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The calendar year 2013 saw both equity and debt markets delivering reasonable returns, though amid high volatility. Moving forward, we look at 2014 with renewed optimism as the positives outweigh the negatives. We may have probably left many uncertainties behind us, as 2014 dawns with the global and domestic economy improving and we can expect economic growth and earnings, which we believe have bottomed out in 2013, to show an uptrend. We must look at both risks and opportunities as we project into this year. There may be global uncertainty around the taper programme and growth in developed economies. A reasonable portion of earnings in the index companies in information technology, pharmaceuticals Anup Bagchi and automobiles are linked to global MD & CEO economies. In addition, due to paucity of ICICI Securities Ltd. domestic savings in equity, we are overly dependent on foreign institutional investors (FII) flows for our equity requirements both for primary as well as secondary markets. Any depreciation in our currency has immediate negative impact on FII flows. We can expect a stable to mildly depreciating dollar-rupee this year with stable current account deficit. General elections, a major event during the middle of the year 2014, assume significance in the context of risk to sovereign rating and investment cycle. A stable elected government is good for sovereign rating and FIl flows. The revival of the investment cycle will also depend on the priorities - infrastructure versus social spending - of the new government. A well-distributed monsoon last year ensured a bumper kharif harvest and a similar rabi harvest is likely to follow. Agriculture growth will continue to boost rural income and rural consumption. This will help two-wheelers and select fast moving consumer goods (FMCG) with low penetrated categories and rural focus. However, urban discretionary spending will continue to remain subdued till the economic growth picks up, inflation drops and/or salaries increase. This does not bode well for domestically exposed automobile companies.
Exports will continue to be a growth driver in this calendar year on the back of an improving global macroeconomic environment and a depreciated rupee. This will continue to benefit sectors such as IT, pharmaceuticals, commodity exporters and companies which have a global footprint and a large part of earnings abroad. Furthermore, favourable regulations and consolidation in certain sectors such as oil and gas (privatesector) and telecommunications will help them continue to improve their profitability. De-bottlenecking of investments has already been done and will increase capital efficiency in the country as a lot of stuck projects will start being delivered. However, fresh investments are still some time away and the outlook appears good for low leveraged capital goods stocks. Other infrastructure stocks could be trading opportunities based on news flows around de-leveraging by asset sales or getting sanctions, approvals to kick start stuck projects. Banks might continue to be under pressure due to high cost of funds, sluggish demand for corporate credit and elevated non-performing assets (levels). We continue to prefer private sector banks over public sector ones as the latter are likely to see significant dilutions due to capital requirements. Finally, mid-caps might be back in action in this calendar year. Select mid-caps with clean balance sheet and leadership poised for gains as valuation gap with large-cap converge. We expect Nifty to sniff 6,700 pre-election and if there is a decisive government, it can move even higher. We expect the Nifty to trade in the 6,000-6,800 range during CY14. Relative to Nifty, we are overweight on IT, pharmaceuticals, oil and gas, telecom, cement and energy; underweight on financials (banks and non-banking financial companies), industrials, materials and real estate; and equal weight on auto, FMCG and utilities. On debt front, we believe that with the macro-economic variables (GDP has bottomed out, inflation seems to be peaking out, concerns over current account deficit has abated and currency has stabilized) and the system liquidity improving, investments in this space look favorable. While longer duration income funds may offer potential gain opportunity as government bond yields are closer to their peak, short-term debt funds offer stable returns by utilizing opportunity to capitalize on current higher yields and credit spread opportunities on medium duration papers. As a part of your asset allocation strategy, it is important that you allocate your capital into both equity (for growth) and debt (to provide stability). We advise investors to focus on their asset allocation first to meet their long-term goals. Our message remains the same - Keep investing and stay invested for your life goals. Through this magazine and our website www.icicidirect.com we want to make an earnest attempt to partner with you in setting and achieving your financial goals. Give us an opportunity to serve you, walk into any of your Neighbourhood Financial Superstore and talk to us
ICICIdirect Money Manager 1
January 2014
EDITORIAL
The calendar year 2013 was reasonably well for almost all the major asset classes, though amid high volatility. As we head into another year, it is natural for most of us to come up with the question, how the New Year would be, for markets and investments, in terms of performance. It's not easy to predict the future. However, knowing where the economy and markets are headed, based on logical analysis, can help us make informed investment decisions. In our cover story of this edition, we bring to you a string of views from fund managers on how they see the year 2014 panning out for major asset classes. Further, to get the big picture of markets in particular, from both fundamental and technical point of view, we cover exclusive columns by Pankaj Pandey and Dharmesh Shah of ICICIdirect, who share their views on what's next for the markets and how you might position your portfolio for the year. Volatility demands changes in the tactical allocations. One can reduce the risk by allocating a part of his or her capital into defensives. In this edition, we offer comprehensive information and analysis on FMCG funds, which offer good investment opportunity in the current scenario. I would also like to draw your attention to our Guest Column by Rohit Salhotra, MD & CEO, ICICI Home Finance Company Ltd., who provides us with the real estate review 2013 and the outlook for 2014. So read on, stay updated and involved. Do write in with your feedback at moneymanager@ icicisecurities.com and share your thoughts. We wish you a happy and prosperous New Year.
Editor & Publisher Coordinating Editor Editorial Board Editorial Team : Abhishake Mathur, CFA : Yogita Khatri : Sameer Chavan, Pankaj Pandey : Azeem Ahmad, Nithyakumar VP , Nitin Kunte, Sachin Jain, Shaboo Razdan, Sheetal Ashar, Venil Shah
January 2014
CONTENTS
MD Desk........................................................................................................... 01 Editorial............................................................................................................ 02 Contents........................................................................................................... 03 News................................................................................................................. 04 Fundamental Market Outlook 2014 By Pankaj Pandey, Head - Research, ICICIdirect ............................................. 05 Technical Market Outlook 2014 Dharmesh Shah, Head - Technical Research, ICICIdirect shares his views on markets, currency, gold and crude oil for 2014 ............................................. 08 Monthly Derivatives Strategy By Amit Gupta, Head - Derivatives, ICICIdirect .............................................. 14 Stock Ideas: ITC and Oberoi Reality.............................................................. 18 Flavour of the Month: Investment Outlook 2014 Here we bring to you a string of views from fund managers on how they see the year 2014 panning out for major asset classes ....................................... 24 Guest Column: Real Estate Outlook 2014 By Rohit Salhotra, MD & CEO, ICICI Home Finance Company Ltd ................ 41 Ask Our Planner: Your personal finance queries answered......................... 46 Your Financial Health Check Here we assess Mumbai-based familys finances and suggest a suitable way forward ..................................................................................................... 50 Primer: Understanding Fiscal Deficit............................................................. 53 Mutual Fund Analysis: Category FMCG Funds.......................................... 55 Equity Model Portfolio.................................................................................... 60 Mutual Funds Model Portfolio........................................................................ 63 Quiz Time......................................................................................................... 65 Monthly Trends................................................................................................ 66 Premium Education Programmes Schedule.................................................. 70
