1 st J anuary-201 6 to 31 st J anuary-201 6 www.jhaveritrade.com F o r P r i v a t e C i r c u l a t i o n O n l y Issue Theme Pg. 1-2 C Y 2 0 1 6 S toc kP ic ke r’ s Mar ke t Comp anyAnalysis Pg.10-1 3 Value Buy Pg. 1 7-19 VA L UEBUYInspite of better macros in India, investors should get ready for a roller coaster ride in CY2016, after a year ofconsolidation in CY2015, mainly due to external global uncertainties including China and volatile crude oil prices. However , we believe that if investors play smartly , they can build portfolio for future. Investor should also focus on qualityIPOs inCY2016. CY2 16 CY2016 Stock Picker’s Market S tock Picker’s Market CY :- Calendar Year
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7/23/2019 Money Navigator January 2016
http://slidepdf.com/reader/full/money-navigator-january-2016 1/361st J anuary-2016 to 31st January-2016 www.jhaveritrade.co
F o r P r i v a t e C i r c u l a t i o n O n l y
Issue ThemePg. 1-2
C Y 2 0 1 6
S toc k P ic ker’ s
Mar ke t
Company AnalysisPg. 10-13
Value BuPg. 17-19
V ALU E B U Y
Inspite of better macros in India, investors should get ready for a roller coaster ride in CY2016, after a year consolidation in CY2015, mainly due to external global uncertainties including China and volatile crude oil priceHowever, we believe that if investors play smartly, they can build portfolio for future. Investor should also focus oquality IPOs in CY2016.
Winter Session of parliament : A repeat of Monsoon session
The US Federal Reserve raised interest rates by 25 basis points taking the first step away from its near-zero interestrate policy and signaling a “gradual” pace of rate hikes to come in CY16 on account of improvement in the labor market
and other macro economic factors but inflation is yet to return to target level of 2%. This is the first hike in nine years
and sends positive signal about the revival in the world’s largest economy, which would have a corresponding positive
impact on the rest of the world.
Historically, the impact of rate hikes in the US on Emerging Market equities has been mixed and ultimately dependent
on the circumstances at the time.
Although, the past two tightening cycles led to net capital inflows into EMs. While the rate hike does not directly impact
equity fundamentals in India, the implications for equity markets flow through the sentiment and foreign portfolio flowschannel. In this regard India as a significant member of emerging market equities basket will react on the basis of
perceptions for overall Ems.
All in all, Lok Sabha passed 13 Bills while Rajya Sabha passed just 9 Bills in the 20-day winter session, but none of
these were large-ticket Bills. The Bills which were passed included Negotiable Instruments Bill, The Scheduled Castes
and Scheduled Tribes Amendment Bill and The Juvenile Justice (Care and Protection of Children) Bill.
If Lalit Modi controversy and Vyapam scam washed out the Monsoon Session, the Winter Session was washed with
allegations and counter-allegations on issues ranging from ‘intolerance debate’ to ‘National Herald' allegations andothers. Parliament’s winter session is a big disappointment and largely a repeat of Monsoon Session in the context of
passage of critical reforms Bills such as GST Bill, which the country desperately needs to progress.
Clearly, the time is running out for new government to make major reforms happen in the economy. The promised
reforms agenda of BJP government is yet to take place in a major way. Beyond FDI liberalization in a few sectors and
some minor incremental reforms, Modi hasn’t managed to introduce any big-ticket reforms yet.
* Source : Live Mint, U3&6 is special measurement of employment in US
With inflows in Mutual Funds scheme, DIIs have invested` 69277.5 Cr. in equity, which was approximately over 3 folds
higher than ` 23842.7 Cr. invested in the previous year. The fall in equity market in recent even sharper if buying from
domestic investors’ ,who infused freshcash flowing in from retail investors,did notcome.
