marketexplorer8march.pdf

7/30/2019 MarketExplorer8march.pdf

1/18

March 2011

MAR K E T

E X P L O R E R


2/18

EDITORIAL

Rajesh Jain, Head Of Research

Ajaykumar Shrivastava

Ajit Mishra

Anjali Shukla

Anurag Vishnoi

Asif Ahmed

Bharat Ashwin Dalal

Gaurav Sharma

Himanshu Sharma

Jyothi Krishnan

Manish Tawde

Rajesh Patel

Rinku Santosh Saraf

Shishir Kedia

Swati Saxena

Tarun Narula

Tanmay Purohit

THE TEAM

EDITOR

The Union Budget, which was initially termed insipid, got a thumbs-up fro

markets the very next day with a 623 point rise, which was also the highest on

day rise in almost two years. Sheer relief at excise duties not increasing

expected, as well as short covering contributed to this jump. The re-focus

infrastructure by allowing FII investment in bonds upto USD 40 billion has com

as the big kick for the sector. The budget may have had some misses like lo

overdue liberalization of the insurance industry but I'm sure that theinitiatives will remain on the FM's radar and show up sooner than lat

However, historically the market reaction to the budget shows up over t

following month as the implications are better understood and it would be t

early to call one way or the other.

Having reached the point of no return in our integration with the world econom

we will also need to have a ready response to the fast-changing global even

and our budget and policies,as the FM rightly pointed out, cannot be seen

isolation. The recent upheavals in North Africa and West Asia can make

severe dent in our budget projections as the price of crude shoots up. Similar

we will have to become adept at using our currency as a tool. Therefore

inflation is now a bigger issue than growth, then it may be wise to increase t

interest rates and let the rupee strengthen. That said, the projected low budg

deficits are a pleasant surprise and the proposal to allow foreign investors

invest in our Mutual Fund schemes will definitely see increased fund flow in

the equity markets. The stage is set and I feel that 2011 will prove the na

sayers wrong and may well turn out to be a banner year for equity markets

India.

The March Issue of Market Explorer brings to you a review of the Union Budg

2011-12 along with the analysis of the Technical, Derivatives and Mutual Fu

segments over the last month. I'm sure you will find it suitably informative

base your investment decisions on.

Jayant Manglik

President, Commodities, Currency & Research


3/18

C O N T E N T

FUNDAMENTAL

Global Economic Recovery

Review : Union Budget 2011 - 12

Union Budget Announcements Pertaining To Various Sectors

01

02

03

DERIVATIVES

Derivatives Monthly Report05

MUTUAL FUND

Moderate yet Stable Returns: Agro Sector Funds

PRIDE MF Model Portfolio

07

08

TECHNICAL

Monthly Outlook06

E X P L O R E R

CONTENT

M A R K E T

M a r c h 2 0 1 1


4/18

Source: Moodys Analytics

GLOBAL ECONOMIC RECOVERY

FUNDAMENT


5/18

UNDAMENTAL

The government has announced the Union Budget for fiscal 2011 and

said that this Budget is seen as a transition towards a more transparentand result oriented economic management system in India. The FinanceMinister that in order to achieve desired outcomes from the policy makingexercise it is important that the expectations of investors, entrepreneursas well as the consumers are taken care of. However, the budget

announcement remained silent with respect to reforms.

The Finance Minister in his Budget speechpegged the GDP growth for FY12 at 9% with 0.25% deviation on either

side. At the same time he also maintained that average inflation will belower but still higher than government's or RBI's benchmark. The

Finance Minister singled out 'Inflation' as the biggest challenged in thenear-to-medium future and pledged to address structural concerns byimproving supply response of agriculture products, while RBI will

address the demand side of the inflation at the same time.

Here are some of the measures announced in the Union Budget toaddress the problem:

Allocation under Rashtriya Krishi Vikas Yojana has been increasedfrom Rs 6,755 crore to Rs 7,860 crore.

To improve rice-based cropping system in this region, allocation of

Rs 400 crore has been made.Allocation of Rs 300 crore to promote 60,000 pulses villages in

rainfed areas.

Credit flow for farmers raised from Rs 3,75,000 crore to Rs 4,75,000crore in 2011-12.

Approval being given to set up 15 more Mega Food Parks during2011-12.

Allocation of Rs 300 crore for Accelerated Fodder DevelopmentProgramme to benefit farmers in 25,000 villages.