Important: All the contents of ICICIdirect Money Manager are the exclusive property of ICICI Securities Ltd. No article, either in whole or in part, may be published circulated or distributed through any medium without the express consent of ICICI Securities Ltd. Join us on Facebook at http://www.facebook.com/icicidirect ICICIdirect Money Manager 3
January 2014
NEWS
EPFO raises interest rate to 8.75% for 2013-14 Retirement fund body Employees Provident Fund Organisation (EPFO) has announced a rise in interest rate on provident fund (PF) deposits to 8.75 per cent for 2013-14, to benefit 50 million subscribers. The interest rate on PF deposits in the previous financial year was 8.5 per cent. Courtesy: Business Standard CBDT may do away with submission of ITRV forms In what could be good news for lakhs of taxpayers filing their I-T returns online, CBDT is mulling doing away with the mandatory submission of paper verification printout to its processing centre in Bangalore. Central Board of Direct Taxes (CBDT), the apex office to formulate policies for the Income Tax department, was prompted to take this customer-friendly step after it was recently informed that lakhs of such paper statements ITRV have not reached its Central Processing Centre (CPC) despite people filing their e-returns online. Courtesy: The Hindu Get landlords PAN details on plain paper for HRA claim Salaried taxpayers, who want to claim I-T exemption on house rent allowance (HRA) exceeding ` one lakh per annum, will have to obtain the PAN card number and other details of their landlord on a plain A-4 size paper before submitting it to their employer. Courtesy: The Economic Times ETF of PSUs set for launch in a month Soon investors can boast of a portfolio consisting of shares of 11 blue-chip Central Public Sector Enterprises (CPSEs) without any risk considerations. An empowered Group of Ministers (eGoM) under the chairmanship of Finance Minister P. Chidambaram has approved the composition of the Central Public Sector Enterprises Exchange Traded Fund (CPSE-ETF). This fund will be used as an alternative to direct share sales of CPSEs. It will be listed on a stock exchange and trade like other shares on the bourse. Courtesy: The Hindu Business Line
January 2014
difficult to corner a majority to form a government. We would witness an increasing dominance of regional parties, which may render the eventual alliance weaker, and puncture positive sentiments. Nonetheless, the market reaction to election results may be a short-term phenomenon. Sentiments would pick up with implementation of positive and growth oriented reforms,
January 2014
one more rate hike of 25 bps if inflation does not soften as expected. Domestic equity markets had reacted vigorously to initial talks of quantitative easing (QE) tapering. However, with a slew of measures from the RBI and government and receding current account deficit, India looks better prepared for eventual liquidity tapering. We believe QE tapering would eventually turn out to be a non-event. On the global front, India could face stiff competition from China for global funds. Chinese markets are down 8% year-to-date (YTD), as there were apprehensions over leadership change. With a smooth transition in leadership, relatively higher economic growth and inexpensive valuations, China is better placed than India, which faces challenges on all three parameters in FY15. We expect the Sensex to trade at 15x one-year forward Earnings per Share (EPS) of 1543 (25% of FY14E EPS `
January 2014
growth, better asset quality), telecom (higher regulatory clarity, de-leveraging) & cement (positive operating leverage, limited capacity addition). We are neutral on Information Technology (demand intact, rich valuation), pharmaceuticals (rich valuation, tepid domestic growth), oil & gas (earnings dependent on deregulation, limited volume growth) & media (earnings visibility intact, rich valuation). We remain negative on capital intensive sectors like public sector banks (asset quality concerns, earnings volatility), capital goods & infrastructure (capital expenditure yet to revive, policy challenges to remain), power (regulatory overhang, uncertain demand), metals (low domestic growth, price volatility), real estate (muted earning cycle, leverage remains high), shipping (earnings stressed, increased tonnage capacity).
Since we do not expect the economy to rebound meaningfully in the near future, we continue to favour defensive & quasi defensive sectors, which have healthy balance sheets. We like Fast Moving Consumer Goods (growth to inch up, valuation modest in select pockets); automobiles (attractive valuation, good earnings delta in case of recovery). Also, we like private banks (sustained
The views expressed in the article are personal views of the author and do not necessarily represent the views of ICICI Securities. ICICIdirect Money Manager 7
January 2014
Dharmesh Shah
Head - Technical Analysis, ICICIdirect
Domestic equity benchmarks are poised at an important crossroad near their lifetime highs. The question foremost on the minds of every equity investor is whether this is the beginning of a new bull market or is this just another bear market rally? We believe the former is true. However, we feel this will not be a tear away rally and investors will get good entry points in 2014. Our charts seem to indicate that a good buying opportunity is expected to emerge at ~18000-18500/5400-5500 levels in Q2CY14, which we strongly recommend to be bought into with an eye for 23000-24000/6900-7000 by 2015. Rationale Major Bull market peaks are preceded by extreme market frenzy and a broad sense of euphoria. As the marked tops out and does a U-turn, this euphoric sentiment is
ICICIdirect Money Manager
The confluence of the long term 200 week moving average (18375/5520), major bullish gap area (18847 18567/5552-5448) and the lower band of the key uptrending channel around the 18300/5500 region makes this a solid base for the markets
January 2014
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Currency Outlook The US$/INR pair behaved precisely in line with our expectations in the year 2013. We had indicated that the US$/ INR pair is expected to take support at 53 mark and embark upon the next up leg towards 57-57.50 during 2013. The US$/INR pair bottomed out precisely near the earmarked support of 53 levels in the first quarter of 2013 as it made a low 52.97 towards February 2013 and witnessed a stupendous rise to a record high of 68.36 levels by August 2013. After nearly 23% flight during 2013, the US dollar is expected to remain under pressure on rallies. The US$ is currently placed near its short-term support around 60-61. In the short-term, the US$/INR pair may move towards 64-65 being the 61.8% retracement of decline from 68 to 61 levels. However, we expect the US dollar to remain subject to selling pressure on such rallies and react lower towards 58 odd levels during 2014. The long term rising trend line connecting the yearly lows since 2011 is placed around 58 levels and, therefore, is seen as a very strong support for the US Dollar.
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January 2014
Gold (International) Outlook During mid-2013, gold prices breached the lower band of their 20-month trading range of $1800-1550 led by a host of reasons like confidence returning to the recovery of the US economy, a stronger US dollar and panic created by negative news flow of countries like Cyprus selling their gold reserves to fund sovereign debt. Technically, the entire decline off September 2011 highs of
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$1921 is seen as a correction of the 2008-11 rally (6821921). The most significant observation has been that the 35-month rally (October 2008-September 2011) has been retraced by little less than 61.8% in the past 26 months. From a longterm trend analysis, such a slower pace highlights a healthy corrective nature of the decline as usually trend reversals are characterized by faster retracements, which are absent in case of gold prices.
January 2014
Brent Crude Outlook The most important observation on the long term chart of Brent crude is that after the 28-month rally from December 2008 lows ($ 36/ barrel) to April 2011 highs ($127/barrel) Brent crude has been consolidating in a sideways manner for the past 33 months.
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While the time-wise correction has extended beyond 100% of the time taken for the rally, price-wise it has retraced the 2008-11 rally only by 38.2%. The longer time consolidation and limited price correction (38.2%) indicate the corrective nature of the decline and highlight the overall positive price structure.
January 2014
The views expressed in the article are personal views of the author and do not necessarily represent the views of ICICI Securities. ICICIdirect Money Manager 13
January 2014
DERIVATIVES STRATEGY
Maintain our view of Nifty support near 6100 seen at the 6100 Put and 6300 Call strike for the January series indicating range bound bias prevailing for the index. Moreover, despite a continuous decline in the broader index, the volatility of index options has remained subdued and did not surge, suggesting options writing going on at OTM Put strikes. Since the inception of the current series, stock specific short addition has been observed, especially in banking heavyweights. Thus, a round of short covering can be expected if the Bank Nifty sustains above its major Put base of 11000 strike. In such a scenario, we believe that the Nifty may also attempt to surpass its highest Call base of 6300 strike to test the previous stated target of 6500.