Reasons like subdued earnings growth, weak currency, monsoon woes, rise in crude oil prices, slow reform process, tax
concerns (MAT) and better performance of other emerging markets are responsible behind foreign out flows. Foreign
investors have registered their lowest net buying in Indian equities market in last four years. In 2015, year-to-date, the FIIs
have beennet buyers in equities to the tune of ` 36395.71 Cr. which is 58% lower than the year earlier when they had been
net buyers inequities to the tuneof ̀ 86668.59Cr. ( $14392.19 million) in2014( See Macro EconomicUpdateonpage21. )
However, India is betterplaced than most of itspeers because its external balances have significantly improved since mid-
2013. India is less dependent than several of its peers on commodity exports. Only a small part of India’s sovereign debt isheld by foreigners or is denominated in foreign currency. India’s favorable economic growth outlook makes India relatively
attractive forforeign investorssooneror later.
As far as the current domestic economic situation is concerned , the economy is suffering from serious cyclical and structural
issues. There is an enormous amount of surplus manufacturing capacity, close to 30% according to RBI. Many
infrastructure projects remain stalled. Corporate earnings have stagnated for two years and investors are getting tired of
waiting for faster growth in earnings per share. Exports have also shrunk, month by month. Public sector banks are in
collective trouble, with a vast amountof stickydebt on their balance sheets.
On political front also, some disillusionment with the government/ruling party and not much confidence in their ability toacceleratethepace ofgrowth.
Adecent Budget, a good monsoon, an improvement in consumption demand and an upstick in global growthcould all help to
turn things around. However, sentiment is now a great deal worse than a year before and sentiment is unlikely to fully
recover ina hurry.
The new year brings fresh hope. US seems poised to lead a global economic recovery. Government finances are strong
enough to push critical infrastructure projects. Hopefully, the economy will see productivity gains that can improve the
competitivenessof exporters.
We believe that CY2015 remained a year of consolidation for Indian equity market (Nifty performed -5% on YTD basis and
–13% from its life time high ), after solid performance in CY2014, as global uncertainty along with weak corporate earnings
weigh on the market. Globally, Fed rate hike is long term positive for global markets.As far as market is concerned, there is
no near term trigger for the market except Q3 results (which expect to remain better on weak base ) and hype of budget
expectation. In CY2016, we wish the hope meets with the reality and the corporate earnings fulfill the expectations of the
investorswhohave built position well in advance on expectationof economic revival.Technically, Niftyhasstrongsupport of
Plastic Industry has direct correlation with GDPgrowth
Low per capitaconsumption provideenough growth opportunity
The most commonly used polymers (commonly referred to as plastics) are high-density polyethylene (HDPE), low-densitypolyethylene (LDPE), linear low-density polyethylene (LLDPE), polypropylene (PP), poly vinyl chloride (PVC) and
polystyrene(PS).
The plastic industry is one of the biggest contributors to India’s GDP and is among the fastest-growing sectors in India.
Plastic consumption has grown primarily due to the progressive substitution of traditional materials with plastic variants,
The healthcare delivery industry in India consists of a range of medical practitioners, beginning with grassroots levelphysicians practicing traditional or indigenousforms of medicine (such as Ayurveda), independent practitioners with clinics
of varying sizes andcapabilities,andhospitals that aremulti-disciplinary or specialty focused. Theavailability of specialized
healthcareservices is largelydemographydriven.
CRISIL estimates the size of the Indian healthcare delivery industry at 3,400 million treatments in volume terms and ` 3.8
trillion in valueterms in the year 2014-15. The healthcaredelivery industry in India is estimated to have grown at a CAGR of
approximately 14-15%in value termsover thelast five years.
CRISILexpects the healthcaredeliverymarket togrow at a CAGRof 12.00% and reach ` 6.8 trillion by theyear 2019-2020,
drivenbypopulation growth, rising incomelevels, andincrease in lifestyle-relateddiseases,amongst other factors.