The resilient Indian economy in 2011-12 showedimpressive performance on the fiscal consolidation front. Fiscalconsolidation targets at Centre and States have shown positive effect on

macroeconomic management of the economy said the Finance Ministerin his Budget Speech. Consequently, the FM surpassed his own target ofFiscal Deficit for FY11. Fiscal Deficit brought down from 5.5% in BE2010-11 to 5.1% of GDP in RE 2010-11. For the FY12, the government

has set an ambitious fiscal deficit target of 4.6% of GDP for 2011-12 withnet market borrowing of Rs 3.43 lakh crore in 2011-12.

However, if one were to take the overall subsidies and uncertainty overcrude prices, the target looks a little farfetched. Full accounting of offbalance sheet items could raise the deficit to 5.5% of GDP. Hence,goingby the last few years, the gap (between printed and actual figures) is here

We look at some of the main features of the Budgetannouncement in detail:

Growth and Inflation

Fiscal Deficit:

to stay. Further, one can only hope the divestment target of Rs 40,00

crore comes through given the Rs 27,000 crorerealisation last yeaversus the same target.

India is on the cusp of two major tax reformsthat have thpotential to provide significant tax buoyancy and iron out anomalies. Ihis speech, Mr.Pranab Mukherjee seemed confident about thimplementation of Direct Taxes Code (DTC) from April 1, 2012. As far athe Central Goods and Services Tax (GST) is concerned, the FinancMinister said the difference between states and the centre havmellowed and that the discussion are in final stages and GST rollout cabe expected from April 2012. As a step towards the roll out of GST, FMwill propose a Constitution Amendment Bill in this session of Parliament

In order to align tax slabs with proposed DTC, the exemption limit fothe General Category of individual taxpayers is enhanced from R1,60,000 to Rs 1,80,000 giving uniform tax relief of Rs 2,000.Exemption limit enhanced and qualifying age reduced for senio

citizens to 60 years from 65 years.Higher exemption limit (Rs 5 lakh) for Very Senior Citizens, who ar

80 years or above.Tax exemption limit has women remains at Rs 1.9 lakh.Additional deduction of Rs 20,000 for investment in long-term

infrastructure bonds proposed to be extended for one more year.

However, the indirect taxes like Central Excise Duty at 10% and servictax duty remained untouched primarily because the rate for GST is alsaround 10%.

Overall the Union Budget 11-12 has set its focus on growth and reignininflation. The key positives include no increase in excise duties and peacustoms dutyas well as allowing foreign investments into the Indian stocmarkets by the Mutual Fund route. However, attaining the target of lower fiscal deficit in 2011-12 and increased spending along with tax cutis an ambitious project not only for the government but also for the RB

since it is the RBI that will manage the government borrowing and decidon crucial issues like - how much to raise and whether the exercise will bfrontloaded or not. The RBI, already saddled with managing pricsituation will now have the additional responsibility of managinborrowings in a manner that doesn't result in crowing out. Besides thfiscal deficit figure does not include off-balance sheet items and icontingent to a lot of things viz., tax buoyancy&export growth andisinvestment.However, in the face of fragile economic recovery ideveloped markets and jittery market scenario back home we fell short oattaining the disinvestment targets of Rs 40,000 crore for FY11. Hencea lot will depend on the approach of the government and the RBI towardattaining the fiscal deficit figure of 4.6% of GDP.

Tax Proposals:

Personal Tax

In Summary

As far as is concerned, the following announcements wermade:

REVIEW: UNION BUDGET 2011-12


6/18

UNION BUDGET ANNOUNCEMENTS PERTAINING TO VARIOUS SECTORS

Sector Measures Impact

Automobiles

BFSI

Information

Tecnology

Infrastructure

Companies

Higher disposable income as a result of widening tax

slabs and enhanced rural income; Excise duty for two-

wheeler retained at 10%

Positive impact Hero

Honda, TVS Motors,

Bajaj Auto

Positive impact on all

Public Sector Banks and

Infrastructure Finance

Companies; Reliance

Capital, IDFC and Aditya

Birla Nuvo

Negative for smaller &

Mid IT firms; Overall

positive for big players

Negative for Mundra

Port, units operating in

SEZ; Overall positive for

Other Infra Companies

MAT has been increased to 18.5%

though surcharge is reduced;

STPI has not been extended

and will be levied on

units operating in SEZ,

MAT levy; Enhanced flow of funds to infrastructure sector

(investment up 23%, tax free bonds of Rs 30,000 crore by

PSU in FY12,Benefits under Section 80CCF extend for 1

more year); FII limit for investment in infra Bonds raised

to USD 25 bn

Recapitalization to the tune of Rs 6000 crore in FY12;