Amit Gupta
Head - Derivatives Research, ICICI Securities
Short covering can be expected above 6300 for target of 6500. We maintain our view of Nifty support near 6100 in current consolidation. Amid profit booking and result announcements, the Nifty was able to hold its crucial support of 6100 in the first half of the January series. Nifty futures witnessed continuous closure of long positions since the inception of the series. As a result, the current aggregate open interest in Nifty futures is the lowest in the last four months since September. Hence, leverage factor in the index is significantly low compared to the past couple of months. In the options space also, major open interest concentration continues to be
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January 2014
DERIVATIVES STRATEGY
India VIX: Upsides may be capped near 19 levels in the near term. Moreover, domestically, WPI data will be seen as a trigger for any policy action. In such a scenario, a marginal rise in volatility cannot be ruled out. However, we do not expect the volatility index to surpass 19 levels in the near term. Bank Nifty: May drag broader markets if it slips below major support of 11000. While midcap PSU banking saw strong short covering trend in the December series, Bank Nifty heavyweights consisting of private stocks broadly remained in the range. The Bank Nifty moved up close to 4% during the series but the Nifty gained 2.8% during the same period. On a positional basis, major support for the Bank Nifty is placed at 11000 , which is the highest Put base in the January series continuing the trend of the previous series. The index may be dragged towards 9800-10000 if it does not hold 11000. On the higher side, the highest Call base is placed
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January 2014
The India Volatility Index (India VIX) has continued to decline in the last couple of months and is currently placed near its six months lows. Profit booking of almost 4% in the broader index did not create any upsurge in the volatility index. However, the upcoming policy meet in India and the US towards the end of the month may trigger a rise in volatility. The volatility index has been unable to sustain above its 50-DMA since October 2013 and continued to hover below these levels. Currently, the 50DMA for India VIX is placed at 18.6. Hence, any upside in the volatility index is likely to be capped near these levels.
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DERIVATIVES STRATEGY
at 12000 and the recent top was formed at 12200, which makes a stiff resistance at 12000-12200. A move above these levels would require strong participation from the private banking space, which was absent in the December series. Key trigger for this space will be in the form of WPI numbers on January 15 and Q4 results of index heavyweights, which are expected in the second half of the January series. S&P 500: Buy on decline towards 1800 for target of 1860 In the last month, S&P has found support near our stated support of 1780 and bounced sharply towards 1850. The index has observed all the negativity regarding tapering in the US Fed policy and remained range bound. However, in the last couple of weeks, S&P hovered in a narrow range during the festive season and New Year. However, we believe the positive trend in the US market
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is still intact and declines in the index should be utilised for fresh buying. On the options front, major accumulation of open interest is visible at the 1800 Put strike for the February series. As the index continues to linger above 1800, a round of short covering can be expected above its Call base of 1850 once again. In recent upsides, the S&P index has witnessed continuous buying support near its 50 DMA levels. In the last month as well, it has reverted from these levels only. Currently, the 50 DMA for the S&P is placed at 1800 levels, which should act as immediate support for the index.
Gold: Current upside may be capped near 1300; downside support remains at 1180
January 2014
DERIVATIVES STRATEGY
Gold futures spent most of the time trading below 1250 levels last month. However, it has not breached its June lows of 1180 and witnessed fresh buying from these levels. Currently, the highest options base for the precious metal is placed at the 1300 Call strike. Thus, on a near term basis, upsides may be capped around these levels. However, if gold is able to remain above 1250, it may attempt to move towards the higher target of 1300 in the days to come. As per CFTC data reported for UK, almost 38% open interest in gold has positive bias. Hence, 1300 can be expected if gold moves above 1250. On downsides, immediate support can be expected around 1220. JPYUS$: Likely to decline towards 101.5. The Japanese Yen continued its depreciation against the US$ and tested 105 levels last month. However, the last couple of sessions saw a sharp deprecation towards 103.5. We expect the deprecation trend to continue for a while. It may move towards 101.5 levels in the days to come. The active futures contracts of March 2014 for JPY in CME are currently trading at a deep discount over the spot indicating the spot is expected to come down in the near term. The Japanese Yen spent almost five months from July 2013 to November 2013 near 101.5 levels. Hence, in the current decline, the currency pair is likely to find support near 101.5 in the near term.
The views expressed in the article are personal views of the author and do not necessarily represent the views of ICICI Securities. ICICIdirect Money Manager 17
January 2014
share by value and ~75% share by volume in FY12) has helped ITC pass on the higher excise impact (~18% in FY13 and ~21% in FY14) entirely through prices without impacting profitability from the segment. Though volume growth was impacted in FY14E (-4%), premiumisation in cigarettes and increasing market share in 64-mm continued to aid its margins to 59.6% (FY13) and 64.8% (FY14E) from 56% (FY12). We believe that with excise hike moderating in FY15E and FY16E, thereby limiting price hikes, ITCs volume growth would revive to ~1% in FY15E and 2.5% in FY16E keeping margins intact at ~65% (FY16E) and earnings before interest and taxes (EBIT) contribution at +80%. FMCG business strength gaining
ITCs relentless expansion in the FMCG business has almost doubled its revenues to ` 7012.4 crore in the past five years (FY08-13)
January 2014
STOCK IDEAS
with losses declining from ` 483.5 crore in FY09 to ` 45.2 crore in FY14E. This has been in spite of constant innovation and expansion into new segments and strengthening market share across categories (noodles, packaged food, and biscuits). Further, with the companys fruitful expansion in rural India for its FMCG products and efficient sourcing model, we believe the segment would attain breakeven by FY14E and contribute to margins positively from FY15E onwards. We expect the revenue growth from the segment to remain healthy at 18.6% compounded annual growth rate (CAGR) (FY1316E). Paperboards profitability to sustain until FY16E We believe that led by ITCs dominance in paperboards industry (2nd largest player with value share of ~26% in FY12) paper boards revenues would remain healthy at 10% CAGR FY13-16E (supported by new capacity becoming operational by FY15E) and
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margins sustaining at ~22% until FY16E. Earnings growth remains strong, valuations attractive We expect ITCs earnings growth to remain healthy at 15.5% (CAGR FY13-16E) led by continuing strength in the cigarettes business and improving profitability from FMCG and paperboards business. With the stock trading near its five-year average price-to-earnings (P/E) multiple (one-year forward) of 22x FY16E earnings per share (EPS), we believe it is attractively valued at current market price and provides a good entry point in the ` 310-325 range. We value ITC on sum-of-theparts (SOTP) basis valuing cigarettes business at ` 303 (26x FY16E EPS), FMCG at ` 47 (3x Market capitalization/ sales FY16E), paperboards at ` 9 (4x EV/EBITDA), agriculture at ` 12 (3x P/BV FY16E) and hotels at ` 5 (1x EV/room FY16E) and adding cash per share of ` 11; arriving at a target price of ` 387. We assign a BUY rating.
January 2014
STOCK IDEAS
Key Financials
Net Profit (` Crore) EBITDA (` Crore) Net Profit (` Crore) EPS (`) FY13 29,606 10,620.7 7,418.1 9.4 FY14 32,631.1 12,738.5 8,734.4 11.0 FY15E 37,848.5 14,447.8 10,170.8 12.8 FY16E 42,759.7 16,222.2 11,470.0 14.5
Valuations Summary
P/E (x) Target P/E Dividend yield (%) Price/Sales RoNW (%) RoCE (%) FY13 34.2 41.2 1.6 8.6 33.3 43.7 FY14 29.1 35.1 1.9 7.8 34.3 46.1 FY15E 25.0 30.1 2.3 6.7 35.4 46.7 FY16E 22.2 26.7 2.8 5.9 36.0 47.7
Stock Data
Particulars Market Capitalization Total Debt (FY13) (` crore) Cash and Investments (FY13) (` crore) EV (` crore) 52-week High/Low (`) Equity capital (` crore) Face value (`) MF holding (%) FII holding (%) Figure ` 2,54,232 crore 192.0 ` 3,616.3 crore ` 2,50,807.8 Crore ` 298 / ` 192 ` 792.0 Crore `1 34.3 19.3
Key risks include: Any significant increase in excise duty for the third consecutive year in FY15E Budget and value added tax (VAT) increases across states could significantly impact the cigarettes volume growth, going ahead. Further, ITCs huge investments in the hotels business inspite of earnings from the segment remaining muted could restrict the expansion in return ratios inspite of improving profitability in cigarettes, FMCG and paperboards.