Hospitals can be broadly classified on the basis of the services offered, complexity of ailments treated, and the ownership
model
Revenueand cost structure of HospitalsRevenue Part
delivery industry, or ̀ 3.1trillion, in2014-15,while OPD accounts forthe remaining19.00%, or ` 0.7 trillion.While surgeries account for a large portion of revenues for most hospitals, the share of different verticals in total revenues
differs across hospitals, depending on pricing strategies and the emphasis on different specialties. In certain hospitals,
particularly for land andbuilding development andequipment. Thecapital cost to build a hospital is typically ` 7-8million per
bed.While costs for secondary-care hospitals are lower, high technology and equipment costs keep total capital costs for super
specialty tertiarycare hospitalsat thehigherend. The useof importedequipmentcanfurther driveupequipmentcosts.
Potential to increasebed capacities
India's overall bed density is approximately 7 per 10,000 population below the global median of 27 beds as well as that of
otherdeveloping nations such asBrazil, Malaysia,Vietnam,and Indonesia.
According to WHO's Global Healthcare Expenditure Database, India's total expenditure on healthcare was 4.00% of the
GDP in 2013. The per capita government expenditure on healthcare (at international dollar rate adjusted for PPP) in 2013
was USD 69 in India compared to USD 4,307 in the US, USD 2,766 in the UK, USD 701 in Brazil, and USD 514 in Malaysia.
Lower per capita spend on healthcare in India can also be partially attributed to the relatively low contribution from the
government.
India'spopulation is expected togrow toover 1.42 billionby 2026, from approximately 1.21 billion in 2011. At 7 beds per 10,000 persons, the number of beds in India significantly lags the global median of 27 beds, indicating a
shortfall of nearly2.5millionbeds compared to thecurrent globalmedian.The growthopportunity for thehealthcare delivery
market in India, therefore, is immense
Key Growth Drivers
Government spending on healthcare continues to remain low, allowing private sector to
increasepresence
Increasing population as well as life expectancy to requiregreater health coverage
Rising income levels to makequality healthcareservices more affordable
Hospital Beds
( Per 10,000 Population)
Sector ViseConsumption of PVC Russia China UK USA Brazil Thailand Indonesia India
97 38 29 29 23 21 9 7
Total Healthcare Expendi ture as % of GDP
USA Brazil UK Russia Vietnam China Thailand Malaysia India
Even though healthcare is considered as non-discretionary expense, affordability of quality healthcare facilities remains a
majorconstraint withan estimated 59.00%of households in India having an annual incomeof less than `0.2 million in 2013-14. Growth in household income, and consequently, disposable incomes, is critical to the overall demand growth of the
healthcaredelivery industry in India.
According to CRISIL research the immense opportunity in the industry can be understand from the fact that the share of
households falling in the income bracket of ̀ 0.2-0.5 millionp.a. is expected to increase to 37.50% in 2017-18 from 28.00%
in 2013-14.
Lifestyle-related, NCD exhibit a tendency to increase in tandem with rising income levels. With households earningsexpected to increase, the share of NCDs as a major cause of deaths in India is expected to rise. Consequently, demand for
healthcare services associated with liferelated diseases, such cardiac ailments, oncology anddiabetes, is also expected to
increase.
Fortis Healthcare
Focuson improvingitsprofitabilityboth in thehospitalsandthediagnosticssegments.
Trendofdouble-digitgrowthin average revenue peroperatingbedhasstarted.
Improvedmargin on diagnosticsegment.
Apol lo Hospi tals
Endof current investment cycle leads toa recovery in margins andreturnoncapital employed.
Added 1,300 beds over the past two years and it is planning to add 895 beds by the end of FY16E.
GARWALLROP is trading at `425.We recommend “Buy” with targetpr ice of `550, valuing stock20xFY18E EPS of `27.47.The stockcurrentlytrades at 22.27xof FY16E,18.56x of FY17E and 15.47x of FY18E.
Investment Horizon : 12 to 15 Months
Company Overview
Indian Technical Textile Industry
Strong products portfolio with wide rangeof end users
Garware-WallRopes Ltd. (GWRL), is oneof India's leading players inTechnicalTextiles
with customers and end-users across the world. The company provides application-
focused solutions for various sectors including Deep Sea Fishing, Aquaculture,
The company has three integrated manufacturing facilities in Pune, Wai and Silvassa,
where a range of products are produced such as 1) Ropes 2) Nets and Aquaculture
Cages for capturing and breeding fish 3) Nets for Sports such as Tennis and Soccer 4)Insect and Shade Nets for high-value Agriculture 5) Coated Fabrics for Covers, Tarps,
Tents 6) products and solutions for water management, waste management and
erosion-control applications.