Benefits under Section 80CCF extend for 1 more year;

FII limit in corporate bonds of infrastructure companies

raised from USD 5bn to USD 25bn; borrowings lower

than estimate; MFs allowed to raise funds abroad

FUNDAMENT


7/18

DERIVATIVES MONTHLY REPORT

Outlook for Nifty

117 with a stop loss of INR 1267 total return approx 8%

Nifty futures in Feb series have declined by 6 %.Call build up seen in the 5400-5600 strike prices in the March series

The market had a lousy month as indices, after opening at 5617made high of 5622 before closing at 5265.3Nifty rollovers: 65%v/s 65% for the previous month (3 month avg66%).The March futures however closed at 5279.35 at a premium of 14points. OI increased by 21 % from Feb series. Going by the Marchfutures, the undertone is range bound.Nifty in the series has major support at 5170 and a strong resistanceat 5450, a closing below and above this will result in a major triggerfor the Nifty.

Nifty March series Options Data:

with 5500 having the largest concentration of 3.91 million shares.Put build up seen in the 5000-5400 strike prices. The 5300 Put ha

highest concentration of 5.76 million shares.5200-5600 should be the broad range for the February series t

begin with though with a positive bias as Nifty could find resistancfrom 5450 levels.

FII Trading Activity for FEB series

Rollovers For Jan series

Rollovers: 64% v/s 65% for the previous month (3 month avg 66%).Roll Spread at premium of 17 basis points compared to 27 basis pointlast month.

Rollovers: 83 % v/s 83 (3 mth avg 84%) average rolls.

Nifty

Market-Wide

DERIVATIVES

Falcon-Nifty Future Price, OI and Volume Chart

Source: My F&O

Index Futures

-231.88

Index Options

1803.47

Stock Futures

3429.22

Stock Options

-41.12

(Figures in Crore

SCRIP

PANTALOONR

GTL

STERLINBIO

GLAXO

BALRAMCHIN

APOLLOTYRE

GTLINFRA

BRFL

MCLEODRUSS

PTC

High Rollovers

Oil (in mn)

5.76

6.66

3.95

0.18

24.12

17.13

47.20

9.58

6.15

4.45

Rollover %

95.98

95.29

93.67

93.62

93.58

92.99

92.95

92.56

91.85

91.82

Last Month

88.89

98.86

90.04

97.45

91.33

90.83

73.36

89.97

93.89

92.35

3 Months Avg

88.8

98.8

90.0

97.4

91.3

90.8

73.3

89.9

93.8

92.3


8/18

Sector Wise Rollover

Rollover highlights

While rollover has been maintained at 84% and compares favorably withJan and the 3-month avg several counters have attracted negative COC.The main ones are BOI,CanBank,Core Project,DLF,Educomp,HeroHonda,Hind Unilever and Maruti.

Directional Calls for the Month

Buy Cipla March Future:

Rationale:

Cipla has witnessed heavy short build up in last 3 months with good openinterest. We expect huge short covering from these levels which help thestock to gain. Therefore we recommend buying Cipla March future at `298 with a Target of`328 and stop loss of `283.

Source: My F&O

Cipla

LTP

Target

Stop Loss

LIC Housing Finance

LTP

Target

Stop Loss

Rollover

Automobile

Banking

Capitalgoods

Cement

Fertilisers

Finance

FMCG

Hotels

Index

Infrastructure

Media

Metals

Oil&Gas

Others

Pharma

Power

Reality

Sugar

Technology

Telecom

Textile

Trading

Transport

78

.2

77

.1

79

.283

.3

79

.2

79

.0

79

.1 88

.0

50

.7

81

.7

84

.3

76

.379

.5

76

.5 81

.2

81

.5

81

.9

84

.2

80

.383

.984

.3

73

.2 82

.1

Buy

298

328

283

Buy

188

207

178

Source: My F&O

Buy LIC Housing Finance

Rationale:

We expect LIC Housing Finance to go up in the March series on the basof strong Open interest build up. Therefore we suggest to long LICHousing Finance at`188 with a target of `207 and a stop loss of `178.