(EBITDA: Earnings before interest, taxes, depreciation, and amortization; EPS: Earnings per share; P/E: Price-to-earnings; RoNW: Return on Net Worth; RoCE: Return on Capital Employed; EV: Enterprise value MF: Mutual Funds; FII: Foreign Institutional Investors). ICICIdirect Money Manager 20
January 2014
Investment Rationale Prudent land acquisition & balance sheet strength A key differentiator ORLs prudent land acquisition strategy (its land parcels are acquired at significantly cheaper cost largely compared to current market prices) coupled with premium realisation have made it one of the highest margin earner (58.8% in FY13) in the sector. This strategy has enabled it to command superior return ratio of 12-14% in the industry vis--vis low single digit in the industry. Furthermore, the availability of financial resources (net cash balance and investment of ~ ` 743 crore in Q2FY14) is another key differentiator for ORL. Given strategy of being prudent in land purchase along with cash at its disposal, ORL would be best suited to lap up a land deal in the scenario where most of it's peers are debt ridden.
January 2014
STOCK IDEAS
Land Parcel Year Area (acres) Cost (` crore) Cost per Developacre eable Area (` crore) (in mn sq ft) Floor space index (FSI) Land cost per sq ft (`)
New launches & price cut Key catalyst for volume pick up While ORL sales volume has been subdued in the past few quarters due to un-affordable price level, we anticipate ORL sales volume to grow from 0.5 mn sq ft in FY13E to 1.1 mn sq ft in FY15E on the back of new launches such as Oberoi Exotica in Mulund & Oasis Residential in Worli. Furthermore, we also built in ~25% price cut in Oberoi Exquisite (Goregaon) from current level of ~` 23,500 per square feet (psf) in our assumptions. The pick up in volume offtake should allay investors concern over sales volume. Esquire to reach threshold in Q4FY14E; to drive earning growth of 14.8% during FY13-15E
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ORLs Esquire, with unrecognised revenues of ` 1270 crore, is expected to hit revenues recognition threshold in Q4FY14E. This coupled with better sales volume on the back of new launches & price cut would drive ORLs earnings at a compounded annual growth rate (CAGR) of 14.8% during FY13-FY15E. Quality player at attractive valuation ORL is our top pick in the sector given the quality of land bank, cash rich balance sheet, management bandwidth to execute the projects and anticipated pick up in the sales volume with new launches such as Mulund and Worli along with attractive valuation (1.4x FY15E P/BV and 0.7x of its net asset value (NAV)). We have BUY rating with a NAV-based price target of ` 285/share.
January 2014
STOCK IDEAS
Key Financials
Net Sales (` Crore) EBITDA (` Crore) PAT (` Crore) EPS (`) FY12 818 483 463 14.1 FY13 1,042 612 505 15.4 FY14E 1,110 625 458 14.0 FY15E 1,297 751 565 17.2
Valuations Summary
P/E (x) Target P/E (x) EV/EBITDA (x) P/BV (x) RoNW (%) RoCE (%) FY12 15.9 20.2 12.5 2.0 12.4 12.2 FY13 14.6 18.5 10.3 1.8 12.1 14.0 FY14E 16.0 20.4 10.9 1.6 10.1 13.0 FY15E 13.0 16.5 8.1 1.5 11.2 14.3
Stock Data
Particulars Market Capitalization Total debt (`) Cash and investments (` crore) EV (` crore) 52-week High/Low (`) Equity capital (` crore) Face value (`) DII Holding (%) FII Holding (%) Figure ` 7,352 crore 0 ` 743 crore ` 6,806 crore ` 328 / ` 153 ` 328.2 crore ` 10 ` 0.8 12.4
Key risks include: Business concentration restricted to Mumbai Metropolitan Region (MMR); softening lease in commercial space; delay in launches and continued weakness in volume off take; and regulatory changes such as Development Control Regulations (DCR) norms in MMR region.
(EBITDA: Earnings before interest, taxes, depreciation, and amortization; PAT: Profit after tax; EPS: Earnings per share; P/E: Price-to-earnings; EV: Enterprise value; P/BV: Price-to-book value; RoNW: Return on Net Worth; RoCE: Return on Capital Employed; DII: Domestic Institutional Investors; FII: Foreign Institutional Investors). ICICIdirect Money Manager 23
January 2014
Ritesh Jain
Chief Investment Officer (CIO), Tata Mutual Fund
Equity: Indian equity markets have been range bound from November 2010 with the Sensex moving in a broad range of 16000 to 21000.
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market valuations are fair and earning expectations for the next two years are not based on optimistic assumptions. We feel investors should increase their equity exposure in 2014 in a systematic way. Investors should also allocate a part of their equity investments in the mid-cap space based on their risk appetite. Debt: We believe that the year 2014 will be an even more volatile period for investment in debt than the year 2013. There are number of local plays (elections) & global factors (Pace of quantitative easing (QE) tapering by US Fed) which will play on market sentiment. In the short term one can expect a rally in government securities (G-sec) in the next one month on the back of relief on the rate front. Moreover, with public sector banks getting conservative in their lending to corporate sector on the back of lower capital adequacy
January 2014
We expect heightened volatility in debt in the year 2014. This volatility should be used to add duration (long term bond funds) as yield move higher. However, we recommend such duration exposure through dynamic bond funds as compared to regular bond funds because in a dynamic bond fund the fund manager has flexibility to tactically manage duration to benefit from the volatility. If investors have a short term investment horizon, they should look at short-term funds and Fixed Maturity Plans (FMPs). In case investors have medium to long term investment horizon; they can start investing in long term funds towards end of first quarter of 2014. Gold: US recovery notwithstanding, the unprecedented liquidity infusion by US Fed seems to be inflating asset prices in US including equities; however
January 2014
brought down the productivity. High M3 growth of about 14% (to support investments in infrastructure) with real gross domestic product (GDP) growth in the range of 4.50% to 5.50%; points to a scenario of continued pressure on inflation. Given all the above domestic plays, expect Indian currency to remain under pressure against developed market currencies thus supporting the price of gold in local currency. Therefore, for Indian investor gold will continue to be an excellent hedge against high and sticky inflation.
Disclaimer: The views expressed are for information purpose only. They are not indicative of future market trends, nor is Tata Asset Management Ltd. attempting to predict the same. These views may or may not be reflected in our scheme portfolios. Kindly consult your financial advisor before investing. Tata Asset Management Limited does not have any Gold Fund and the views on Gold are personal views of the CIO. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
January 2014
Equity: Going into 2014, fears over the tapering in the US, the euro zone crisis and outflows from emerging markets (EM) have eased. Markets are better prepared for the taper and investor sentiment is buoyed by expectations of economic recovery across the world. We expect the global economy to improve, albeit uneven at a country level, against improving set of macroeconomic numbers. EMs should be beneficiaries of improving growth in the developed markets but could be weighed down by a strong US dollar and foreign
ICICIdirect Money Manager
commodity prices globally could be a contributor too. Recent state election results were a triumph of growth and governance over dole outs and entitlement, anti corruption issues even overshadowed competence like never before. India looks to be ready to turn a new leaf in sensible policy making in 2014, an important pre-requisite to build confidence and help kick-start the capital expenditure (capex) cycle - global investors are keenly looking forward to that as well. We expect growth to pick up, with a favourable outcome in the forthcoming general elections should act as a catalyst for quick recovery. Return of growth and stability of the currency is a virtuous cycle that feeds into one another and will endear steady FII and foreign direct investment (FDI) flows which should create an environment for stability. Indian retail investors who have been taking out money from equity markets for the last two years will then have a compelling reason to reverse this and participate in the journey of growth and prosperity.
