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orthe readers oflslamiTijaramagazine,ourresearch group screens stocks for Shariahcompliance. As ofOct 2016, there are

1164 stocks that are Shariah compliant. Out of these Shariah Compliant stocks, we have selected the best probable stocksthat are the constituents of our ITE 2ll Shariah Index. We have given a scoreboard of these 2 1 I companies and we have

ranked them based on the trailing 12 months average Market capitalization. The stocks in the list are liquid enough for investments.

Upon analysing the stocks, we found that these 2 1 1 Shariah compliant companies have a market capitalisation of 5.55 percent ofthe total market capitalisation of the BSE traded stocks. This demonstrates the underlying values of Shariah compliant companies.

1 Automobiles 29 28 8,33,029 9,53,616 l,!:.:,:.:0,o/o . ,!.6.67Y . 4,31,886 .. 4,86,3116 .,16:5,3%

18.48%

2 Consumer 51 46 11,07,608 10,20,369 18.49% l7.84yo 4,26,368 4,01,663 15.68% 15.260

4 Heatthcare 29 35 6,58"807 7,59,915 l2!.g3%o l3.zgyo 3,14,440 3,49,763 l3.46yo l3.2go

5lnd.&CapitalGoods 53 51 6,47,733 6,78,042 1156% l1.86yo 3,36,476 3,55,662 12.79% l3.5lv"6lnfo-Technology 21 19 11,55,262 10,61,794 22.27o/o 18.560/o 5,23,634 4,96,727 22.28% l8.87oh

7 Metals&Mining 2 3 78,189 1,00,461 1.47% 1.760/0 27,966 35,851 t.lso/o l.36yo

8 Oil&Gas ll 13 6,95,262 8,t2,855 13.95% t4Lto/s 3,lz,zgt 3,6s,4s4 13.71o/o 13.88%

9 Power & Utilities 0 0 0.04% 0.00% 0.03% 0.00%

Total zfi ztt 54,60F28 si,tg,4}i 100.00% 100.00% z4,gt,sgg 26A2,30s 100.00% 100.00%

ITE 211Sector Analysis

*FF Mkt cap: Free Float Market Capitalisation Rs. Crs.r

5 Automobiles

I C0nstru(tion & Realty

:,4 CoRsumer

lt Haalthcare

* lndustrials & Capital 6oods

a lnformation Technology

Metals & Minin8

Oil& Gas

Power & t tiliti€s

(data as on 3oth Sept 2016)

* As on 30th Sept 2016

:

lTE 211 Sector Analysis

aTE zLL Top 10 Gainers

t197.45

JB Chem. & Phar. Ltd.

SH Kelkar & Co Ltd.

ITEzLL Top 10 Losers

t KP|TTechnologies Ltd, 183.90 729.70 -29%

2 lu$ Dial ttd. 610.15 442.75 -27o/"

3 Mindtree Ltd. 664.75 493.20 -25%

4 lndo Count lndu$ries Ltd, 958.05 766.80 '2Lo/o j

5 Housing Devel. & lnfra. [td, 103.25 82.55 -20%

6 Ashok leyland Ltd, 98.60 81.35 'l7o/"

7 (averi Seed Co. Ltd. 444.35 358.20 -77%

8 Gateway Dh$ipada [td. 310.9s 250.90 -16%

9 HexawareTech, Ltd. 224.65 196.45 -74%

10 NllTTechnologies ttd, 517.75 440.60 -14y; i

'52 loct - Dec 2016 | lslami Tijara

The Ban on Riba flnterestl in Holy Ouran

Surah Al-Baqarah 2:27 5-281 Holy QuranThose who take riba(usury or interest) will not standbut as stands the one whom the demon has drivencrazy by his touch. That

is because they have said:"Trading is but like riba." And Allah has permittedtrading, and prohibited riba. So, whoever

receives anadvice from his Lord and stops, he is allowed what haspassed, and his matter is up to Allah. And the ones

whorevefi back, those are the people of Fire. There theyremain forever.Allah destroys ribaand nourishes charities. And

