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  • Mutual Fund Review

    October 20 2009 | Mutual Fund October 20 2009 | Mutual Fund October 20 2009 | Mutual Fund

    November 19, 2009 | Mutual Fund Mutual Fund Review

    January 22, 2016

  • ICICI Securities Ltd. | Retail MF Research

    Note: Whenever, returns for the scheme are shown in the report, they are for the growth option of the scheme.

    Mutual Fund Review

    Equity Markets ....................................................................................... 2 Debt Markets.......................................................................................... 2 MF industry synopsis ............................................................................ 3 MF Category Analysis............................................................................ 5 Equity funds......................................................................................... 5 Equity diversified funds....................................................................... 6 Equity Infrastructure fund.................................................................... 7 Equity Banking Funds.......................................................................... 8 Equity FMCG........................................................................................ 8 Equity Pharma Funds .......................................................................... 9 Equity Technology Funds.................................................................... 9

    Exchange Traded Funds (ETF) ....................................................... 10

    Balanced funds ............................................................................... 11

    Monthly Income Plans (MIP) .......................................................... 11

    Arbitrage Funds .............................................................................. 12

    Debt funds ...................................................................................... 13 Liquid Funds ...................................................................................... 14 Income funds..................................................................................... 15 Gilt Funds ........................................................................................ 16 Gold ETFs: Medium term outlook benign......................................... 18 Model Portfolios .................................................................................. 20

    Equity funds model portfolio.......................................................... 20 Debt funds model portfolio ............................................................ 21

    Top Picks.............................................................................................. 22

    January 22, 2016

  • ICICI Securities Ltd. | Retail MF Research

    Page 2

    Equity Markets Update

    Indian equity markets have started 2016 on a weak note on the back of extremely fragile global capital markets. Domestic markets have been on a declining trend since March 2015 and have fallen back to pre general election results levels of May 2014

    From the all-time high levels in March 2015, the BSE Sensex, Nifty 50 is down around 20%. Many bluechip stocks have corrected far higher than headline indices and are trading near 52 week low levels

    Global markets have been under severe pressure particularly since the start of the new year on concerns over a slowdown in China, sharp volatility in the global currency market and concerns over the negative impact of a sharp fall in crude oil prices

    While the steady decline in commodity prices would have been positive Indian market, the relentless fall, particularly in crude oil prices, has put pressure on crude producing countries and oil related companies globally leading to money shifting out of these segments and finding way to safe havens

    The recent correction has seen two interesting trends. FIIs have been large sellers on account of the flight of capital from emerging markets. However, this selling has been absorbed by strong buying on part of DIIs. Outperformance across broader markets is explained by this strong buying trend of DIIs while FII holding remains high in large caps

    Mutual funds invested a record | 67000 crore in CY15 in Indian equity markets on the back of record inflows into equity schemes

    Outlook

    The recent correction in the last 10 months since March 2015 needs to be looked at in conjunction with the significant market rally in the preceding 18 months from September 2013 to February 2015 wherein headline benchmark indices rallied around 70%

    The government has initiated a number of structural policy reforms like power reforms, road sector reforms, implementation of DBT in centrally funded welfare schemes, increasing FDI in many sectors, thrust on manufacturing in sectors like defence, focus on ease of doing business, taxation reforms, etc. The GST bill proposed to be discussed in Rajya Sabha is a crucial development, which investors will be watching. Any positive development on this front will boost investor sentiments

    Structurally, the outlook for Indian equity markets remains good on the back of a steep correction in commodities, especially crude oil & industrial metals, 125 bps repo rate cut and subsequent transmission of the same to corporate balance sheets along with relatively stable exchange rates

    Any intermediate throwbacks from here on should be utilised to buy in a staggered manner from a medium-term perspective to ride the next larger uptrend

    Investors with a long term horizon should start accumulating from current levels and look for portfolio construction rather than opportunistic bottom fishing

    CNX Nifty: On downward trend since March 2015

    6500

    7000

    7500

    8000

    8500

    9000

    Ja n-

    15

    Fe b-

    15

    M ar

    -1 5

    Ap r-1

    5

    M ay

    -1 5

    Ju n-

    15

    Ju l-1

    5

    Au g-

    15

    Se p-

    15

    Oc t-1

    5

    N ov

    -1 5

    De c-

    15

    Ja n-

    16

    Source: Bloomberg, ICICIdirect.com Research

    Mid & small cap outperform …

    6. 1

    10 .0

    -0 .8

    -3 .2

    -5 .0-7.0

    -4.5 -2.0 0.5 3.0 5.5 8.0

    10.5

    BSE Midcap

    BSE Small Cap

    BSE 500 BSE 100 BSE Sensex

    Re tu

    rn (%

    )

    Source: Bloomberg, ICICIdirect.com Research Returns : December 31, 2014– December 31, 2015

    Consumer Durable & pharma sectors outperform…

    24 .0

    15 .3

    4. 3

    2. 2

    -0 .6

    -3 .4

    -5 .0

    -8 .5

    -9 .9

    -1 3.

    6 -1

    7. 2

    -3 1.

    2

    -35 -25 -15 -5 5

    15 25

    Co n.

    Du ra

    He al

    th ca

    re IT

    FM CG

    Au to

    Oi l &

    Ga s

    Se ns

    ex

    Ca p.

    Go od

    s

    Ba nk

    in g

    Re al

    ity

    PS U

    M et

    al

    Re tu

    rn (%

    )

    Source: Bloomberg, ICICIdirect.com Research Returns : December 31, 2014– December 31, 2015

    Research Analyst

    Sachin Jain sachin.jain@icicisecurities.com

    Isha Bansal isha.bansal@icicisecurities.com

  • ICICI Securities Ltd. | Retail MF Research

    Page 3

    Debt Markets Update

    The year 2016 started on a steady and cautious approach for fixed income markets. Yields remain steady with long term G-Sec yields remain at elevated levels

    The returns of debt funds were subdued during 2015, especially in longer duration funds. Market expectations were, however, quite high as longer duration yields were expected to fall around 75-100 bps on the back of positive macroeconomic data and a 125bps rate cut by the Reserve Bank of India. However, G-Secs as well as corporate bond yields remained sticky and traded in a narrow band

    Concerns on the start of monetary tightening by the US Federal reserve, impact on fiscal deficit due to announcement of the Seventh Pay Commission and reduced participation from banks due to asset quality concerns prevented yields from falling in a structural manner

    Indian benchmark 10 year G-Sec yields again rose to 7.7% from 7.55%, levels before the latest rate cut of 50 bps by the RBI. The benchmark US 10 year G-Sec yield also witnessed upward pressure and is trading at around 2.30% currently

    Foreign portfolio investors, after having put in US$12.3 billion in the first four month of 2015, have been extremely subdued

    Outlook

    One of the major structural reforms has been the announcement of an increase in FII limit and linking it to the total outstanding issuance at 5%. Since the total current investment currently is effectively around 3.8%, the increase to 5% is proposed in a phase manner till 2018. The same is expected to lead to increased medium term participation by foreign investors

    The sharp fall in global commodity prices, particularly crude oil prices, is fundamentally positive for the Indian debt market. The CPI inflation trajectory has already shifted down from nearly 10% to below 6%. Inflation is likely to remain benign and is, therefore, positive for debt markets

    Overall, given stable inflation and external account, declining fiscal deficit, an accommodative central

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