January 2014
second half of the year. Data dependency by will the be RBI price high, as has been repeatedly emphasised governor. Consumer
Debt: As we head into 2014, uncertainty still prevails in the form of upcoming central elections, fiscal policies of the new government and structural food supply problems which lead to periodic high inflation. However, a couple of positives such as - attractive absolute level of yields, tapering being much less of an overhang, inflation possibly having seen its worst, a structurally lower current account deficit (CAD) and hence a relatively more
ICICIdirect Money Manager 30
index (CPI) inflation is expected to moderate sharply, however the key is to watch whether it can drop significantly below the stubborn 9% levels seen in the past few years. Important in this regard would be the new governments resolve to bring down inflation and implement effective supply side responses. The fiscal situation is a concern, and this is despite the government sticking to a fiscal target for FY 2013 and
January 2014
rupee weakening episodes. From a fund selection and allocation perspective, we think risk reward at the start of the year is in favour of lower duration funds such as short-term and accrual oriented funds. While tactical rallies are likely given elevated yield levels, for a sustained secular drop in yields, we need to see clarity on policies post government formation. Hence, while the second half could witness a sharp rally in yields, we still believe it is better for investors to be prudent in their allocations especially given that shortend yields are fairly attractive, with much lower risk. We both would highlight some key points: Diversification investments and across across assets portfolio
January 2014
are expected to be more favourable, investments in these for a longer term of more than five years. If investing in fixed income and for a short time frame liquid funds, ultra short term plans, short term income funds and fixed maturity plans are good low risk options. Investing in low risk funds is better than leaving money uninvested in savings account as inflation would eat into savings. It would be beneficial to rather allocate some amount into the accrual bond oriented products for a 2-3 year time horizon. longer Investors investment with a horizon
systematic investment plans, wherein monthly investment amount tends to be low. Longer term investors pay an average price for units over time and this helps beat volatility. Remain invested: We have always believed that in times of volatility most opportunities arise and one should stay in the market rather than away from it. Often investors make the mistake of trying to time the market and as a result end up entering the markets at higher levels and sometimes stop their SIPs or exit when markets decline. Review portfolios and pare risks: It would be important to review underlying holdings of portfolios and maybe pare those very high risk investments into lower risk avenues.
32
January 2014
could also look at allocation to long duration products such as income funds provided they are comfortable with short term volatility in those
ICICIdirect Money Manager
Sachin Relekar
Fund Manager/Senior Equity Analyst, LIC Nomura Mutual Fund
Ramnath Venkateswaran
Fund Manager/Senior Equity Analyst, LIC Nomura Mutual Fund
Equity: Elections and views on stability of newly formed government are going to be dominating market movement at-least in the first half of the 2014. We expect investment cycle to continue to receive highest attention irrespective of the political formation that will form the next government. However, progress on the fiscal consolidation front might be difficult to achieve without a decisive electoral verdict for a particular political formation. Cyclical sectors, (financials, industrials, and infrastructure) are likely see improved
ICICIdirect Money Manager 33
visibility in the earnings given the underperformance of these sectors for the past few years and attractive valuations that they are trading currently. While the actual earnings improvement might lag, stock market is a future discounting machine and this may result in these stocks performing better (some of this process may well be underway). a. Export / import substitution (industrials, textiles, Information technology (IT), and pharmaceuticals) may well be the other theme that may play out
January 2014
term and long-term financial objectives. It will be beneficial to ignore the high frequency near-term developments and stay focused on their longer term financial goals. Indian equities are expected to deliver strong long term performance, which is under-pinned by strong demographics, high quality human resource and maturity its governing institutions have gained. Further, the relatively muted performance of the equity asset class over the past 6 years improves the possibility of better returns in the future. Returns from equity markets are typically cyclical in nature, retail investors need to appreciate this and not lose sight of the longer term record of the asset class in generating returns for its investors. Therefore we advise retail investors to stay invested, however, it should be in the context of asset allocation strategy that is aligned to his / her risk profile and longer term financial objectives.
January 2014
Debt: The RBI has been effectively communicating that it is not just interest rates that matter but also a deeper and vibrant debt market. The events of Indian bonds getting added in the global bond indices, more than 1 benchmarks being launched and tracked (short term and long term), a debt market with a healthy exchange traded volume and newer instruments will change the way the debt market looks and works. Of course the rate cycle
35
The India story is in nascent stage and will only get bigger and real with time. Investors must focus on asset allocation, thrift and discipline rather than the noise they hear about market factors or schemes. With equity and debt schemes poised for a better show in 2014 compared to 2013, investors must make up their plans and deploy legitimate amounts in equity, long term debt and short term debt funds. To gain from volatility, we suggest investors use liquid funds to pool their savings and use Systematic Transfer Plan (STP) facility to channelize investment into equity and
January 2014
Sankaran Naren
Chief Investment Officer (CIO), ICICI Prudential Mutual Fund
Equity: Indian corporates have turned in a decent second quarter performance. While sales and operating profits have increased marginally, high interest cost has eroded the bottom line. 1 year forward price-to-earnings (PE) of the Sensex is now below the historical average and so is the market cap/GDP ratio. These two are favorable indicators for the return potential of equities. The equity markets witnessed a recent upturn which was purely driven by FII money which predominantly went into large cap stocks and that too only in selected sectors. This
January 2014
capital goods etc.). However, over the recent past due to severe market polarization, this premium is now hovering in excess of 110%. Over the next few years, we expect interest rates to gradually decline resulting in the investment cycle kick starting in the Indian economy. Once this takes place, the valuation premium gap should regress to the long-term average of ~ 60% resulting in increase in value of cyclical stocks. Though foreigners have poured money by the billions, the Indian retail investor is still reluctant towards equity. Over the past few years, retail investors have been focusing on physical assets like real estate and gold. It is our belief that physical assets cannot be outperforming financial assets over long periods of time. Over the last 5 years, physical assets have outperformed financial assets. In our opinion, we are currently at the stage where financial assets have become extremely attractive from the long term investing perspective. There are a number of reasons for this
January 2014
the best wealth creator over long term needs emphasis. Retail investors have mostly missed the bus in the past and the same hopefully is not the story again. Debt: Interest rates are high and hardly conducive for growth to pick up. On the other hand, with falling food prices, inflation is expected to start cooling down. These two factors shall actuate the central bank to look forward for an accommodative policy. Hence, we expect duration funds to do well in the coming quarters once interest rates starts coming down. Investors are recommended to consider investing in duration funds for the next 18 to 24 months based on their individual risk appetite and investment horizon. People who have already invested in duration funds can stay invested as these are favorable times to be invested. Investors with low risk appetite, however, may consider investing in funds which benefit out of accruals and have low interest rate risk.
