Thursday, June 5, 2008
SBI Mutual Fund appoints Achal Kumar Gupta as the new MD
Achal Kumar Gupta, chief operating officer (COO), has been appointed as the new MD of the asset management business of the country’s largest bank. The fund house has confirmed Mr. Gupta the new designation on back Mr. Syed Shahabuddin’s retirement. The appointment of Mr. Gupta as the managing director of the asset management company is with effect from May 15, 2008.
Fund Manager Sandip Sabharwal's view about MARKET
As the stock markets continue on their volatile movements over the last few months it is now important to sit back and evaluate the various factors impacting the markets and correlate from them the direction that the markets are likely to take going forward.
There are various factors at play today, There is the slowing global economy and the stress in the financial sector globally which has led to a squeeze on liquidity and credit flow. The germination of the same was the US subprime problem and has rapidly spread to other parts of the US economy and has also flown abroad through complex derivative products which have impacted financial institutions all over the world, more so in the US and Japan. Rapid interest rate cuts by the US Fed have limited the damage to some extent but seem to have created a US dollar carry trade which has led to a huge flow of money into commodities. This has inturn created strong inflationary pressures due to the increase in prices of commodities across the board from oil to agricommodities to metals. It has also flown through to secondary products made from primary commodities lately.
This has now created a dichotomy where central bankers across the world are faced with slowing growth and strong inflationary pressures. We believe that the central bankers will be more focused on controlling inflation at this stage and that is also reflected in the statements of the US Fed where they are indicating a steady policy going forward. European central banks are also holding steady and in the developing world we are either seeing a standstill policy or liquidity tightening measures being pursued as in most countries inflation has gone above the targeted levels.
We believe that a combination of slowing global growth and reduced liquidity flows will lead to a collapse of the commodity bubble going forward. We have already seen several agri commodities and base metals already correcting. However crude oil and steel are yet to see any significant correction. A correction in these commodities is now imminent.
As commodities correct they will lead to a reduction of inflationary pressures and we expect that inflation in India which is today at 8 percent plus should trend down to 5-6% over the next one year.
Domestically today we have a macro situation that does not look very healthy with a ballooning fiscal deficit situation, high inflation,increasing trade deficit and slowing growth. However on the micro front as we evaluate company results and the guidance given by companies across sectors is concerned the situation does not seem to be as grim. Most capital goods and construction companies have guided for a growth of 30-40%. Companies in the technology sector have guided for a growth of 20-25% and that guidance factored in rupee at Rs 39 levels. Given the way rupee has fallen over the last few months this guidance is likely to be exceeded. Pharmaceutical companies that were not doing well over the last few years are bouncing back strongly and are likely to grow at 20%. High steel and base metal prices are likely to see strong growth in commodity companies. FMCG is seeing a revival and growth in earnings is likely to be 15-20%. Telecom companies are likely to grow at 30% plus. Automobile and real estate sectors are likely to slow down but still grow earnings. Overall as it seems earnings are likely to see a 20-25% growth. Current market expectations are for a 10-15% earnings growth and the markets in their valuations are factoring in this slow growth. The stock markets are down nearly 30% from the peaks and the mid cap index is down over 40%.
Overall we believe this is the right time for long term investing and lot of the macro issues will get addressed over the next one year. Given strong earnings growth we believe that markets over the next one year are likely to deliver a return of 30-40%. Monsoons are first quarter corporate results are likely to trigger the upmove and the pace of the move will depend on various factors like the rate of change of inflation, commodity price movements as well as clarity on global economic growth. Valuations at around 15X 2009 earnings and 12-13X 2010 earnings are now reasonable. Irrespective of short term volatility or weakness the long term trend is very much intact and it is time to focus on long term upsides rather than short term downsides.
There are various factors at play today, There is the slowing global economy and the stress in the financial sector globally which has led to a squeeze on liquidity and credit flow. The germination of the same was the US subprime problem and has rapidly spread to other parts of the US economy and has also flown abroad through complex derivative products which have impacted financial institutions all over the world, more so in the US and Japan. Rapid interest rate cuts by the US Fed have limited the damage to some extent but seem to have created a US dollar carry trade which has led to a huge flow of money into commodities. This has inturn created strong inflationary pressures due to the increase in prices of commodities across the board from oil to agricommodities to metals. It has also flown through to secondary products made from primary commodities lately.