Technical Textile sector is one of the most innovative branch of the industry in the world
ranking as one of the five high tech sectors with the greatest potential for
development. The success of technical textiles is primarily due to the creativity,
innovationandversatility in fibers, yarnsandwoven/knitted/non wovenfabrics
Technical textiles are textile materials and products used for their technical
performance and functional properties. Technical textiles are an important part of the
textile industryanditspotential isstill largely untapped in India.
With the increase in disposable income, the consumption of technical textiles is
expected to increase.
Based on past trends of growth and estimated end user segment growth, the Working
Group on Technical Textiles for 12th Five Year Plan (FYP) projected the market size to
reach `
1,58,540 Cr. by 2016-17 at a year-on-year growth rate of 20% during the 12thFiveYearPlan.
GWPL is the largest domestic player in Technical Textile industry that provides
application focus solutions to various traditionalsectors like Fisheries,Aquaculture and
also cater to newandrisingsectors like Sports, Defence andTransportation with its
wide range of product portfolios. End-usersof Company'sproducts include Fishermen, Shipping Companies, OilDrillers,
Agriculturists, Packers, Transporters, Construction companies, Municipalities, Government Organizations, Clubs,Universities and Manufacturing Plants. The company also provide various product and solution for Water management,
Waste management, erosion control applications.Apart from being a leadingplayer in the domestic market, GWPL has a
Apart from the traditional sectors, GWPLhas started focus on innovative business areas like Agriculture, Coated Fabrics (
toprotect goodsduringtransportation)and Defence.
As the growth in defence technical textiles is immense as India imports >20% of its requirement from different countries
such as Israel, Russia and the US. The market size of technical textiles in Indian defence is estimated at is more than~1,300 Cr. GWRLhas developed a strong association withAerial Delivery Research & Development Establishment. The
partnership has seen successful completion of several projects like Flexible Helimats (landing & take-off of helicopter at
oddplaceslikedesert ), tocover radarat sensitive location andspecial type of balloons.
Apart from general product portfolio in Agriculture products, GWRL has developed products like Insect Repellant Nets
through advance extrusion and coating techniques for protection of crops from different insects and also developed
Staking Cord forsupport of high fruit bearing plants from falling off to thegroundbyweightof thefruits.
To counter the slowdown in traditional business, GWRL has developed new business lines in Aquaculture with vastproduct portfolio specially in Cages and Nest that best suits the industry requirement. According to management, GWRL
innovative solutionslaunched in theAquaculturearebecomingslowlyandsteadilysuccessful.
According to Industry estimates, the market for Geo-textiles is projected to reach $8,632.83 Million by 2019, growing with a
CAGR of 10.59% between 2014 and 2019. Asia is the fastest growing market for Geo-textiles with China and India
cumulatively accounting for more than 85% of the total Asian market. Asia-Pacific is projected to gain the major market
size byvalue by2019.
GWRL provides some of the unique solution in Geo Textile for Infrastructure sector. Despite the persistent slowdown in
the domestic infrastructure sector, Company has increased its business in Geo Textile specially in erosion control and
Most of the Raw Material (like High Density Polyethylene ,Polypropylene, Nylon PolyesterYarn) consumed by the GWRL
is crude based derivatives which constitutes ~50% of total expenditure. RM cost as % of sales remains in the range of
45%-47% in last five years.Fallingcrudeoilprice (Brentcrudetouched lowest levelsince 2004) leads toadded
GWRL focuses on new business areas
Growth in Aquacultureindustry and Infrastructure development will benefit to GWRL
landfill lining.
