india investment review 2014 & outlook 2015
TRANSCRIPT
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Indian Asset markets – SHIFT to the financial assets or regret.
Outlook 2015
Right Horizons PMS
For private circulation only
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Agenda / Table of contents
A review of the asset markets in 20141
The bull market has started2
Luck, Sentiment, tailwinds – call it what you will3
Buying that dip is the right way to get it right4
Opportunity in financial markets – Outlook 20155
Get ready to be overwhelmed!
Right Horizons PMS – Keeping the head down!6
For private circulation only
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Asset market have clear diversion – time to bet clear Equities had everything going for them in
2014.
- Clear political mandate and a government which
projects business
- Marked change in macro-economic indicators –
inflation, fiscal deficit, CAD
- Stabilizing industry data and better corporate health
Bond / Debt have also begin to factor in the
benign interest rate scenario, though on-
ground policy remains cautious
Gold continued to provide worst
performance now also from Indian context;
globally it continues to lose in successive
years– falling over 7% in USD terms.
Real estate in metros has stagnated in
2014, inventories continue to pile, fresh
projects stalled and deliveries slowed
considerably
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A review of the asset markets in India - 20141
For private circulation only
-20.00%
-10.00%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
Equities -Nifty
Equities -CNX Mid
Cap
Bond -Short Term
Bond -Long Term (GILT)
Gold -ETF
Real Estate -
Tier I
Asset return in 2014#
in India
# YTD Nov 30th 2014
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The bull market has started2
For private circulation only
We talked about these during last year
outlook for 2014. The one critical indicator
has now turned Green. Other are expected
to follow soon.
The trough to peak index value in the
last bull run was 7x and if the same
multiple were to applied, we end
up around a number over 60,000 on
the Sensex in the next 3 years!!!
Sensex EPS: Bloomberg analyst consensus estimates.
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The bull market has started2
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Psychology of calling peaks in a BULL market: Most times, most people get it wrong. The
essence is the get the math right and getting the pulse of participants. 50% science, 50% art.
Markets at previous
highs. Deep correction
envisaged , mood had
been pessimistic.
Uncharted territory.
Correction coming and
market not driven by
fundamentals.
Crash eminent.
Markets running
ahead of
fundamentals.
Oh man! Past 4
Years the markets
are on FIRE! Participate
or perish!
Nobody has ever
Made money in
the stock markets!!!
Source: Yahoo charts
7 year period
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Luck, sentiment, tailwinds...call it what you will!3
For private circulation only
LuckDef
: the things that happen to a person because of chance
: the accidental way things happen without being
planned
: good fortune : good luck
: success in doing or getting something
Factor #1: Falling commodity
prices – predominantly Crude and
energy.
Factor #2: Falling Gold prices
despite apparent monetary
stimulus by central banks
Factor #3: Unprecedented
government mandate; something
happening once in 30 years.
Factor #4: Best amongst the
worse. Timing for India in the
emerging markets.
SentimentDef
: an attitude or opinion
: feelings of love, sympathy, kindness, etc
Factor #1: Never before
mandate could cure policy
issues
Factor #2: Businesses could
move at higher speed than
before. Sales and profits could
be higher
Factor #3: Higher confidence
and feel good amongst citizens
Factor #4: productivity is
going to be rewarded
tailwindDef
: a wind that blows in the same direction as
something (such as a ship or an airplane) that
is moving forward
Impact #1: A combination of
luck and sentiment has
resulted in India becoming
„HOT‟ destination to do
business.
Impact #2: Foreign inflows
have boosted financial asset
prices
Impact #3: World press has
taken notice of this
combination of Luck +
Sentiment = positive
coverage.
NET Result = A balloon which can go only up. A balloon which has air
cannot sink in water. Water is lighter than air. Physics 101.
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Remember! Equities markets are for long term. If you keep buying and stay invested; you CAN make money!
BUY LOW, SELL HIGH, NOT the other way round. Please repeat this 10 times.
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Buying that dip is the way to get it right...4
For private circulation only
BUY that DIP
The higher the fall,
the more you buy.
Sigh!
Easier said
than done!
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The opportunity in the financial markets5
For private circulation only
Outlook 2015
It’s advantage financial asset class. Fixed Income and equities are the real favorites for 4th year in a row.
1. We expect the equities markets to face some short term hiccups and a minor pull-back during the
Jan-March 2015 period and then head higher levels.
2. We believe that 31st December 2015 target to be in the range of 9500-10000 on the CNX Nifty Index and
around 32,000-33,000 on the Sensex.
This translates to a 2015 calendar return of around 16-18% on the expected close of
around 34% annual return that is expected to be for 2014
The wild card is on the fixed income asset class1. We believe that short term funds could provide decent double digit (annualized) returns over the 6-9 month
time frame.
2. Medium to long duration fixed income funds/securities could return 18%-22% range for calendar 2015
3. For Gilt (medium / long duration) funds the return could be mover 25% for funds that are managed well
Overall, we expect balanced (hybrid) funds to do extremely well during 2015
since they could utilize the best of both worlds. We favor a combination
portfolio approach to get steady yet high yield on these category of
investments.
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Right Horizons PMS portfolios – wealth creation vehicles6
For private circulation only
Portfolio Strategy
Nifty Plus FlexicapCapital Protection
Super Value
Fixed Income
ObjectiveLong term Wealth
creation
Long term weath
creation
Lower Capital
Volatility
Provide for high
capital
appreciation
Provide for
Inflation beating
returns
Predominantly
invests in
Equities
• Nifty Index stocks
• BSE 200 stocks
Equities
•BSE 500 stocks
Fixed Income
securities
• Listed securities
(80%)
• Equity Indices
Equities
• Mid-cap
Equities
Fixed Income
Securities
• 100%
listed/Unlisted
Fixed income
securities
Recommended
Holding Horizon> 18 months > 30 months 24 months >36 months 12 months
Portfolio StrategyBUY & Hold; Weight
Management
BUY & Hold;
Thesis Driven
BUY & Hold;
Trading Driven
Active
Strategy;
Bottom Up
BUY & Hold;
Risk Level Medium Medium Low High Low to Medium
Minimum Strategy
Size1 INR 1million INR 1million INR 1million INR 1million INR 1million
1 Each PMS account shall be a minimum of INR25,00,000 set up value
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Portfolios – Outperform! – Keeping the head down.6
For private circulation only
All time frames based on Nov 30 2014 data; Inception dates vary with respect to the different benchmarks adopted by the portfolios
Portfolio Performance
(%)
1 month 3 months 6 months 1 year Since Inception
Nifty Plus 6.46% 8.49% 19.11% 44.13% 36.74%
Flexicap 3.56% 5.32% 13.54% 31.35% 25.24%
Super Value (Mid & Small cap) 6.52% 15.08% 31.77% 67.19% 25.75%
CNX Nifty Index 5.75% 7.22% 15.17% 39.88% 28.73%
CNX MidCAP Index 5.71% 9.51% 18.82% 61.78% 25.05%
Alliance Portfolio (Equity
Oriented Hybrid)
4.30% 6.39% - - 7.67%
Capital Protection 0.99% 2.28% 6.29% 12.54% 10.70%
GSEC Index 0.88% 2.20% 3.50% 6.46% 4.69%
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Disclaimer
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