A Monthly Newsletter on Wealth Management
wealth
In This Issue
•
•
•
•
•
•
•
Market Outlook for the month
Markets and our Recommendations
Large Cap and Mid Cap Investment Ideas
Model Advisory Portfolios
Recommended Funds
4 key products to Successful Investing
Advisory Products
MOSt
June 2012
Key Highlights for the Month
Rupee depreciated by 7.02% to
Rs56.38,
a new low
Implementation of GAAR being postponed to FY14
4QFY12 results season concluded with numbers stronger
than our estimates
Decline in oil price by 14% provides a ray of hope for equities
Dear Investor,
The Nifty after consolidating for last 3 months near its
200 DMA, broke its support and closed 6.2% down
at 4924. FIIs continued to be sellers in markets to the
tune of
Rs1522.8
cr. Fall in markets was largely led by
cross currency movement and fall in commodities.
Rupee depreciated by 7.02% to
Rs56.38,
a new low.
The Finance Bill was being cleared by the parliament with implementation of GAAR
being postponed to FY14 along with some dilution. On economic front inflation for
Apr'12 came at 7.2% slightly higher than expectation; however, core inflation at 4.9%
was still within RBI's comfort level. Mar'12 IIP growth at -3.5% was below
expectations, signified near collapse of industrial production. Also, 4QFY12 GDP
growth at 5.3% came below expectations; being the lowest growth in nine years.
4QFY12 results season came to an end with numbers stronger than our estimates,
For companies in the Nifty top line grew at 21.3% YoY (est. 20.7%), EBITDA grew
at 15.8% YoY (est. 13.2%) and PAT grew at 28.6% YoY (est. 16.2%), excluding SBI
PAT growth was 21.5%. PSU Banks and Automobiles contributed to 53% of the total
PAT growth for the Quarter. Sensex EPS grew 11% in FY12 (3% upgrade) to
Rs1134,
and for FY13 Sensex EPS expected to grow 9% to 1,232.
The risk averse trade seems to be in full swing in markets with EU fear growing
coupled with weak economic data points across the US. From Indian equities outlook,
rapid decline in oil price down by 14% provides a ray of hope as it directly benefits
India's inflation, current account deficit and balance of payments. The fall in Rogers
Commodity Index by 10% augurs well. We expect RBI to stay on course on softening
stance with expectation of CRR cut by 25 bps along with OMO in current monetary
meeting. Little doubt that India may fall as well in the interim, but every dip should
be treated as an opportunity to buy.
Happy Investing
Forthcoming Events
• 12th June
• 14th June
• 15th June
• 18th June
• 20th June
IIP
WPI
US Industrial Production
RBI Credit Policy
US minutes of FOMC
Economic Pulse
Key Indicators
IIP
WPI
10 Year Yield
USD/ INR
Crude ($)
Gold (10 gms)
Current
Month
-3.50%
7.23%
8.49%
56.38
101.87
29183
Chg. (%)
-185%
4.93%
-2.08%
7.02%
-2.77%
0.03%
Global Markets
Index
Sensex
Nifty
FTSE
Dow Jones
Nasdaq
Hang Seng
31-May-12 MoM (%) YoY (%)
16,219
4,924
5,321
12,393
2,827
18,630
-6.4
-6.2
-7.3
-6.2
-7.2
-11.7
-12.3
-11.4
-11.2
-1.4
-0.3
-21.3
Rikesh Parikh - Vice President
Sensex
18,846
Nifty
5,647
Gold
29,183
29,148
Silver
62,162
16,219
15,455
4,624
4,924
21,904
50,963
54,110
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June 2012
wealth
Equity Market Outlook
Technical Outlook
•
Nifty broke down from its previous 3 month range and closed lower by 6.2%
MOSt
On This Page
Equity Market Outlook
Derivatives Market Outlook
Commodities Market Outlook
Markets & Our Recommendations
MOSL's Recommendations
•
Long positions could be made above 5020 for a
potential of 5420, with a stop loss of 4800.
•
Short positions could be below 4800 with a stop
loss of 5020 for a target of 4500.
at 4924, in the process it broke its 200 DMA which was acting as strong
support in previous months.