DERIVATIV

Scrip

COLPAL

NATIONALUM

MUNDRAPORT

EXIDEIND

HAVELLS

TATAPOWER

M&M

SUNPHARMA

BHUSANSTL

ITC

Low Rollovers

Oil (in mn)

0.22

1.21

3.37

1.90

0.15

1.58

5.44

2.78

0.91

24.96

Rollover %

41.76

44.60

57.89

61.93

63.43

63.77

63.93

63.99

65.06

65.28

Last Month

77.23

83.40

74.06

80.66

68.00

75.44

71.73

69.34

72.09

62.97

3 Months Avg.

78.07

83.40

74.06

80.66

68.00

75.44

71.73

69.34

75.32

62.97

Source: My F&O


9/18

SBI Option Strategy:

Rationale:

We expect SBIN to go up in March series on basis of strong open interestand strong options build up. We recommend a Bull call spread were in webuy 2650 call `87 and sell a 2700 put `67 total cost of the spread`20

Nifty Option Strategy:

Rationale:

We expect Nifty to go up in March series on basis of strong open interesPositive COC and strong options build up. We recommend buying 2 calof 5300 at 163 and buy 1 put of 5300 strike at 126 total cost of strateg452.

DERIVATIVES

Source: My F&O

Source: My F&O

SBIN

BUY 2650 March Call

SELL 2700 March Put

Total Cost

Maximum Profit

Maximum loss

BEP

Bull Call Spread

87

67

20

30

20

2670

Nifty

BUY 5300 March Call (TWO LOTS )

BUY 5300 March Put

Total Cost

Maximum Profit

Maximum loss

Upper BEP

Lower BEP

Strap

163

126

452

unlimited

452

5526

4848


10/18

MONTHLY OUTLOOK

The Month That Was:-

Nifty fell 172 points in the month of February to settle at 5333 and it tested5177 as lowest point in the month.

Below is a summary of Top Nifty Gainers & Losers:

Top Nifty Gainers for February 2011

Top Nifty Losers for February 2011

Nifty is down by 3.1% in the month of Feb-2011.FMCG and OIL & GAS stocks outperformed the Nifty while

REALTY, CAPITAL GOODS & HEALTHCARE were laggards.

* All the sector have been compared with Nifty & the zero line representNifty. The movement of the sector vis-a-vis Nifty whether they outperformor underperform is shown in the chart below. It goes to show where themoney is going & where the money is exiting.

Outlook for S&P CNX Nifty

Nifty (5333.25) - Support 5170/5040/4800 Resistance

5440/5590/5680

Nifty tested 5177 as lowest point in February and it turned out to be volatile month owing to budget and parliament session. Nifty hascompleted 16 weeks after forming lower top at 6338 in November 201and we are witnessing an intermediate correction. It still trades below200DMA (at 5606) and it has been able to hold on to 5177 bottom inrecent dip. Going into March, Nifty crucial support exists near 5160 levelholding which there can be a recovery till 5500-5600 levels too. Below

5160 correction may deepen and next support would be near 5040 an4800 levels.

Stock Recommendations For March-2011

Jaiprakash Associates Limited (JPASSOCIAT)

CMP Rs 77.20

Buy range Rs 73-75 Stop Loss Rs 70 Target Rs 8

Scrip Name

Siemens Limited

Kotak Mahindra Bank Limited

Reliance Industries Limited

Cairn India Limited

Hindustan Unilever Limited

Scrip Name

Reliance Communications Ltd

Sesa Goa Limited

Reliance Power Limited

Ranbaxy Laboratories Limited

Reliance Infrastructure Limited

% Change

16.39

6.72

5.61

3.73

3.70

% Change

-31.48

-20.70

-19.39

-18.83

-15.84

Latest Close (Rs)

847.35

405.05

964.25

339.20

282.00

Latest Close (Rs)

85.75

261.20

110.35

434.65

609.80

TECHNIC

Auto

Ba

nkex

CapitalG

oods

ConsumerDurables

F

MCG

Health

Care IT

Metal

MidCap

Oil&

Gas

P

ower

PSU

RealtyIndex

SmallCap

Teck

SECTOR PERFORMANCE

-4.08%

1.28%

-5.19%

-2.94%

5.10%

-5.18%

-1.01%-1.62%

-4.07%

2.90%

-4.91%

-0.61%

-7.95%

-4.66%

-1.17%


11/18

The stock had underperformed broader indices, forming high of 180 inOctober 2009. It has tested crucial support levels around 70. It ralliedquickly from 70 till 92 levels and settled at 77 levels to close the month.Dips towards 73-75 can once again be a chance to buy into this stock fortargets above 85 levels.

Polaris Limited (POLARIS)

CMP Rs 181.85

The stock has closed higher by more than 8% in February and tradesabove long term moving averages indicating better relative strengthagainst Nifty. On weekly graphs it trades in up-slanting channel. Thestock trades very close to monthly resistance of 215 above which it wouldbe a major breakout. Dips towards 170 can be a chance to buy into thisstock.