January 2014
Quarterly
for period ended September 2013 were better than market expectation. Improvements in economy globally augur well for equities. For India, improvement in US economy is always good for exportoriented sectors. Globally, tapering will lead to coming down of overall pool of money in all asset class. Fixed income market may be impacted more than equities and developed markets may get more inflows than the emerging markets. We are positive on equities for CY14. It is important to remember that wealth can
39
January 2014
Equity: There was a lot of talk in the market about two events in the last year. One: Tapering in US and the other, surrounding general elections in India. One event is over and market is preparing itself for the second event in India. Ultimately, market likes growth and improvement in earnings. The most recent economic data underlines recovery in the developed market. At domestic level, CAD is improving, rupee is stabilizing and GDP growth
ICICIdirect Money Manager
time. Contrary to popular belief, equity markets have outperformed gold in the last two years. In the short term, we think that market will keep giving opportunities. We are positive on equities and advise investors to use the volatility to build their longterm portfolio. Debt: Last year was not a good year for the debt investors though at the beginning it looked promising. Current year should be relatively better. We expect RBI to go on pause for rest of the year after a probable rate hike. Though inflation may come down in near future due to sharp fall in vegetable prices, CPI and WPI is expected to remain sticky throughout the year. Gradual rise in diesel
The views expressed in the article are personal views of the author and do not necessarily represent the views of ICICI Securities. Please send your feedback to moneymanager@icicisecurities.com ICICIdirect Money Manager 40
January 2014
GUEST COLUMN
Real Estate Outlook 2014 Rohit Salhotra, MD & CEO, ICICI Home Finance Company Ltd. shares with us the real estate review of 2013 and the outlook for 2014. Real Estate is close to most heartsNo doubt then, wherever we meet clients, friends, business associates, a common question asked is: Where do you see real estate going? I must say that, quite like for any other asset class, outlook estimation is a culmination of current trends, analysis and expectations. Cautious may be able to summarize the state and the sentiment at the moment. The first half of 2014 could well be a phase of indecision. Home buying is a high involvement decision making, and it would surely require a positive sentiment in the macro market to drive that decision making. A decisive verdict in the general elections could provide that positive news the markets are waiting for. This
ICICIdirect Money Manager 41
Rohit Salhotra
MD & CEO, ICICI Home Finance Company Ltd.
may kick start the buying in H2-CY 2014, and if the new government, in the first few days in office was to send out decisive sound bytes on measures to boost economy, the investment climate may well be activated. This will be a significant boost for the real estate sector. Consumption (self-use) led home buying continues regardless of these
January 2014
GUEST COLUMN
sentiments, and will continue to be the core driver in the months ahead. As an investor, the real estate asset class may not offer significant arbitrage in the short to medium term, as compared to other investment options. One, therefore, must look at this asset class with a long-term perspective. (See the Chart 1 below, showcasing the property prices movement as per the National Housing Bank (NHB) Residex).
(* Delhi does not include Gurgaon, Noida etc. It is not NCR. * Mumbai includes Thane, Navi Mumbai)
Over the past 12 months, we have seen fewer new launches, and a lower absorption. We estimate that CY 2013 would have ended at approximately 22-25% lower absorption as
ICICIdirect Money Manager 42
compared to CY 2012 (Top 7 cities), on the residential sales (see Chart 2), and approx. 5-8% or so lower office space absorption (see Chart 3).
January 2014
GUEST COLUMN
Chart 2: Residential sales numbers of top 7 cities
400000 350000 300000 250000 200000 150000 100000 50000 0 2008 2009 2010 2011 2012 2013*
2013 * is CY end estimates based on 9-month data available from PropEquity
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January 2014
GUEST COLUMN
The early part of CY 2014 may continue to remain lackluster. The developers have started incentives to buyers in the form of masked discounts, and offerings. With fewer new launches, the developers are also focusing on production and execution of the projects on hand. If sales do not pick up, and availability of money continues to stay at a premium, then execution of projects could be affected. Affordability will be a key term if the residential off-take is to increase/improve. Architects and developers will have to think out-of-the-box to bring in more economical supply. The macro number of 19 million units housing shortage almost masks the fact that 95% of this demand is in the economic weak class (EWS) and low income groups (LIG) segments a demand almost un-catered to. The regulatory environment
ICICIdirect Money Manager 44
(Real Estate Regulatory Bill, and the Land Acquisition Resettlement and Rehabilitation RARR Bill) will surely infuse transparency in the real estate sector in the year ahead, but also threatens to induce a price increase. Office space absorption too may not pick up till the macroeconomic indicators send out positive signals. Office vacancy rates in the Top 7 cities have been in the 20-25% range (see Chart 4), and this has kept the prices under check. The Securities and Exchange Board of Indias (SEBIs) decision to release the draft regulations for Real Estate Investment Trusts (REITs) to make their entry into India has fuelled some investor interest in this segment. The commercial (office) real estate market saw some interesting private equity (PE) investments into large portfolio holding during the past year.
January 2014
GUEST COLUMN
Chart 4: Office vacancy rates in the top 7 cities
35% 30% 25% 20% 15% 10% 5% 0% Vacancy Rate
Retail or shopping space could see increased activity. The young India population has been driving consumption, and provides an attractive opportunity to many retailers. The government has also eased investment norms for multi-brand and single-brand retail. Retailer margins though have been shrinking, putting a pressure on real estate component of the input costs. We could see the emergence of more performance driven rental models, rather than
simple straight rentals on a per square foot basis. In summary, it will be an interesting 12 months, possibly split into 2 distinct halves. Though sentiments may be low, the changes in terms of transparency, pricing and investments through REIT do augur well for the industry as a whole. Also considering the underlying demand for housing in India, in the long run return expectations from real estate remain intact.
The views expressed in the article are personal views of the author and do not necessarily represent the views of ICICI Securities. ICICIdirect Money Manager 45
January 2014
income
regular basis. Rather I want to grow my investment. 2. I have SIPs going in 11 mutual funds 9 equity funds & 2 gold funds totaling to `11,700 p.m., of which few funds are not performing well. Should I remain invested in these funds? Or should I sell those at higher level and invest in other funds? - Rushikesh Kulkarni A: To dividend answer your first
first deducts DDT out of the pays you the rest. You dont pay directly; it goes out of the dividend due to you. Under the dividend your re-investment scheme first option,
declares a dividend and then immediately re-invests it in the same scheme at that days net asset value (NAV). The growth option does not declare any dividends; the NAVs move up or down, depending upon the market movement. Both
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January 2014
question, both growth and re-investment options do the same thing, but
ICICIdirect Money Manager
funds, we assume you would invest for the long term; in other words definitely more than a year. In this case, it doesnt matter whether you choose the growth plan or the dividend re-investment plan because equity funds neither impose DDT nor do they attract long-term capital gains tax. Coming to your second question, you should review your funds regularly, at least once in a year, if not less. If your fund consistently underperforms its benchmark and its peers, you can consider exiting them. Also, keep your portfolio to a maximum of 4 to 5 mutual funds only, as investing into mutual funds itself will provide you the required diversification; diversifying again into more number of funds will be like investing into same shares, as some of your funds might be
January 2014
Many couples opt for A: a joint loan as it gives them additional tax benefits. For instance, if you take a joint home loan, both you and your spouse can individually claim
ICICIdirect Money Manager
Please advise how to manage it. - Alok Kumar Rai A: Your existing investments into mutual funds & PPF will grow to around `1.05 crore in the next 10 years, assuming an average return of 12% p.a. from mutual funds & 8.50% p.a. from PPF. You can then utilize the maturity proceeds of PPF and part of the mutual funds accumulation for funding higher education of your kids; the balance amount in your mutual funds can be left to grow for another 2 years, with your SIP continuing in these 2 years. This will give you an amount of `74.95 lakh after 12 years for the marriage of your kids. To bridge the shortfall, we suggest you to increase your existing SIP by `6,000 p.m. i.e. from `24,000 to 30,000 p.m.