•
Nifty fall was triggered by sharp decline in value of the Rupee versus the
US $ to an all time low of over
Rs56.
Nifty for the month found support at its
200 Week Moving Average (WMA) at 4800 level.
•
Going ahead level of 200 WMA is going to be a crucial support level for
markets to watch out for, break below 200 WMA market likely to revisit its
December low of 4531. Range for the current month could be 5150 to 4510.
Derivatives Market Outlook
•
May Series witnessed Total Rollovers of 81 % (6m-avg 80%), Nifty rollovers of
MOSL's Recommendations
INDEX: NIFTY
Strategy
:
Premium Outflow
:
Span margin
:
LOT SIZE: 50
Bear Put Ladder.
Rs150.00
(per pair)
Rs32,000.00
(approx)
56% (6m-avg 63%).Total Open Interest at the start of Jun'12 expiry is
Rs805.9bn
as against
Rs778.5bn
at the start of May'12 expiry.
•
In Jun series for Nifty, Highest Call OI is at 5000 strike with 4.8mn shares and
highest Put OI is at 4500 strike with 6.6 mn shares. India VIX has moved higher
above 25 level indicating increased volatility in market.
•
Markets moved below its last 3 month range and closed below its crucial sup-
Pay off Profile On Expiry
Break Even
Point
4303 & 4697
Maximum
Profit
Rs9850
if Nifty
closes at 4500
Maximum
Loss
Rs150
if Nifty
closes above 4700
port of 200 DMA, it is trading very close to its 200 WMA which is placed at
4800 level. Overall volatility in markets has increased and any break below 4800
could take markets nears its previous bottom in December at 4531. One can
initiate Bear Put ratio spread buying Nifty 4700 Jun Put and Sell 2 lots of Nifty
4500Jun Put, exit from ratio spread if Nifty closes below 4500.
Commodities Market Outlook
•
Gold had fallen nearly 20% from its peak of $1,920.30 hit last September. Prices
MOSL's Recommendations
Commodity
1 month
Return
Buy/
Sell
are likely to remain volatile as investors follow the twists and turns in euro zone's
struggle with the debt crisis and assess the possibility of more monetary stimu
lus, with the focus on June 17 Greek elections that may decide if the country
will break away from the single currency bloc.
• Copper sank to its lowest price this year after worsening factory sector indicators
out of China and Europe flagged a downturn in global economic growth, trig-
gering a washout across commodities. Additionally the strengthening dollar
index above 83 further pressurized the red metal to trade lower.
• US crude oil futures hammered down by 17.49% in May, as rising crude oil
inventories, disappointing economic data and a deepening euro zone debt crisis
pressured oil prices.
Gold
Copper
Crude
Silver
-0.06%
-5.71%
-10.73%
-2.20%
Buy
Sell
Sell
Sell
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June 2012
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Large Cap Investment Ideas
MOSt
On This Page
Large Cap Investment Ideas
Mid Cap Investment Ideas
Must Buy
3
State Bank of India (SBI) is the largest commercial bank in India with a network of over
Market & Our Recommendation
SBI
CMP*:
Target:
Rs2,055
Rs2,725
BUY
14,000 branches across India and 18% market-share of the banking business.
3
PAT of
Rs40.5bn
for 4QFY12 is 19% above estimate. NII grew 45% YoY on a low base.
3
We expect SBIN's healthy margin performance to continue with reduction in CRR and
recent equity infusion. Sharp sequential decline in gross slippages across segments in
4QFY12 is comforting. Though we conservatively build in higher credit costs, earnings
CAGR is likely to remain strong at 25% over FY12-14. Continuous improvement in asset
quality could lead to earnings upgrade. Maintain Buy with a target price of
Rs2,725.
3
Coal India Limited is a leading public sector undertaking engaged in coal mining in India
with proved reserves of 52.4bn tons, of which extractable reserves stand at 21.7bn tons.