Falling crude oil prices and currency devaluation work well for GWRL
advantage for GWRL in the form of margin expansion. RM cost as % of Sales fell from 47% in 6MFY15 to 43% in 6M Fy16
leads to EBITDAmargin expansion of 137bps to 11.80% in H2FY16 (v/s 10.43% in H2FY15). Rupee depreciation help s tomaintain top line better due to exports revenue contributes ~49% of top line as company has increased its focus on USA,
Canada and Europe.
GWRL ’s top line grew from `498 Cr. in FY11 to ̀782 Cr. in FY15, CAGR of 12% (absolute growth +57% ) largely on better
performance of itssyntheticcordage segment (mainly includes its Ropes,Twines and Nettings business ), better capacity
utilization and improved itsperformance through innovative productsandexploration of newbusiness segments. In last five
years, company has made its efforts for addition of new customers across the globe to compensate for contraction in
To strengthen the presence in the Hair Oil segment, HUL has signed anagreement with Mosons Group to acquire hair-care brand “Indulekha” for Rs 330crore and further deferred payments based on performance. The deal includestrademarks “Indulekha “and “Vayodha” intellectual property, design and knowhow. HUL wil l also pay "deferred consideration” of 10% on thedomestic turnover of the brands each year for five years starting FY18. Theacquisitionmayalso help HULboost itspresence in theAyurvedicspace.
Delayed commencement of winter will have a bearing on performance of itsPersonal Care portfolio. Nonetheless, the management remains confident of long-term consumption opportunity and continues to see premiumization invarious product categories—e.g., Surf Excel is now the largest brand forHUVR inDetergents.
HUL to acquire“ Indulekha” for ̀ 330Cr.,
Latearrival of winter season may impact Q3FY16 performance
Valuation :
Currently, HINDUNLVR is trading at `856. We recommend “Accumulate” withtarget price of ̀ 922, valuing stock 45x FY17E EPS of ̀ 20.50. The stock currentlytradesat45.30xofFY16E and 41.80 x ofFY17E.
Welspun Syntex Ltd. CMP: 151 Target : 223 “ Buy”
Financial Basics
FV (`)
EPS (`)
Book Value (`)
P/E (x)
P/BV (x)
52 Week High (`)
52 Week Low (`)
Equity ( ` in Cr.)
MKT.CAP( ` in Cr.)
10
11.37
37.3
13.76
4.2
158.6
91.5
39.24
614.11Share Holding Pattern (%)
Foreign
Institutions
Non Prom.
Promoters
Public & Others
0.66
1.1
5
70.1
23.16
New Developments
Welspun Group to hive off yarn-spinning business for next generation
Valuation
Welspun Group, is carving out the yarn-spinning business, Welspun Syntex,which will bemanaged bycofounderRajeshMandawewala's elder sonAbhishek.
Mandawewala, group managing director, is in the process of purchasing partner and chairman BK Goenka's stake in Welspun Syntex. This step is part of efforts toensure separation of ownership and management while simultaneously planninga smoothsuccession of thebusiness to thenext generation.
Initially, It was assumed that sons would join fathers' business but that isn't thecase anymore with globalization of businesses and better corporate governancemechanisms
Currently, WELSYNTEX is trading at `151. We recommend “Buy” with targetprice of `223, valuing stock 13xFY17E EPS of `17.18.The stock currently tradesat 10.06xof FY16Eand8.38xof FY17E.
Various NBFCs have started to focus on SMEs to tap the high quality borrowersbecause as bank lending declined. All NBFCs are remain optimistic about thefunding scenario. According to a recent Crisil report, loan against propertysegment for SMEs is expected togrow by Rs5 lakh crore by 2018-19 and NBFCsare expected tocontributenearlyhalfof this.
According to Management , DHFL is fairly optimistic of clocking 18-19% growth inits loan book. Thehousing finance major is also hopeful of maintaining thegrowth
rate in the next two years as it goes about strengthening its existing branchnetwork and improving the IT systems to reach further into Tier- 2 and Tier-3markets. DHFL will remain on the low- and middle-income segments and arefocused andwill bea retail focused player.