This has now created a dichotomy where central bankers across the world are faced with slowing growth and strong inflationary pressures. We believe that the central bankers will be more focused on controlling inflation at this stage and that is also reflected in the statements of the US Fed where they are indicating a steady policy going forward. European central banks are also holding steady and in the developing world we are either seeing a standstill policy or liquidity tightening measures being pursued as in most countries inflation has gone above the targeted levels.
We believe that a combination of slowing global growth and reduced liquidity flows will lead to a collapse of the commodity bubble going forward. We have already seen several agri commodities and base metals already correcting. However crude oil and steel are yet to see any significant correction. A correction in these commodities is now imminent.
As commodities correct they will lead to a reduction of inflationary pressures and we expect that inflation in India which is today at 8 percent plus should trend down to 5-6% over the next one year.
Domestically today we have a macro situation that does not look very healthy with a ballooning fiscal deficit situation, high inflation,increasing trade deficit and slowing growth. However on the micro front as we evaluate company results and the guidance given by companies across sectors is concerned the situation does not seem to be as grim. Most capital goods and construction companies have guided for a growth of 30-40%. Companies in the technology sector have guided for a growth of 20-25% and that guidance factored in rupee at Rs 39 levels. Given the way rupee has fallen over the last few months this guidance is likely to be exceeded. Pharmaceutical companies that were not doing well over the last few years are bouncing back strongly and are likely to grow at 20%. High steel and base metal prices are likely to see strong growth in commodity companies. FMCG is seeing a revival and growth in earnings is likely to be 15-20%. Telecom companies are likely to grow at 30% plus. Automobile and real estate sectors are likely to slow down but still grow earnings. Overall as it seems earnings are likely to see a 20-25% growth. Current market expectations are for a 10-15% earnings growth and the markets in their valuations are factoring in this slow growth. The stock markets are down nearly 30% from the peaks and the mid cap index is down over 40%.
Overall we believe this is the right time for long term investing and lot of the macro issues will get addressed over the next one year. Given strong earnings growth we believe that markets over the next one year are likely to deliver a return of 30-40%. Monsoons are first quarter corporate results are likely to trigger the upmove and the pace of the move will depend on various factors like the rate of change of inflation, commodity price movements as well as clarity on global economic growth. Valuations at around 15X 2009 earnings and 12-13X 2010 earnings are now reasonable. Irrespective of short term volatility or weakness the long term trend is very much intact and it is time to focus on long term upsides rather than short term downsides.
Saturday, May 31, 2008
DSP ML Top 100
In the context of Indian stock markets, there is lack of consensus with regards to the definition of large caps, mid caps and small caps. So most fund houses have their own definitions for various stock categories.
The situation is no different on the mutual fund side. There is no unanimity in what constitutes a large cap fund. Basically, there are two breeds of large cap funds. One is the predominantly large cap variety, whereas the other is the ‘true blue’ large cap category.
Predominantly large cap funds have the liberty to invest smaller portion of their assets in mid caps, thereby diversifying their holdings. Conversely, ‘true blue’ large cap funds invest only in large cap stocks. While the former is a common breed in the domestic mutual fund industry, the latter is bit of a rarity.
DSP ML Top 100 Equity Fund (DMLT) belongs to the rare breed of pure large cap funds. But before venturing into its investment proposition, let’s first understand the benefits of investing in large cap funds.
Benefits of investing in large cap stocks/funds
Large cap companies typically have well-established track records in terms of earnings/profitability among other factors. These companies are also well-researched as information on them is widely available, so the chances of making a wrong investment call are relatively lower. This makes their performance more predictable when compared to their mid/small cap peers. Large cap funds, given their investments in large cap stocks, imbibe similar traits. These funds are also less risky compared to mid and small cap funds. It is due to these reasons we advocate that investors with risk appetite must invest in well-managed large cap funds, so as to infuse stability in their portfolios over the long-term.