Coal India
CMP*:
Target:
Rs321
Rs370
BUY
3
FY13 could be the year of 'operational performance turnaround', largely driven by in-
creased focus on production growth. For FY13, production target stands at 464m tons
and we believe that 1HFY13 production could go up ~10% YoY, given the base effect.
3
The phase of 'tight spot' has led to stock price being influenced by news flows. The stock
at 11x FY13E earnings. It has impressive RoE of 25%+, FY12-14E earnings CAGR of
17% and FY13E dividend yield of ~3%. Reiterate Buy, with target of
Rs370.
Mid Cap Investment Ideas
3
Gujarat Mineral Development Corporation Ltd (GMDC), has lignite mines with ~15cr
tonnes of reserves. Lignite, Bauxite and Power were 76%, 5% and 18% of revenue.
3
GMDC is the sole supplier of Lignite in Gujarat with zero competition and strong
GMDC Ltd
CMP*:
Target:
Rs178
Rs225
BUY
pricing power resulting in strong EBITDA margins (Average 47% in last 5 years).
3
Lignite volumes have risen 8% CAGR during last 5 years. Gujarat as an industrial
state offers GMDC tremendous visibility of volume growth. GMDC has no major
capex plans, zero debt and operating cash flows of
Rs9bn
in FY13 as well as FY14.
3
GMDC trades at EV/EBIDTA of 6.5x/5x of FY12/FY13E.We believe the valuations on
trailing basis will roll over to FY13E. BUY with a 12 month target of
Rs225
(EV/
EBIDTA of 6.5x FY13E, return of 30%).
3
Andhra Bank is a mid-sized public sector bank (PSB) operating from 1,729 branches,
extension counters and representative offices.
3
In 4QFY12, net slippages were a negative
Rs791mn
a key positive. Strong recoveries
from system-based NPAs have led to this impressive performance. GNPAs declined
by 5% QoQ in absolute terms and by 26bp QoQ in percentage terms to 2.1%.
3
We expect Andhra Bank to report EPS of
Rs26
and
Rs30
and BV of
Rs152
and
Rs174
for
Andhra Bank
CMP*:
Target:
Rs109
Rs152
BUY
FY13 and FY14, respectively. For FY13/14, we estimate RoA at 1%+ and RoE at
18%+. The stock trades at attractive valuations of 0.8x FY13E and 0.7x FY14E BV,
with a dividend yield of 5%. Reiterate Buy, with target of
Rs152.
*As on 30th April 2012
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June 2012
wealth
Model Advisory Portfolio for Investors
What’s IN
What’s OUT
Aggressive
-
Scrip
MOSt
On This Page
MOSt Value
MOSt Velocity
Build a Portfolio
Coal India
Tata Steel
• Volume growth and price hike at subsidiaries to act as drivers, focus on operational efficiencies to boost profit.
• Exiting on account of downgrade of rating post results.
High Risk,High Returns
MODERATE
-
Scrip
Medium Risk,Medium Returns
DEFENSIVE
-
Scrip
Low Risk,Low Returns
MBP
#
Wtg.
@
MBP
#
Wtg.
@
MBP
#
Wtg.
@
Bharti Airtel
Maruti
SBI
Central Bank
Coal India
ICICI Bank
Reliance
CESC
Infosys
IPCA Lab
L&T
Sintex Industries
Cash
Total
305
1125
2075
80
325
800
715
275
2450
350
1185
55
10%
10%
10%
10%
10%
10%
10%
5%
5%
5%
5%
5%
5%
100%
Bharti Airtel
Maruti
SBI
Central Bank
Coal India
ICICI Bank
Power Grid
Infosys
IPCA Lab
L&T
Reliance
Cash
Total
305
1125
2075
80
325
800
108
2450
350
1185
715
10%
10%
10%
10%
10%
10%
10%
5%
5%
5%
5%
10%
100%
Bharti Airtel
Maruti
SBI
Coal India
ICICI Bank
Reliance
Central Bank
Infosys
L&T
Lupin
Power Grid
Cash
Total
305
1125
2075
325
800
715
80
2450
1185
550
108
10%
10%
10%
10%
10%
10%
5%
5%
5%
5%
5%
15%
100%
Our Aggressive Portfolio works on the principle of ‘no pain
no gain’. The target returns are high at 30%+. Portfolio
includes commodity, cyclical and small-cap stocks.