Focus started on SMEs to tap thehigh quality borrowers
Fairly optimistic for FY16E to achieve 18-19%loan book growth
Valuation
Currently, DHFLis trading at `235. Werecommend“Buy”with targetprice of ̀ 368,valuing stock 1.80xFY17E book value of ̀ 204.The stock currently trades at 1.31xofFY16E and1.15xof FY17E.
Bharat Forge Ltd. CMP : 893 Target : 1150 “ Buy”
Financial Basics
FV (`)
EPS (`)
Book Value (`)
P/E (x)
P/BV (x)
52 Week High (`)
52 Week Low (`)
Equity ( ` in Cr.)
MKT.CAP( ` in Cr.)
2
29.88
147.94
28.6
5.78
1363
773.05
46.56
19891.6Share Holding Pattern (%)
Foreign
Institutions
Non Prom.
Promoters
Public & Others
18.45
13.87
7.7
46.74
13.24
New Developments
Bharat Forgeto supply engineparts to Rolls-Royce
Near headwinds continue,long term future bright
Valuation
Bharat Forge signed a long-term agreement with Rolls-Royce for supply of aeroengine parts. The agreement includes supply of critical and high integrity forgedand machined components for a range of aero engines, including the flagshipTrent engine. According to Management, it is strategic intent to play asignificant role in global aerospace supply chain with forged and machinedproducts.
Bharat Forge organized a meeting with analysts to discuss the company’sbusiness plans. The compnay has made to scale-up various segments of itsbusiness and develop new products to double its standalone revenues over the
next five years. FY2016 is likely to be a weak year for the company, led byslowdown in the US truck market and oil & gas industry (~40% of standalonerevenues) but new products/verticals will likely result in 16% CAGR (compoundannualgrowth rate) in revenues in theFY2016-18period.
Currently, BHARATFORG is trading at `893. We recommend “Buy” with targetprice of `1150, valuing stock 25.05xFY17E EPS of `45.9.The stock currentlytradesat25.01xof FY16Eand19.46xofFY17E.
Havells India has decided to sell 80 stake in Havells Sylvania Malta BV owned byits subsidiary Havells Holdings (HHL) and Havells Exim to Chinese companyFeilo. Feilo which has business of manufacturing and distributing lightingequipment, is the first listed company in China. Havells India will continue to hold20 percent stake in Sylvania. Stake sell in Sylvania fetch for Rs 1,070 crore thatwill be used for expansion of company's portfolio through organic & inorganicroute.
Havells has invested over Rs980crore in Sylvania in 8 years.Company'sbalancesheet will strengthen post Sylvania divestment. Standalone business continuestobeona strong footing andthere isnochangetostandalonebusinessguidance.
Havells India will start manufacturing small domestic appliances from January2016. The company will make appliances like mixer grinder, juicer mixer grinder,electric iron andinductioncook top.
Valuation
Currently, HAVELLS is trading at `301. We recommend “Buy” with target price of `346, valuingstock 31xFY17E EPS of ̀ 11. The stock currently trades at 33.82x of FY16Eand27.36xofFY17E.
Maruti Suzuki India's minority shareholders vote on Gujarat plant, positivefor Maruti Suzuki India
Expected to double its current manufacturing facility by 2020
Valuation
Initially, the Gujarat plant was proposed tobe owned by Maruti Suzuki but the planwas changed later with its Japanese parent Suzuki Motor Corporationannouncing in January last year that it would invest$488 millionto build theplant.
The Gujarat plant is envisaged to have an installed capacity of 7.5 lakh unitsannually. MSI's two units at Gurgaon and Manesar have a total productioncapacityof 1.5millionunitsannually.
To double its infrastructure and sell 30 lakh units of cars a year, country's largestcarmaker, MarutiSuzuki India and itsdealers areplanning to make an investmentof 30,000 crore. The carmaker has claimed that it is looking forward to sell 20 lakhunits by year 2020, which means that it will be at least 8 to 10 years before Marutireaches its 30 lakh units per yearmark.