DMLT’s investment proposition
DMLT is an open-ended diversified equity fund from the stable of DSP Merrill Lynch Fund Managers. The fund’s name as well as its investment objective - ‘to invest in equity securities and equity related securities of the 100 largest corporates, by market capitalisation, listed in India’, clearly defines its investment mandate. And in line with its investment objective, large cap stocks dominate the fund’s portfolio.
The fund is mandated to invest atleast 90% of assets in equities and related instruments, while upto 10% of the assets can be invested in debt and money market instruments. For stock picking, it adopts a combination of the top down and bottom up approaches. It invests in both, growth as well as value stocks.
The situation is no different on the mutual fund side. There is no unanimity in what constitutes a large cap fund. Basically, there are two breeds of large cap funds. One is the predominantly large cap variety, whereas the other is the ‘true blue’ large cap category.
Predominantly large cap funds have the liberty to invest smaller portion of their assets in mid caps, thereby diversifying their holdings. Conversely, ‘true blue’ large cap funds invest only in large cap stocks. While the former is a common breed in the domestic mutual fund industry, the latter is bit of a rarity.
DSP ML Top 100 Equity Fund (DMLT) belongs to the rare breed of pure large cap funds. But before venturing into its investment proposition, let’s first understand the benefits of investing in large cap funds.
Benefits of investing in large cap stocks/funds
Large cap companies typically have well-established track records in terms of earnings/profitability among other factors. These companies are also well-researched as information on them is widely available, so the chances of making a wrong investment call are relatively lower. This makes their performance more predictable when compared to their mid/small cap peers. Large cap funds, given their investments in large cap stocks, imbibe similar traits. These funds are also less risky compared to mid and small cap funds. It is due to these reasons we advocate that investors with risk appetite must invest in well-managed large cap funds, so as to infuse stability in their portfolios over the long-term.
DMLT’s investment proposition
DMLT is an open-ended diversified equity fund from the stable of DSP Merrill Lynch Fund Managers. The fund’s name as well as its investment objective - ‘to invest in equity securities and equity related securities of the 100 largest corporates, by market capitalisation, listed in India’, clearly defines its investment mandate. And in line with its investment objective, large cap stocks dominate the fund’s portfolio.
The fund is mandated to invest atleast 90% of assets in equities and related instruments, while upto 10% of the assets can be invested in debt and money market instruments. For stock picking, it adopts a combination of the top down and bottom up approaches. It invests in both, growth as well as value stocks.
Being rich and looking rich
There are two kinds of people. The first type are ones-- who look rich i.e those who have a flaunting lifestyle. The other one's are rich but you cant gauge the richness from their lifestyle.
There are a lot of salaried middle class class people who belong to the first category. They flaunt a rich life style ( Thanks to the high salaries and EMI facilities !!).Nothing wrong in enjoying one's money. But one shouldn't end up eating out all his current income and future income. You should also save and invest for your future.
If you do not save even for contingencies, you may face a disaster when some unforeseen event happens. In this fast moving world, all things including permanency of employment, longevity of work life, etc have changed drastically. We should really work towards financial independence. i.e making money work for us , so that it can take care of all our future needs. So, being rich is more important than looking rich when you are working towards financial independence.
There are a lot of salaried middle class class people who belong to the first category. They flaunt a rich life style ( Thanks to the high salaries and EMI facilities !!).Nothing wrong in enjoying one's money. But one shouldn't end up eating out all his current income and future income. You should also save and invest for your future.
If you do not save even for contingencies, you may face a disaster when some unforeseen event happens. In this fast moving world, all things including permanency of employment, longevity of work life, etc have changed drastically. We should really work towards financial independence. i.e making money work for us , so that it can take care of all our future needs. So, being rich is more important than looking rich when you are working towards financial independence.
Tuesday, May 27, 2008
Do you know!!!!! 4.5L SIPs added to MF in last four months
Markets might have been in a state of turmoil for the last few months, but it seems that nothing unnerves mutual fund investors. Nearly 4.5 lakh Systematic Investment Plans or SIPs were added to the mutual fund kitty early this year, at the time when the Indian capital markets witnessed their biggest quantum fall.