Some Moderation is achieved in this portfolio by investing in
large and growth stocks available at value. The aim is to
generate 20%+ annualized returns with less risk.
Our Defensive portfolio works on the principle of balanced
growth to outperform the market. The aim is to get
annualized returns in excess of 15% taking minimal risks.
MBP
#
: Maximum Buying Price. One should not buy the stock if Price is above MBP
.
Wtg.
@
: Weightage refers to the size of the position recommended.
Model Advisory Portfolio for Positional Traders
MOSt VELOCITY is a structured advisory process that recommends investments in stocks/ETFs with short-medium term perspective to extract
value out of market momentum. Our Solid Research and Advice will steer you through the ups and downs of the market.
MOSt Velocity 10
Stock
Hindalco
IDFC
ICICI Bank
L&T
HDFC Ltd
Idea Cellular
Infosys Ltd
IPCA
Madras Cement
SBI
Cash
Total
Sector
Metals
Financials
Financials
Engineerig
Financials
Telecom
IT Services
Pharma
Cement
Financials
Wtg%
10.0%
10.0%
7.5%
7.5%
5.0%
5.0%
5.0%
5.0%
5.0%
5.0%
35.0%
100.0%
MOSt Velocity 25
Stock
Hindalco
IDFC
ICICI Bank
L&T
HDFC Ltd
Idea Cellular
Infosys Ltd
IPCA
Madras Cement
SBI
Cash
Total
Sector
Metals
Financials
Financials
Engineerig
Financials
Telecom
IT Services
Pharma
Cement
Financials
Wtg%
10.0%
10.0%
7.5%
7.5%
5.0%
5.0%
5.0%
5.0%
5.0%
5.0%
35.0%
100.0%
*As on 31st May 2012
*Inception Date 9th September 2011
SIP : 300 +Equity Scrips
|
880 + MF schemes
|
M50
|
Midcap100
|
NASDAQ100
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June 2012
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MOSt PMS
Value Strategy
•
Scrips
MOSt
On This Page
MOSt PMS
MOSt Mutual - Model Portfolio
Managed Funds
Top Holdings in Value Strategy
% Holdings
11.53
10.69
10.13
8.71
8.11
Bosch Ltd.
HDFC Bank Ltd
Nestle India Ltd.
Hero Motocorp Ltd.
ITC Ltd.
The Strategy aims to benefit from the long term compounding effect on invest-
ments done in good businesses, run by great business managers for superior
wealth creation.
Value Strategy has the investment style of buying undervalued stock & sell over-
valued stocks, irrespective of index movements.
Since Inception Value Strategy has delivered CAGR returns of 27.98 % Vs.
18.75 % of S&P CNX Nifty.
Money multiplied by approx 10 times in just 9 years.
Rs1cr
invested in Value PMS
in March 2003 is worth
Rs9.66cr
vs. 4.87cr in S&P CNX Nifty.
Thrice the returns compared to Benchmark. In last 3 years, Value Strategy has
delivered more than 3 times the returns of benchmark, delivering 10.78 % annu-
alized returns vs. 3.43% of S&P CNX Nifty.
•
•
•
•
Sector Allocation
Auto & Auto Ancillaries
Banking & Finance
FMCG
InfoTech
Pharmaceuticals
(%)
25.38
25.37
18.25
7.62
6.38
Data as on 31st May 2012
MOSt PMS
NTDOP Strategy
•
Top Holdings in NTDOP Strategy
Scrips
Page Industries Ltd.
Bosch Ltd.
Eicher Motors
Bajaj Finance
Glaxo Consumer
The strategy aims to deliver superior returns by investing in focused themes which
are part of the next Trillion Dollar GDP growth opportunity. It aims to predomi-
nantly invest in Small & Mid Cap stocks with a focus on identifying emerging
stocks/sectors.
The strategy aims to capitalize on the themes of Consumerism, Banking & Finan-
cial Services & Infrastructure in the indian economy.