Buy range Rs 170-175 Stop Loss Rs 158 Target Rs 204

ECHNICAL

Monthly trend sheet for Nifty 50 Stocks

Stocks LTP Trend Trend When Changed Closing StoplossRate When Trend Changed

ACC

AMBUJACEM

AXISBANK

BAJAJ-AUTO

BHARTIARTL

BHEL

BPCL

CAIRN

CIPLA

DLF

DRREDDY

GAIL

HCLTECH

HDFC

HDFCBANK

HEROHONDA

HINDALCO

HINDUNILVR

ICICIBANK

IDFC

INFOSYSTCH

ITC

JINDALSTEL

JPASSOCIAT

969.35

117.85

1218.55

1269.15

331.3

2001.1

553.45

339.2

299.65

211.85

1546

426.55

442.45

629.2

2052.25

1465.2

201.35

282

970.85

145.2

2997.1

169

657.75

77.2

Up

Down

Down

Down

Up

Down

Down

Up

Down

Down

Down

Down

Up

Down

Down

Down

Down

Down

Down

Down

Down

Down

Down

Down

27-Aug-10

7-Jan-11

7-Jan-11

7-Jan-11

9-Jul-10

12-Nov-10

26-Nov-10

19-Mar-10

28-Jan-11

19-Nov-10

11-Feb-11

21-Jan-11

31-Dec-10

14-Jan-11

14-Jan-11

21-Jan-11

25-Feb-11

28-Jan-11

7-Jan-11

19-Nov-10

25-Feb-11

25-Feb-11

19-Nov-10

19-Nov-10

872.1

128.85

1280

1316.6

308.65

2389

667.7

285.35

337.2

307.95

1497.25

453

455

641.75

2049.55

1753.25

200.05

273

1049.2

184.8

3007.3

153

648

120.6

970

140

1470

1500

320

2380

700

310

335

310

1780

500

420

710

2370

1900

245

305

1150

186

3350

175

720

105


12/18

When trend changes to up, one can buy & when trend changes to down one can sell.Resistance is mentioned for stocks which are in downtrend where one can go short with closing stoploss as mentioned. Support is mentioned fo

stocks which are in uptrend where one can go long with closing stoploss as mentioned.Closing stoploss has to be seen at closing at 3:30pm. All stocks prices refer to spot price.In this table of trends, it has been observed that if someone tries to take all levels of a stock or index continuously, the losses are small but once the

market catches a strong trend in either direction, one makes a huge profit that time.The trend changes are considered on weekly basis, so always watch weekly closing for changes in trend.

Stocks LTP Trend Trend When Changed Closing StoplossRate When Trend Changed

KOTAKBANK

LT

M&M

MARUTI

NTPC

ONGC

PNB

POWERGRID

RANBAXY

RCOM

RELCAPITAL

RELIANCE

RELINFRA

RPOWER

SAIL

SBIN

SESA GOA

SIEMENS

STER

SUNPHARMA

SUZLON

TATAMOTORS

TATAPOWER

TATASTEEL

TCS

WIPRO

405.05

1527.95

615.75

1208.2

169.85

270.35

1062

98.95

434.65

85.75

475.45

964.25

609.8

110.35

152.55

2630.45

261.2

847.35

164.05

423.5

46.65

1082.75

1150.15

607.15

1110.25

438.2

Down

Down

Down

Down

Down

Down

Down

Down

Down

Down

Down

Down

Down

Down

Down

Down

Down

Up

Down

Up

Down

Down

Down

Down

Up

Down

7-Jan-11

7-Jan-11

28-Jan-11

14-Jan-11

29-Oct-10

12-Nov-10

26-Nov-10

29-Oct-10

28-Jan-11

12-Nov-10

12-Nov-10

19-Nov-10

13-Aug-10

10-Dec-10

5-Nov-10

10-Dec-10

29-Oct-10

4-Feb-11

25-Feb-11

4-Jun-10

19-Nov-10

25-Feb-11

26-Nov-10

11-Feb-11

16-Jul-10

11-Feb-11

435.2

1846.25

698

1269.7

195.3

260.95

1151.45

100.4

536

169.9

784.2

996.25

1083.75

151.85

196.75

2732.45

321.6

848.5

159.2

340.96

51.7

1110

1290.2

595.3

833.65

420.25

460

1950

780

1425

195

260

1250

101

580

145

690

1040

850

153

190

2930

348

760

190

410

55

1300

1350

670

1050

500

TECHNIC


13/18

MUTUAL FUND

MODERATE YET STABLE RETURNS: AGRO SECTOR FUNDS

Sectors such as Infra, Construction, Auto, Consumer Durables &

Banking are more of interest rate driven industries. In the currentscenario interest rates are just 15 - 20% behind the highest levels we

have seen in recent years or just before recession of 2008.