SIP by SIP is the way to go for mutual fund investors and it seems market volatility doesn't have much of bearing. Between September to December 2007, when the markets were on its fastest upside, the industry added 2 lakh SIPs.
But contrastingly, in the first three months of this year, when heightened volatility loomed over the Indian stock markets, four and a half lakh SIPs were added. The total number of SIPs now stands at a whopping 2.9 million.
Madhusudan Kela, CIO, Reliance MF said, “I think we have had a 3-5 year bull run which is bearing on the investor's mind. Many have realized corrections of this nature can possibly be a good entry.”
Sanjay Sinha, CIO, SBI MF said, “Unlike the falls that we saw in May 2004 and May 2006, in which the investors chose to go away from the funds or not come in at all, in this fall since January, we have actually seen money coming into almost all our funds. This is a very significant development and if this sustains we are going to see retail participation far more than what it has been in last three years."
What's more, in the same volatile period early this year, 75 lakh new folios were created as compared to the quarter before, that saw just 26 lakh folios coming in. The number of SIPs is growing at a healthy 42% YoY. And it's not just the top 20 urban centres that are contributing to this growth. Experts say, as the reach widens across the country with more number of players stepping in, investors from smaller towns are also increasingly participating. This perhaps may be a sign of more maturity amongst investors.
SIP by SIP is the way to go for mutual fund investors and it seems market volatility doesn't have much of bearing. Between September to December 2007, when the markets were on its fastest upside, the industry added 2 lakh SIPs.
But contrastingly, in the first three months of this year, when heightened volatility loomed over the Indian stock markets, four and a half lakh SIPs were added. The total number of SIPs now stands at a whopping 2.9 million.
Madhusudan Kela, CIO, Reliance MF said, “I think we have had a 3-5 year bull run which is bearing on the investor's mind. Many have realized corrections of this nature can possibly be a good entry.”
Sanjay Sinha, CIO, SBI MF said, “Unlike the falls that we saw in May 2004 and May 2006, in which the investors chose to go away from the funds or not come in at all, in this fall since January, we have actually seen money coming into almost all our funds. This is a very significant development and if this sustains we are going to see retail participation far more than what it has been in last three years."
What's more, in the same volatile period early this year, 75 lakh new folios were created as compared to the quarter before, that saw just 26 lakh folios coming in. The number of SIPs is growing at a healthy 42% YoY. And it's not just the top 20 urban centres that are contributing to this growth. Experts say, as the reach widens across the country with more number of players stepping in, investors from smaller towns are also increasingly participating. This perhaps may be a sign of more maturity amongst investors.
Saturday, May 24, 2008
Quantum Index Fund
Quantum is coming out with an Index fund:
NFO opens: 9th June 2008
NFO closes: 20th June 2008
Objective of the fund: To invest in stocks of companies comprising S&P CNX Nifty Index and endeavour to achieve return equivalent to the Nifty by 'passive' investment.
Minimum Investment: INR 5000
NFO opens: 9th June 2008
NFO closes: 20th June 2008
Objective of the fund: To invest in stocks of companies comprising S&P CNX Nifty Index and endeavour to achieve return equivalent to the Nifty by 'passive' investment.
Minimum Investment: INR 5000
Mutual funds in selling mode
Mutual funds pressed sales in equities for a third day in a row on Thursday, 22 May 2008. Mutual funds sold shares worth a net Rs 92.20 crore Thursday, compared to outflow of Rs 44.50 crore on Wednesday, 21 May 2008. Mutual funds had pressed sales worth a net Rs 488.70 crore on Tuesday, 20 May 2008.
Mutual funds outflow of Rs 92.20 crore on Thursday, 22 May 2008, was a result of gross purchases Rs 548.80 crore and gross sales Rs 640.90 crore. Sensex lost 336.05 points or 1.95% at 16,907.11 on that day.
Mutual funds outflow reached Rs 728.30 crore in the month of May 2008, till 22 May 2008. Mutual funds had sold shares worth a net Rs 111.50 crore in April 2008. They had offloaded shares worth Rs 1971.30 crore in March 2008.
Subscribe to:
Posts (Atom)