January 2014
` 2,04,000 ` 12,000 ` 36,000 ` 96,000 ` 18,000 ` 12,000 ` 6,000 ` 3,84,000 ` 66,000 ` 1,44,000 ` 2,10,000 surplus
investible
(Annual expenses + Annual (Annual Income - Annual cash investments): ` 3,84,000+ ` 2,10,000 = ` 5,94,000
ICICIdirect Money Manager
GOALS PLANNING Goal Name Salils graduation Salils marriage Existing investments to allocate Bank FDs Current SIP Amount Balance future Monthly/ (Present value to be Annual SIP value) achieved recommended ` 1,20,000 NIL NIL ` 1,13,000 NIL NIL p.a. ` 2,00,000 NIL NIL ` 1,90,000 + ` 31,000 p.a. + ` 2,30,000 + ` 2,00,000 1,50,000 31,16,263 10,115 p.m. or 1,15,293 p.a.
Saumyas Debt mutual graduation funds Saumyas marriage Equity + balance SIP + bank FDs + Debt mutual funds New vehicle (For Debt mutual down payment funds amount of ` 1 lakh in present value)
NIL
NIL
Assumed rate of return for SIP / Equity - 12% p.a., bank FDs 6% p.a., Debt mutual funds 7% p.a.
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January 2014
With your current investible surplus, i.e. ` 10,500 per month, you can start investing immediately for accumulating the shortfall for Saumyas marriage. And, as and when your income increases, you can set aside certain portion of it and invest the same for building corpus for your retirement. Insurance Planning As Shashank is the sole earning member of the family and has three dependants, he must take adequate life insurance cover to take care of the family and children goals. Shashank has a life cover of ` 13 lakh, at present. Considering his expenses and goals, he has a shortfall of ~ ` 80 lakh. He should consider buying a term plan to meet the gap. Health insurance is another important cover Shashank should consider. Currently, he has an employer-provided cover. We recommend taking a separate family floater cover of ` 4 lakh and increasing it regularly to ` 6 lakh in 5 years, ` 8 lakh in 10 years and ` 10 lakh in 15 years.
January 2014
expenditure includes salaries payable to the government employees, expenses incurred in running various government departments, and so on. Capital expenditure, on the other hand, includes money spent on some sort of asset creation such as building roads, dams, infrastructure, etc. Governments expenditures can be plan and non-plan. Plan expenditure means spending on the activities related to the national five year plan. Revenue: A major chunk of governments revenue comes from direct and indirect taxes (known as tax revenues). The government also collects revenue from other sources such as
January 2014
PRIMERS
dividends, interest, fees, fine, regulatory charges and license fees, etc. (known as non-tax revenue). A fiscal deficit means that the government is living beyond it means, and in order to bridge this gap, the government borrows additional funds to finance its expenditures. It can borrow either within India (from the Reserve Bank of India, other banks, etc) or outside India (from Word Bank, International Monetary Fund (IMF), etc.). A countrys fiscal deficit is expressed as a percentage of its Gross Domestic Product (GDP). How is current account deficit (CAD) different from fiscal deficit? CAD is the difference between exports and imports of a country, whereas fiscal deficit is the difference between governments total income and total expenditure. Indias recent fiscal deficit numbers: India's fiscal deficit touched ` 5,09,557 crore during AprilICICIdirect Money Manager 54
November, or 93.9% of the annual target, the Controller General of Accounts (CGA) said on December 31, 2013. The gap was 80.4% of the budget estimate at the end of November in 2012-13. The target for the fiscal deficit - the gap between expenditure and revenue - was set at `5,42,499 crore for this financial year. The government has repeatedly asserted that the fiscal deficit would be restricted to 4.8 per cent of GDP , down from 4.9 percent in 2012-13.
Indias fiscal deficit trend
600,000 500,000 400,000 300,000 200,000 100,000 2008-09 2009-10 2010-11 2011-12 2012-13RE 2013-14BE 336,992 418,482 373,592 515,990 520,925 542,499 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
Ministry,
ICICIdirect.com
To sum up, as citizens, we must pay attention to the fiscal deficit and try and understand the different areas of government spending.
January 2014
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January 2014
Product Label
This product is suitable for investors seeking*: l Long term investment l An equity fund that primarily invests in a select group of companies in the FMCG sector l High risk (BROWN)
Calendar Year-wise Performance 2013 2012 2011 2010 2009 NAV as on Dec 31 (`) Return(%) Benchmark (%) Net Assets(` Cr) 116.2 106.3 9.3 12.2 226 40.8 48.5 215 75.5 15.0 8.6 117 65.7 24.9 30.6 78 52.6 65.2 41.6 68
Last three Year Performance Fund Name Fund Benchmark 31-Dec-12 31-Dec-13 9.27 12.18 31-Dec-11 31-Dec-12 40.81 48.53 31-Dec-10 31-Dec-11 14.96 8.58
40 30 20 10 0
4.3
6 Month
9.3
1 Year Fund
12.2
3 Year Benchmark
5 Year
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January 2014
Asset Type % Domestic Equities 52.4 Domestic Equities 6.9 Cash & Cash 6.1 Equivalents VST Industries Ltd. Domestic Equities 5.2 Tata Global Domestic Equities 4.3 Beverages Ltd Bata India Ltd. Domestic Equities 4.2 Dabur India Ltd. Domestic Equities 3.9 Britannia Industries Domestic Equities 3.9 Ltd. Pidilite Industries Domestic Equities 3.6 Ltd. Marico Ltd. Domestic Equities 2.9 Dividend History Date Dec-30-2013 Dec-31-2012 Mar-30-2011 Feb-15-2010 Aug-24-2009 Feb-16-2009 31-Dec-11 31-Dec-12 45.73 29.60 43.59 8.77 11.18 6.05 9.27 12.18 9.22 5.87 6.42 4.38 -5.03 -4.16 31-Dec-10 31-Dec-11 --34.49 26.87 29.38 21.27 40.81 48.53 30.90 29.96 36.53 30.98 25.50 21.65 Dividend(%) 40 45 20 12 12 12 31-Dec-09 31-Dec-10 ---24.53 -24.16 -9.33 -14.39 14.96 8.58 -23.76 -25.73 -27.41 -26.95 -31.02 -38.54
*Investors should consult their financial advisors if in doubt about whether the product is suitable for them
Data and portfolio details are as on December 31, 2013 Source: Accord Fintech, ICICIdirect Research
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January 2014
Fund Manager Minimum Investment (`) Lumpsum SIP Expense Ratio(%) Exit Load Benchmark Last declared Quarterly AAUM(` cr)
shareholder wealth creation. It is an open ended growth scheme that has the objective of providing growth of capital plus regular dividends through a diversified portfolio of equities, fixed income securities and money market instruments. Fund Management: Saurabh 2011. Performance:
Periodic Performance
34.7 21 .7 40 1.7 20 0 6 Month 1 Year Fund 3 Year Benchmark 5 Year 4 .3 21.2 27
Product Label
This product is suitable for investors seeking*:
l l
Long term investment Equity Investments in stock of FMCG sector of the economy to provide sector specific growth opportunities High risk (BROWN)
Pant
has
been
NAV as on Dec 31 (`) Return(%) Benchmark (%) Net Assets(` Cr)
2013 2012 2011 2010 2009 69.7 9.3 11.0 221 63.8 55.3 46.6 172 41.1 6.2 9.5 62 38.7 48.1 32.0 35 26.1 66.4 40.5 9
Last three Year Performance Fund Name SBI Magnum Benchmark 31-Dec-12 31-Dec-13 9.30 11.00 31-Dec-11 31-Dec-12 55.30 46.61 31-Dec-10 31-Dec-11 6.18 9.53
Return%
9.3
11
58
January 2014
Domestic Equities 42.7 Domestic Equities Domestic Equities Domestic Equities Domestic Equities 9.6 7.0 6.9 5.0
Hindustan Unilever does not find space in the portfolio despite ~14% weightage in the index. This fund has more of multinational FMCG companies like P&G, Nestle, etc. The portfolio is more diverse compared to its peer FMCG fund in terms of subsector allocation.