Allahdoes not like any sinful disbeliever. Surely those whobelieve and do good deeds, establish Salah and Zakahhave their

reward with their Lord, and there is no fearfor them, nor shall they grieve.0 those who believe, fear Allah and give up what

stillremains of the 'riba' if you are believers. But if you donot, then listen to the declaration of war from Allahand His

Messenger. And if you repent, yours is yourprincipal. Neither you wrong, nor be wronged.And if there be one in misery then

defement till ease.And that you leave it as alms is far better for you, if youreally know And be fearful of a day when you shall

beretumed to Allah, then everybody shall be paid, in full,what he has earned. And they shali not be wronged. (Verses 275 -

28t)

The prohibition of Riba (lnterest)

From these verses begins the description ofthe forbiddance ofriba and the injunctions relating to its unlawfulness. This issue

is veryimportant from different angles. On the one hand, there are the severes'arnings of the Qur'an and Sunnahand on the

other, it has beentaken today as an integral parl of the world economy.The desiredSurahAl-Baqarah 2 :215 - 281liberation

3A I o"t - Dec 2016 | Islami Tijara

Muslims should take advantage of the boom witnessed inthe Indian Equity markets and they should not get leftbehind in the economic growth that is being witnessedthroughout the country and likely to continue for years to

come..India is one of the fastest growing nations in the

world with the GDP growing over 6- 7 o/o for 2015-16 and

expected to grow above 8to l0o/o,2017-2018 onwards.

In order to be part of the main stream of the economy and toget equitableinvestment opportunity, Equity stock markets(The Islamicway) provides the best Investment option and

solution for the Muslims. Equity markets have proved thatthey are not only the most cost effective,transparent, liquidand conducive to small and big size investors as a means ofinvestment, history have proved that it has outperformed allother asset classes where return on investments is the

parameter considered. In the long term, particularly in adeveloping economy,equity (stock) market alwaysperformed well. Hence Muslims must Invest in the EquityMarket.

On the onset Investment in equity markets is Islamicallypermissible since it is based on Musharaka (Partnership)principle the profit is earned with the risk of losses, where inprofit and losses are shared (PLS). WithUlemas(Islamicscholar) guidance and approval it is now possible to investin regulated Equity markets, of course with stipulatedconditions, and in fact investment in equity markets theIslamic way is probably the best option available for the

4 | oct - Dec 2016 llslami Tiiara

Imtiaz MerchantEditor - Islami lijdla

MD - Pragmatic Weahh Mdnagemeilt Pvt. Ltd

Muslims, the stock market is not only regulated by the

government body like SEBI but also approved by the

Islamic Scholarwith some caveat.

Advantages of Investments in Equities over other formsof Investments.

1. Fixed Interest (Riba) Based InvestmentsFixed interest (Riba) based investments like the savingBank deposit, Bank FDR; Postal savings, Debentures,Bonds etc. are prohibited in Islam. Allah says in the

Quran,'O those who believe, do not eat Riba (usury orinterest) multiplied many times. And fearAllah, so that youmay besuccessful.' (Holy Quran Al-Imran verse 1 30) Islamhas discouraged fixed saving and withholding ofivealth,rather encouraged Business& Investments. 'Profit shouldbe eamed only with the risk of losses',in equity investmentthe profit and loss is shared in proportion to the investmentsmade. Thus, on a prima facie investment in equity market is

in accordance to the Quran and Hadeeth injunctions.