Above that, Interest rates are expected to move up in this year further

with increasing inflation. So these Industries may not yield huge returns

like in the past in short to medium term period. In this trying period it

makes sense to go overweight on conservative but stable return

generating industries such as FMCG, Agro Products which have

continuous demand for products even in lower money liquidity

conditions.

We have considered our target investors to be Moderate Risk appetite &

looking for stable returns in the long term w.r. to this investment idea.

The agriculture sector, which has so far been a laggard in terms o

contributing to the Indian GDP growth is all set to achieve a growth of 4%

(Annual growth rate for the 12th five year plan) as per government'

estimates. The north-bound food price inflation can be viewed as

trigger point for the Indian government to come out with a two pronge

strategy of

A. Steps necessary to plug the leakages in the supply of agro produc

(by the way of better storage capacity) and

B. Reduce the demand-supply gap (through better agro-productivit

irrigation, subsidies and credit facilities)

FMCG

Fertilizers

Financials (Banking)

21.20%

4.54%

36%

13.80%

5%

21.90%

Improvement in the farm productivity could lead to lowering of prices of primary food articles which could

lower the raw material input cost for the agro-based FMCG companies.

Better disposable rural income could also increase demand for the FMCG products.

Investment in fertilizer to be considered as an infrastructure sub-sector, could attract higher investment

and lead to better capacity additions in the fertilizer sector

Rs 1bn India microfinance equity fund to be controlled by SIDBI could be positive for Micro

Finance Institutions

Recapitalization of PSU banks Positive for banks with low tier I and banks where government

holding is 51%.

Rise in the home loan ticket size positive for banks; interest subvention beneficial for banks and housing

finance companies

Sales growth Q3FY11Sub - sector Net profit growth Q3FY11 Post budget Outlook

Budget positives for the agro-oriented sectors:

Fertilizer subsidies - Direct subsidies for Fertilizers for the end users

(i.e. farmers) will ensure its proper utilization

Priority loans - Increasing subsidy on loans will ensure effective

repayment of loans by farmers thus improving the Supply of Credit by

Banks to farmers

Irrigation equipments: Basic Custom Duty reduced for specified

agricultural machinery from 5% to 2.5%. Basic Custom Duty reduced on

micro-irrigation equipment from 7.5% to 5%.

Rural infrastructure:

Rural infrastructure development fund corpus will be raised to Rs

18000 Cr from Rs 16000 Cr.

A corpus of Rs 2000 Cr set aside for additional warehousing

capacity

FII limit in corporate bonds in infrastructure is being raised b

additional USD 20bn

Tax free bonds of Rs 30,000 Cr to be issued for infrastructur

development. This will cover Warehousing Corporation, NHA

IRFC and HUDCO.

There has been allocation of Rs.2.14 Cr towards infrastructur

development

Cold storage chains to be given infrastructure status

Investment in fertiliser to be considered as an infrastructure subsector

Cold storage facilities to be enhanced.

The Govt. plans to create 150 lakh metric tons food storage capacit

Farmers

Credit flows to farmers raised from Rs 3.75 lakh Cr to Rs 4.75 lakh C

Interest subsidy for farmers who promptly repay their loans raise

from 2% to 3% thus reducing the effective Interest to 4%.

The Budget proposes to move to direct cash subsidy for fertilizer

Source: Religare Capital Market Research,


14/18

Mutual Fund Schemes focused on Agro Sector:

Top MF schemes with returns will be provided here (pending)

Scheme Name

Tata Dividend Yield Fund - Growth

Fidelity India Special Situations Fund - Growth

Tata Contra Fund - Growth

Sundaram Rural India Fund - Growth

HDFC Arbitrage Fund - Retail - Growth

Tata Equity P/E Fund - Growth

Benchmark Derivative Fund - Growth

Tata Growth Fund - Growth

Tata Midcap Fund - Growth

SBI Magnum COMMA Fund - Growth

Sundaram SMILE Fund - Growth

NAV Launch Date 1 Month 3 Months 6 Months 1 Year 3 Years 5 YearsSince Inception

(P2P)-C

Source: MFI, Data as on 3rd March 2011, Absolute returns below 1 year, CAGR returns above 1 year