Domestic Equities Domestic Equities Domestic Equities Domestic Equities Domestic Equities
Performance of all the schemes managed by the fund manager Fund Name SBI FMCG Fund-Reg(D) S&P BSE FMCG
31-Dec-11 31-Dec-12 31-Dec-10 31-Dec-11 31-Dec-09 31-Dec-10
9.29 11.00
55.30 46.61
6.18 9.53
*Investors should consult their financial advisors if in doubt about whether the product is suitable for them Note : Risk is represented as: (BLUE) Investors understand that their principal will be at low risk (YELLOW) Investors understand that their principal will be at medium risk (BROWN) Investors understand that their principal will be at high risk
Data and portfolio details are as on December 31, 2013 Source: Accord Fintech, ICICIdirect Research
59
January 2014
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January 2014
Model Portfolio Midcap (%) 8 8 6 6 16 8 8 20 8 6 6 14 8 6 6 6 6 6 6 6 18 6 6 6 100 100 100 Diversified (%) 2.4 2.4 1.8 1.8 4.8 2.4 2.4 6 2.4 1.8 1.8 4.2 2.4 1.8 1.8 1.8 1.8 1.8 1.8 1.8 5.4 1.8 1.8 1.8 30 100
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January 2014
Aggressive Moderate Conservative Monthly Monthly Quarterly High Risk- High Medium Risk Low Risk - Low Return - Medium Return Return % Allocation 25 25 25 25 100 25 25 25 25 100 25 25 25 25 100
CY13 absolute returns in %; Source: Crisil Fund Analyser, ICICIdirect.com Research; Portfolio inception date : September 15, 2009
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January 2014
Time Horizon 6 months - 1 Year Above 1 Year Liquidity with Above FD moderate return Monthly Quarterly Medium Risk Low Risk - High Medium Return Return % Allocation 20 20 20 20 20 100 20 20 20 20 20 100
0 -6 Months
Above 1yr
Model portfolio performance: CY13; Source: Crisil Fund Analyser, ICICIdirect.com Research; *Index: 0-6 months portfolio Crisil Liquid Fund Index; 6 months-1 year Crisil Short term Index; Above 1 year: Crisil Composite Bond Index.
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January 2014
QUIZ TIME
1. Employees' Provident Fund Organisation (EPFO) hikes interest rate on deposits from _______ per cent to _______ per cent. 2. You can get landlords PAN details on plain paper for claiming HRA exceeding ` 1 lakh per annum. True / False 3. Dividends from debt funds are subject to a dividend distribution tax (DDT) of _______ per cent including surcharge and cess. 4. If you take a joint home loan, both you and your spouse can individually claim deduction under Section 80C and Section 24, provided the said home is registered in both your names. True/ False 5. The _______ option in mutual funds does not declare any dividends. Note: All the answers are in the stories that have appeared in this edition of ICICIdirect Money Manager. You may send in your answers at: moneymanager@ icicisecurities.com The answers will be published in our next edition. The names of the earliest all correct entries will be published too. So jog your grey cells and be quick to send in your entries. Correct answers for the last quiz are: 1. For life insurance policies issued after April 1 2012, the tax deduction under section 80C is available only if the premium paid is not more than _______ per cent of the sum assured. A: 10 2. Under new section _______, the additional tax benefit on home loan interest paid is available, for first-time home buyers, subject to certain conditions. A: 80EE 3. If assessee and his parents are both senior citizens, then the total tax deduction for health insurance premium under section 80D would be ` _______. A: 40,000 4. As per the current tax rates, an individual earning ` 8,00,000 and above, is charged tax at _______ per cent. A: 20 5. You get tax deduction on health insurance premium paid by any mode - cash, cheque, etc. True / False A: False Congratulations to the following winner for providing correct answers! Anup Singh, Gandhinagar
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January 2014
MONTHLY TRENDS
INFLATION (FOOD)
25.0 20.0 15.0
(%)
19.93 13.68
(Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DII) net equity investment (` in crore)
ICICIdirect Money Manager 66
January 2014
MONTHLY TRENDS
VIX is a key measure of market expectations of near term volatility. When the markets are highly volatile, the VIX tends to rise. DOMESTIC INDICES BSE Sensex
21400 21200 21000 20800 20600 20400 20200 9 - Dec 14 - Dec 19 - Dec 24 - Dec 29 - Dec 3 - Jan 8 - Jan 20729.38 21326.42
2.80%
NSE Nifty
6400 6350 6300 6250 6200 6150 6100 6050 6000 9 - Dec 14 - Dec 19 - Dec 24 - Dec 29 - Dec 3 - Jan 8 - Jan 6174 .60 6363.90
2.97%
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January 2014
MONTHLY TRENDS
2.73%
NASDAQ
4200 4165.61
4100
4068.75
4000
2.38%
61.13
1.67%
POUND-INR
103.0 102.5 102.0 101.5 102.22
/ INR
101.0 100.5 100.0 99.5 99.0 9 - Dec 14 - Dec 19 - Dec 24 - Dec 29 - Dec 3 - Jan 8 - Jan 100.42
1.79%
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January 2014
MONTHLY TRENDS
EURO-INR
86.0 83.97 84.37 84.0 / INR
82.0
0.47%
80.0
BULLION Gold
1300
$ per Ounce
1225
1240.56
1225.71
$ per Ounce
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January 2014
Schedule for Fast Track Beginners programme on Futures and Options Trading
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January 2014
City
Schedule for Foundation Programme on Stock Investing Dates For More Information & Registration call:
Mumbai-Andheri Jan 18 and 19 2014 Vidhu on 9619716146 Bangalore Jan 18 and 19 2014 Subrata on 9620001478 Indore Jan 11 and 12 2014 Yogesh on 8238053563 Kolkata Jan 25 and 26 2014 Sumit on 8017516187 Navi Mumbai Jan 25 and 26 2014 Manish on 8451057943 Mumbai-Chembur Jan 25 and 26 2014 Manish on 8451057943 Hyderabad Jan 25 and 26 2014 Ruchi on 8297362323 Schedule for Fast Track Foundation Programme on Stock Investing City Dates For More Information & Registration call: Ranchi Faridabad Ahmedabad THIRSSUR Ajmer Jaipur Aurangabad Gurgaon Agra Lucknow Allahabad City Mumbai-Chembur Pune Bangalore Kolkata Bhubaneshwar City Patna Ahmedabad Jan 19, 2014 Sumit on 8017516187 Jan 19, 2014 Vishal on 07838290143 Jan 26, 2014 Yogesh on 8238053563 Jan 11, 2014 Subrata on 9620001478 Jan 19, 2014 Harneet on 09582158693 Jan 12, 2014 Harneet on 09582158693 Jan 19, 2014 Kusmakar on 7875442311 Jan 12, 2014 Harneet on 09582158693 Jan 19, 2014 Vishal on 07838290143 Jan 19, 2014 Vishal on 07838290143 Jan 19, 2014 Vishal on 07838290143 Schedule for Technical Analysis Dates For More Information & Registration call: Jan 18 and 19 2014 Manish on 8451057943 Jan 11 and 12 2014 Kusmakar on 7875442311 Jan 18 and 19 2014 Subrata on 9620001478 Jan 11 and 12 2014 Sumit on 8017516187 Jan 25 and 26 2014 Sumit on 8017516187 Schedule for Fast Track Technical Analysis Date For More Information & Registration, Call: Jan 19, 2014 Jan 12, 2014 Sumit on 8017516187 Yogesh on 8238053563
Contact us Email: Send us an email at learning@icicisecurities.com Please mention the name, date and venue of the programme you have attended or wish to attend, for faster resolution of your queries. SMS: SMS EDU to 5676766 for more details
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