2. Investment in Real EstateInvestment in Real Estate / Properties, althoughinvestmentis permissible in Islam,but it has many disadvantages overequities. First, Equity Market is well regulated by SEBI and

Real Estate market is not regulated by any institutions, unitsize is concern, it is not possible for every individual to buyproperty since the investment involved is huge, whereasone can invest in equity for an amount as low as Rs. Onethousand and there isno upper limit. Secqndly, property is

subject to a lot of legal paper work and one has to gothrough a very cumbersome procedure to acquiieproperties. Howevqr, it is very easy to buy and sell shares bybecoming the member ofSEBI registired broker. Thusbuying and selling shares is as eisy as snapping yourfingers.There is often a threat of encroachment of the properfywhich involves costly litigation. Equity shares frave a tiiiadvantage here since the stocks purihased get directlideposited in the investor's depoiitory u""orrt (D_mataccount) where it is in the safe custody and one can sellthem whenever and as much as the inveitor desires to sell.Even If returns on investments as a parameter consideredthan historically it's proved that returns eamed in equityinvestments is superior to all the asset classes including thereal estate, over a long term Real Estate has givei ananntalized retums of 7 to 8 percent whereas equity hasgiven a yield of 12 to 14 percent Finally One can a1o partiatwithdrawals from equities and get the sale p.o.""d, inmaximum three days (T+2), it is not possible to get partwithdrawal, one has to sell the entire properly and thepayment proceeds sometimes takes months. Hence Equitymarkethas immense liquidityto take immediate Exitwhiciris far too easier and faster than Real Estate

3. Investments in Conventional Mutual FundsInvestments in Conventional Mutual Funds isnotpermissible from the view point that these mutual funds arenot mandate to follow Shariah nofins thus they even investin stocks of prohibited businesses like Li[uor, Banks,Hotels, Entertainment, Cinema, Casino etc. that is strictlyprohibited in Islam, hence profit earned from these mutualfunds is impure and tainted. Mutual Funds do invest in Debt& derivatives instrument too which is not allowed under theShariah laws. And moreover, since about 45 percent themarket capitalization is Non-Shariah Complaint,presumably over 40 percent retums eamed is not Halal,hence this option too is not compatible for Investrnents,However Muslims can invest in Authentic Shariah_Compliant Mutual fund, Shariah Compliant pMS, DirectInvestments into Shariah compliant stocks approved andmonitored by areputed Shariah Scholars.

TaxAdvantage

.O1e qore point that goes in the favour of equity Investmentis the Capital gains tax. The capital gains tax ii Nil for longterm investors i.e. if the investment is held for more thanone year (calendar year). And for the short term investmentsfor les s than a y ear, investors have to pay only I 5 % percenttax on its gains on booked profit minus booked losses.Muslims must take advantage of this benefit and invest inequities that would help them create wealth in the long termin the Shariah way. The concerning part in the eq:uitiesinvestment is the market rist inO volatility. Theperformance of the company, industry and economy isnever static and varies from time to time and since themarkets is mass psychology it goes up or down on fear andhope based on the underline fundamintals. Andin order to

overcome this and to optimize Halal return on investments,one should take guidance from Shariah based EquityResearch Analyst and Investment advisorswho can guidethe investors build the Equity portfolio after hivingunderstood the Risk profile and Risk appetite of investors.Ifthis part is taken care ofdiligently, then equity investmentis certainlythe bestlnvestment option forthe Muslims.

RoIe of Shariah ScholarIslam makes 'Lawful Eaming, (Halal) mandatory and inIslam, the spiritual and secular aspects are one and thesame. This implies that Islam emphasizes the need to makea living by means that are permissible under it. After manyyears ofdebate and discussions and looking into the neeifor Muslims to invest in equity markets as-an alternate toBank, Bonds and Insurance, Islamic scholarshavepermitted Muslims to invest in equity marketswith certainstrict stipulated conditions. With the help of computertechnology and with so much of information availabl", ,orvit is possible to screen the companies on Shariah norms.

Shariah scholars have imposed investment restriction andconditions and only upon fulfilling these conditionsMuslims can invest in equitymarkets the Halal way.

