4.08%
outperforming its benchmark BSE Midcap which delivered 2.55% in the same tenure. All equity funds
gave positive returns except for ICICI Prudential Infrastructure Fund, which gave a negative performance
during the month.
In the debt category, Birla Sun Life Floating Rate Fund - LTP and HDFC Cash Mgmt Fund - Treasury
Advantage were the best performing funds. Also the percentage allocation to floating rate funds is only
15% but returns account for 45% of the total returns on the debt portfolio.
Monthly Markets Update - India
August 2010
4. Moderately Aggressive Portfolio:
Portfolio Objective:
The portfolio aims to achieve long term capital appreciation by investing 30% into bond funds and 70%
into equity funds. The target allocation may change depending upon our views on financial markets.
Currently we have an overweight position in equities and we target to have an exposure of 20% to bond
funds and 80% to equity funds.
Total Investment: INR 1,00,000 Portfolio Absolute Return since inception:
(Inception Date: 26 Feb 2010)
13.73%
Portfolio Value:
INR 1,13,730
August 2010 Portfolio Return:
2.15%
Portfolio Commentary:
The portfolio gave a return of 2.15% in the month of August. Overweight position in Equity helped post a
better performance during the month. The banking sector was one of the best performers in this month
due to good Q1 numbers and some banks choosing to hike their lending rates. All of the equity funds
have outperformed the Sensex except for ICICI Prudential Infrastructure Fund.
The equity portion of the portfolio accounted for 96% of the portfolio returns. Reliance Banking fund
was the best performing fund in the portfolio during the month in absolute terms with returns of 4.91%,
accounting for close to 11% of the portfolio’s total return despite having a 5% weightage in the portfolio.
However, returns from HDFC Top 200 fund have attributed to more than 20% of the portfolio returns,
while the fund has a weightage of 15% in the portfolio. Sundaram BNP Paribas Select Midcap Fund is the
second best performing fund in the portfolio and has attributed close to 19% of the portfolio returns.
Reliance Growth fund although is a midcap oriented fund, its performance has lagged that of the BSE
Midcap Index mainly due to its higher holding of cash to the tune of over 6%
5. Aggressive Portfolio:
Portfolio Objective:
The portfolio aims to achieve long term capital appreciation by investing 10% into bond funds and 90%
into equity funds. The target allocation may change depending upon our views on financial markets.
Currently we have an overweight position in equities and we target to have an exposure of 0% to bond
funds and 100% to equity funds.
Total Investment: INR 1,00,000 Portfolio Absolute Return since inception:
(Inception Date: 26 Feb 2010)
17.87%
Portfolio Value:
INR 1,17,870
August 2010 Portfolio Return:
2.78%
Monthly Markets Update - India
August 2010
Portfolio Commentary:
The portfolio gave a return of 2.78% in the month of August. All the funds in the portfolio are equity
funds and all of the funds except for ICICI Prudential Infrastructure Fund outperformed the Sensex by a
huge margin. The banking sector was one of the best performers in this month due to good Q1 numbers
and some banks choosing to hike their lending rates
Most of the sectoral and Midcap funds have delivered returns in August in excess of 2.5%. The Reliance
Banking fund has given an absolute return of 4.91% followed by Sundaram BNP Paribas Select Midcap
Fund which has given an absolute performance of 4.08% for August. While, the Reliance Growth Fund,
another midcap fund in the portfolio underperformed other midcap funds because of huge idle cash
lying in the portfolio to the tune of over 6%.
The Reliance Banking fund despite having only 10% weightage in the portfolio accounted for 17% of the
portfolio’s return for August and the diversified funds have accounted for over 44% of the portfolio
returns.
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