Currently, MARUTI is trading at `4638. We recommend “Buy” with target price of `5200, valuing stock 22.46xFY17E EPS of `231.5.The stock currently trades at26.01xof FY16Eand20.03xof FY17E.
American Depositary Receipt (ADR) & Global Deposi try Receipt (GDR)
DifferencebetweenADRand GDR
What are theBenefits of ADRs to US investors?
What arethe Benefits for companies issuing ADRs?
Indian depositary receipt (IDR)
Who can participate?
How are IDRs taxed?
AnAmerican Depositary Receipt (ADR) is a certificate that represents shares of a foreign stock owned and issued by a U.S.bank. The foreign shares are usually held in custody overseas, but the certificates trade in the U.S. Through this system, a
What is RSI (Relative Strength Index) ? A technical momentum indicator that compares the magnitude of recent gains to recent losses in an attempt to determine
overbought and oversold conditions of an asset. The relative strength index (RSI), one of the most popular technical
indicators, is computed on the basis of the speed and direction of a stock's price movement. This means that the RSI
The ratio between these values (average gains / average losses) is known as relative strength (RS). To make sure that the
RSI alwaysmoves between 0 and100, theindicatoris normalized laterbyusing theformula givenbelow:
RSI=100-100/(1+RS)
How to read and concludeRSI ?
Overbought/oversold levels:
The RSI ranges from 0 to 100.An asset is deemed to be overbought once the RSI approaches the 70 level, meaning that it
may be getting overvalued and is a good candidate for a pullback. Likewise, if the RSI approaches 30, it is an indication that
theasset maybe getting oversold andthereforelikely to becomeundervalued.Below mentionedgraph of NIFTYDaily chart
shows RSI overbought and oversold conditions (RSI value considered in relation to Pricewhich is Indicated by pink marker
at price).
Drawbacks :
The main problemfaced by the short-term traders who use indicators is that the stock may continue to move up despite theindicator hitting the overbought zone, or continue to go down even after the indicator hits the oversold zone. This is the
reason Wilder developed a new concept called 'failure swing' for the RSI. A 'bearish failure swing' occurs when
the RSI enters the overbought zone (goes above the 70 level) and comes below 70 again. In other words, a short
position can be taken only when the RSI cuts the 70 lines from the top. Similarly, a 'bullish failure swing' occurs when
Theobjective of this portfolio is to generate long term capital appreciationby investing
in concentrated portfolio of large cap and growth oriented mid cap companies. This will help to generate meaningful wealthfor InvestorsfromEquity Market.
Based on various fundamental parameters andvaluationcheck along with certain themes
We have detected a Symmetrical Continuation Triangle chart patternformed on Bharti Infratel Ltd.The price has broken upward out of aconsolidation period, suggesting a continuation of theprior uptrend.ASymmetrical Continuation Triangle (Bullish) shows two convergingtrendlines as prices reach lower highs and higher lows. Then wellbefore the triangle reaches its apex, the price breaks out above theupper trendline with a noticeable increase in volume, confirming thepattern asa continuation of theprioruptrend.
ADANI PORT
We has detected a "Descending Continuation Triangle" chart pattern
formed on Canara Bank.The increasingly lower highs and constantlows within this pattern tell us that sellers are more aggressive thanbuyers, confirmed by a break down through a support level to signal acontinuation of the prior downtrend. The pattern typically formsbecause a demand for shares is available at a certain price,represented by the lower flat line propping the price up. But when thesupply depletes, the shares quickly break down below the bottomboundary lineand movelower.
We has detected that Average Directional moving index has started
rising in Adani Ports weekly charts. The stock had earlier fallen fromlevels of 372 to 239 Rs and had now bounced backto 268 Rs which is23.8% retracement level of earlier fall and also coincides with 100days EMA will act as strong resistance. We recommend to sell thestock at these levels as this bearish pattern indicates that the stockpricemay fall in thecoming weeks.