Since Inception NTDOP Strategy has delivered 6.68% annualized returns vs.
-4.99 % of CNX Midcap.
In last 1 Year, NTDOP Strategy has delivered 10.09% returns vs. -14.43% of CNX
Midcap and generated an alpha of 24.5%.
% Holdings
16.42
9.60
7.87
7.22
6.81
•
•
•
Sector Allocation
Banking & Finance
Auto & Auto Ancillaries
Textiles
Engineering & Electricals
FMCG
(%)
23.74
21.09
16.42
9.48
6.81
Data as on 31st May 2012
All the above figures are of a model client. Returns shown above are calculated on NAV method "
MOSt Mutual - Model Portfolio
AGGRESSIVE - High Risk
Scheme Name
Type
D
D
E
E
E
E
Return %
1yr
10.66
8.35
-6.32
-6.97
-2.28
-3.81
3yrs Wtg%
7.75 15%
10.42 15%
15.01 15%
17.07 20%
21.15 20%
20.89 15%
100
DEFENSIVE - Low Risk
Scheme Name
Birla Sun Life Dynamic Bond -Ret-G
Birla Sun Life MIP II - Savings 5 - G
HDFC Multiple Yield Fund - G
Templeton India STIP - G
Franklin India Bluechip - G
ICICI Pru Focused Bluechip Eq F-Ret-G
Total
Type
D
D
D
D
E
E
Return %
1yr
10.66
9.19
8.35
9.57
-7.41
-6.60
3yrs
7.75
7.19
10.42
8.40
10.19
12.43
Wtg%
10%
20%
20%
20%
15%
15%
100
Data as on 31st May 2012
Birla Sun Life Dynamic Bond Fund- Ret-G
HDFC Multiple Yield Fund - G
Birla Sun Life Dividend Yield Plus - G
DSP BlackRock Small and Midcap Fund-G
HDFC Mid-Cap Opportunities Fund - G
ICICI Prudential Discovery Fund - G
Total
G: Growth , E: Equity, D: Debt
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June 2012
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All
You Need To Know
About
MOSt
On This Page
My Motilal Oswal
4 key products to Successful Investing
My Motilal
Oswal
A service as customised as you want it to be
What is My Motilal Oswal?
My Motilal Oswal is a platform that offers you a
Single SignOn access to all your backoffice reports.
It also offers advanced features such as Watchlist,
customised alerts, etc.
What does My Motilal Oswal offer?
•
•
•
•
•
Integrated view of your Portfolio, available 24x7
Portfolio Restructuring service built-in
Watchlists for Equity, Derivatives, MFs, Commodi
ties, etc.
Customised Alerts based on News & Advice
Single SignOn access to all Backoffice reports
Key Features
Alerts
• Track markets on the move
via SMS & Email
• Set alerts for news, market
updates and more...
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June 2012
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All You Need To Know About
MOSt
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MOSt Velocity
Advisory Products
Delivery Ideas
Few Weeks to Few Months
MOSt
Velocity
A Model Advisory portfolio that recommends investments in stocks and ETFs
from a medium term perspective
Target Segment:
For Investors/Traders looking for delivery ideas from a few weeks to three
months horizon
Rationale
Model advisory trading portfolio which suggests investment in stocks and ETFs
Investments are advised based on technical outlook, sector outlook and stock specific events
Entry and exits are advised, performance is tracked and the results are benchmarked
Efforts are made to stay invested for minimum 60% of the portfolio
Calls are displayed as below:
To read more log on to
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Reg. Office: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad (West), Mumbai 400 064. Tel: 022 3080 1000. Registration Nos.: NSE (Cash) : INB231041238 ; NSE (F&O) : INF231041238 ;
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Disclosure of Interest Statement:
Analyst ownership of the stock: None
Group/Directors ownership of the stock : Bharti Airtel, Birla Corporation, Cairn India, Coal India,GSK Pharma, Honda MotoCorp, IDFC, IOC, Marico, Nestle India, Oriental Bank, South Indian Bank, State Bank, Tata Steel
Broking relationship with company covered: State Bank of India
Investment Banking relationship with company covered: None
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