31.60

17.94

17.04

14.28

12.40

45.70

1452.69

39.53

15.89

23.04

29.59

22-Nov-04

22-May-06

14-Nov-05

12-May-06

23-Oct-07

29-Jun-04

18-Dec-04

01-Jul-94

11-Jul-05

08-Aug-05

15-Feb-05

-2.67

-0.33

-1.28

-0.14

0.57

-2.31

0.59

-3.74

-4.44

-2.78

-3.96

-8.28

-9.30

-8.06

-14.45

1.71

-8.74

1.59

-15.48

-15.18

-10.45

-17.18

-4.65

-3.81

-4.67

-9.86

4.42

-4.57

3.46

-14.58

-15.43

-8.61

-16.88

15.12

11.53

9.47

7.56

7.14

6.53

5.19

2.95

-1.73

-2.33

-2.88

10.74

5.63

5.88

-2.22

6.24

7.90

--

-1.00

-2.39

-0.46

5.09

14.29

--

9.26

--

--

16.11

6.30

7.08

4.36

12.12

12.55

20.11

13.00

10.58

7.69

6.62

25.54

6.20

8.59

8.55

16.17

19.65

MUTUAL FU

and kerosene. Kerosene and fertiliser subsidies will be 'directly

transferred' to beneficiaries. The Govt. mulls nutrient-based subsidy

policy for urea

Banks will step up direct lending to farmersTo create Rs 100cr equity fund for microfinance companies

Farm Productivity and production

Government proposes to promote organic farming methods to

improve Farm productivity

Increase allocation of Rs 400 Cr for Green Revolution

Rs 300 Cr provided to promote pulses cultivation in rain-fed areas.

Another Rs 300 Cr has been provided to promote farm product

cultivation

Allocation under Rashtriya Krishi Vikas Yojana to be raised from

Rs.6755 Cr in the current year to Rs.7860Cr50 new food parks to be implemented

Support for production of nutritious cereals like Bajra, Jowar, Ragi.

Rs 300 Cr to encourage vegetable production and higher income for

farmers

Rs 300 Cr to be allocated for enhancing oil palm production

Provision of Rs 300 Cr being made to promote production of Bajra,

Jowar, Ragi

To allocate Rs 300 Cr for fodder development

Rs 300 Cr allocation for Nutricereals for higher production through

upgradation of Technology and awareness

Food security bill to be introduced this year

Proposal to introduce self-assessment of customs duty whereinimporters and exporters will themselves assess payment of duty

Rs 5000 Cr additional corpus to SIDBI for priority sector lending

Outlook for the agro-based sectors

Better farm productivity: Improving farm productivity remains the

single most important factor for increasing the production of Food

products. With area under cultivation remaining stagnant, i

becomes imperative that the productivity should improve. This

could bring down the agro prices which in turn would enhance

margins for agro-based industries (FMCG).

Improving food storage and distribution system to reduce

wastage and fetch better pricing.

Higher disposable income for rural population based on bette

farm productivity and easier credit availability to the farmers could

lead to incremental rural demand and consumption for FMCG

consumer durables and 2-3 wheelers, farm equipmen

manufacturers among others.


15/18

MUTUAL FUND

Target Age Group: 20 to 35 years

AGGRESSIVE MF MODEL PORTFOLIO

Asset Allocation: Equity MF : 90% - Debt MF : 10%

Large Cap MF,

30%

Mid Cap MF,

20%

Sector MF,

10%Flexi Cap MF,

30%

Liquid MF,

10%

PRIDE MUTUAL FUND MODEL PORTFOLIO

Investment Universe: High Weightage to aggressive Equity schemes

with the combination of Large Cap, Mid Cap, Sector Funds. Within

equity categories higher weight to Mid Cap / Sector Funds compare to

other types of portfolio such as Conservative.

Pride advised 2 months back to be under weight on equities while nifty

was hovering around 6200 levels. Since then in last 4 months market

has corrected significantly. Pride's Aggressive MF Portfolio has

outperformed Nifty & given lesser negative returns in the same period.

With market valuation becoming more attractive at Nifty 5400 or

around 20 trail P/E levels, we have increase around 5% in each

portfolio post correction we advice mutual fund investors to invest in

following mutual fund schemes on the regular basis.