The following conditions mandate by Shariah Scholar:

1. Restriction based on the type of Securities:Investment should only be done in Shariah. compliantstocks as defined.A security tradrngin derivatiies and day

lslami Tijara I Oct - Dec 2016 I 5

I

INDIAN EOUITY MARKET AT A GLANCE

TlgBombavStockExchanle3O-sharebarometerendedthequarterwithapositivereturn of6.l77%o.The50-shareNiftyalsoendedthequaxterwithanincreaseof 6.56%o.ITE 35 index too ended the quarter with positive 5.28olo ofreturns. It is seen from the charts below, that Banking, Automobiles and some stocks fromConsumer sector have performed well for the Sensex, Nifty, as well as for ITE 35. The highest grosser for Sensex have bien Maruti Suzuki, Adani ports, TataMotors, ONGC etc. with an increase of 27Yo,26%o,2lo/o,and,16% respectively. The achi&ers firNifty have been Maruti Suzuki,Adani ports, Tata Motors &EicherMotorswith an increase of 27%,26%,21%, and lSTorespectively. The-bestperforming stocks f:orITE 35 havebeen Maruti Suzukiw ith21%o,B;1tannialnds. with2+o/o,TataMotors 2 1olo andEicherMotorswith l8%.

L! r! sx ,rn

3 Month Return (in %) SENSEX

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,,! ,!" L7o/" !L% Tooa

3% 3o/o 2%

3 Month Return (in %) Nifty

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Advance : 41Decline : 10

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lslami Tiiara loct- oec2016 115

Quartely

0ctober - Decemher 2016 Vol. Issue 16

PatronsMaulana Mohammad Wali Rahmani(Secretary All India Muslim Personal Law Board)

Dr. M. Y. Khan(Former Senior Director RBI & Economic Advisor to SEBI)

S. S. Thukur(Former Chairman HDFC Bank & Comptroller [Exchange] RBI

EditorImtiaz Rehman Merchant

Shariah AdvisorsMaulana Khalid Saifulluh Rahmani

a

Mufti Fuzailur Rahman Hilal Uthmani(Grand Mufti of Punjab)

Mufti Shuaiballah Khan(Editor-in-Cheif Islamic Vision, Bengaluru)

ResearchHina Mohd. Hunif Qureshi

Eales & DistributionE - m ail : c o ntact@is lam itij ara. c o m

Cell : 9702317868

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A$ripada, Mumbai Central (E), Mumbai - 11.Telephone : 022-23001290 / 022-23007290

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Near town hall bridge, VIP ruad Kazi wada, Bhadkal Gate,

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For Adveftisement and 0ueries - Write to us

E m ail : c o ntact@is I amitij ara, c om

Printed & Published by lmtiaz Behman Merchant.22, Red CrossSt., Nazneen,Znd Floor,Agripada, Mumbai-40001 l. MAH.0wned by PragmaticWealth Management Pvt. Ltd.22, Bed Cross St., Nazneen,2nd Floor, Agripada, Mumbai - 400 0 1 1 . MAH.and Printed at Prirtvision 31, J0yti lnd- Estate, Nooribaba Darga Boad, NearMakhamaliTalao.Thane{W)-400601 and Published at22, Bed CrossSt., Nazneen,2nd Floor, Agripada, Mumbai-400 01 1. MAH.

DisclaimerThe information contained inthis magaine Islami Tiiam does not constitute an otfer or solicitationto sell any security or fund to or by anyone in any jurisdictions, nor should it be regarded as a

contmctual document. Under no circutrEtaoces shouldlfie idomation provided on this magazinebe considered as advice for any investnent d as a sufficientbasis on which to make investmentdecisions. The infomation contained herein is lesrch dore by PEgmatic Wealth lranaoement P

ttd. (PWM) but no waranty of accuEcy or conpletenGs is 0iven. PWM is not responsible for andprovides no guarantee with respect to any oflhe idomatim previded in this magazine past resuhsare n0 indicalion of luture perfomance. All infomation in tiis magiline is suogestive andinformative and does not constitute investrnent. lhe opinion expressd in wrious anichs do notnecessarily refled the views or policy of'lslami liiam'and indMdual are Esponsible lortheir views.M part ofthis magazine may be reproduced withoutthe prior Mitten pemission of lhe editol

ON PAGE

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