Scheme Returns 1 Year %

Large Cap Funds

Flexi Cap Funds

Mid Cap Funds

Thematic & Sector Funds

Liquid Funds

ICICI Prudential Focused Bluechip Equity Fund - Ret - Growth

Birla Sun Life Frontline Equity Fund (plan A)

ICICI Prudential Dynamic Plan - Growth

Reliance Equity Opportunities Fund - Growth

Religare Contra Fund - Growth

ICICI Prudential Discovery Fund - Growth

Reliance Banking Fund - Growth

ICICI Prudential Liquid Plan - Growth

15.1

8.2

13.0

15.3

3.6

10.7

7.0

3 Month %

90

15

30

30

20

10

10

15

10

10

10

10

10

10

5

Recommended Allocation %Pride MF Rating Radar

Equity Funds

1

6

13

9

32

2

2

Debt Funds

76

IDFC Small & Midcap Equity Fund - Growth 11.4

32.5

103

IDFC Ultra Short Term Fund - Growth 8.157


16/18

MUTUAL FU


MODERATE MF MODEL PORTFOLIO

Investment Universe: Balanced Weightage to Equity & Fixed Income

instruments like Debt & Liquid schemes. With correction in the market

considering current market valuations, where Nifty is at around 20 trail

P/E, equity weightage is moved to 60% & Debt / Liquid funds while

debt allocation is down to 40%.

Pride's Moderate MF Portfolio has outperformed Nifty.

Large Cap MF,

25%

Flexi Cap MF,

15%

Mid Cap MF,

10% Sector MF,

5%

Liquid MF,

30%

Income MF,

5%

MIP MF,

5%

ELSS MF,

5%


Large Cap Funds

Flexi Cap Funds

Mid Cap Funds

ELSS

Thematic & Sector Funds

Liquid Funds

Income Funds

MIP

Franklin India Blue chip Fund

IDFC Imperial Equity Fund (plan A)

Fidelity Equity Fund - Growth

Reliance Equity Opportunities Fund - Growth

DSP BlackRock Small and Midcap Fund - Growth

HDFC Taxsaver - Growth

ICICI Prudential Technology Fund - Growth

DSP BlackRock Liquidity Fund - Regular Plan - Growth

Religare Active Income Fund

Reliance MIP - Growth

10.9

4.5

15.6

15.3

9.3

12.3

7.5

8.1

-1.6

3 Month %

60

10

25

15

10

30

5

5

5

5

5

10

5

10

5

5

40

10

5

5


Equity Funds

4

8

2

9

1

1

8

Debt Funds

44

1

4

28.8

IDFC Ultra Short Term Fund - Growth

Birla Sun Life Cash Manager - Growth

8.1

7.3

10

10

7

46

DSP BlackRock Top 100 Equity Fund 8.71013



17/18

MUTUAL FUND


CONSERVATIVE MF MODEL PORTFOLIO


Investment Universe: Investors looking for safer & stable revenue

generation without taking high risk should stick to conservative MF

Model Portfolio. High Weightage to Debt & Liquid schemes,

Conservative Debt MF Schemes such as Liquid Funds. Within debt

categories higher weight to Liquid Funds compare to other types of

portfolio such as Moderate as expectations of hike in interest rates is

expected to be positive for Liquid Funds in next 3 months.

Conservative MF Model Portfolio was able to outperform Nifty with

descent returns as timely increase Debt Funds weightage gavesupport the portfolio. Asset allocation for equities increased to 30% in

this month.

Large Cap MF,

20%

Flexi Cap MF,

5%

Liquid MF,

25%

Income MF,

5%

MIP MF,

10%

ELSS MF,

5%

STP MF,

15%

Gilt LT MF,

15%


Large Cap Funds

Flexi Cap Funds

ELSS

Liquid Funds

Income Funds

MIP

Short Term Plans

Gilt Funds

ICICI Prudential Focused Bluechip Equity Fund - Ret - Growth

Franklin India Blue chip Fund

Birla Sun Life Dividend Yield Plus - Growth

Religare Tax Plan - Growth

HDFC Liquid Fund - Growth

Birla Sun Life Medium Term Plan - Ret - Growth

Birla Sun Life Short Term Opportunities Fund - Ret - Growth

Birla Sun Life G Sec Fund - LT - Growth (Gilt - Long Term)

15.1

10.9

13.3

9.6

7.4

7.0

7.7

4.8

3 Month %

30

5

20

5

30

5

10

15

15

5

10

5

5

70

10

5

10

10


Equity Funds

1

4

1

4

Debt Funds

50

3

1

1

Religare Liquid Fund - Regular - Growth 7.71039

Reliance Equity Advantage Fund - Retail - Growth 9.7512

Birla Sun Life Cash Manager - Growth 7.31046

Religare MIP / MIP Plus

Religare Credit Opportunities Fund - IP - Growth

-1.2

5.4

10

5

11


18/18

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