We have detected bullish chart pattern formed on IRB InfrastructureDevelopers Ltd. The price has broken upward out of a consolidationperiod, suggesting a continuation of the prior uptrend. The patternbegins during a downtrend as prices create higher highs and lower lows in a broadening pattern. Then the trading range graduallynarrows after the highs peak and the lows start trending upward.When the price breaks upward out of the rectangle boundary lines, itmarksthe resumption of theprioruptrend.
The index opened at 7958, made a high of 7979, made a low of 7551 and closed the month at 7946. Nifty is currently inMedium term downtrend. Nifty is taking support at long term trend line on monthly charts from previous few months. The
current level of trend line support zone is at 7750-7800 on monthly basis and nifty has managed to close above that in
December month also. But Directional moving index had given negative crossover and momentum indicators like RSI at
53.65 in declining phase is indicating that more downside levels can come in coming months if nifty breaks the trend line
support and momentumof sell will riseafter break of previous lowof nifty at 7550. Monthlysupport cluster of Nifty is at 7200-
6700. Bullswillhaveupper handonly ifNifty crosses and manages toclose above 8350onweeklybasis.
Bank Nifty
The index opened at 17456, made a high of 17496, made a low of 16188 and closed the month at 16922. BankNifty iscurrently in Medium term downtrend. It is witnessing retracement of previous bull rally from 8366 to 20907. The Monthly
Fibonacci Retracement comes at 16100-14600 where Banknifty is likely to take supports. Banknifty has managed to close
above 16100 levels from previous four months. But Momentum indicators like RSI at 54.22 in declining phase is indicating
that more downside levels can come in coming months as lower top lower bottom pattern is witnessed in weekly charts.
Momentumof sell will rise afterbreakof previous lowofBankniftyat15762.
Bullion prices dropped as the combination of a firm dollar and weak oil prices left the metal on track for its third consecutiveannual loss. Largely influenced by U.S. monetary policy and dollar flows, the price of bullion dropped in 2015 as someinvestors sold the precious metal to buy assets that pay a yield, such as equities. Following the U.S. Federal Reserve's firstinterest rate rise in nearly a decade earlier this month and indications the central bank would resort to gradual increases in2016, the outlook for gold does not look bullish. Other fundamentals were not supportive either. A report showed that thenumber of people who filed for unemployment assistance in the U.S. rose to the highest level since mid-July last week. TheU.S. Department of Labor said the number of individuals filing for initial jobless benefits increased by 20,000 last week to287,000. Manufacturing activity in the Chicago-area contracted at the fastest pace since July 2009 in December,dampening optimism over the U.S. economic outlook, industry data showed. Market research group KingsburyInternational said its Chicagopurchasing managers’ index tumbled by 5.8 points to42.9 this month from a reading of 48.7 inNovember.Assetsof SPDR Gold Trust, the topgold-backed exchange-tradedfund, were near a seven-year lowwhile shortpositions on COMEX gold contracts were close to a record high. Regional premiums for gold in India were higher becausethe New Year holidays were restricting imports. Buoyed by sharp fall in gold prices globally, India is likely to see a jump of 11per cent in imports of the metal to 1,000 tonnes, says a trade body. According to the All India Gems and Jewellery Trade
Federation, the world’s second-biggest gold consumer imported around 900 tonnes in 2014. According to the federation,India has already imported 850 tonnes of gold from January to September 2015 as against 650 tonnes in the first ninemonthsof last year. The U.S.Mintsolda recordamountofAmerican Eagle silver bullioncoins and saw sales of its goldcoinsrise by 53 percent this year, it said, as weak metal prices unleashed a fresh wave of buying by investors and collectors.Volumes remained light as many investors already closed books at the end of the year, reducing liquidity in the market.Silver imports are likely to set a new record due to rapid change in consumer preferences from imitation jewellery andartifactsmadeof alternativematerials to silver.
Crude oil dropped byaround two percent and also ended the year lower after a racetopumpby MiddleEastcrude producersand U.S. shale oil drillers created an unprecedented global glut that may take through 2016 to clear. Prices also seen underpressure after another year that showed the helplessness of SaudiArabia and others in the once-powerful Organization ofthe Petroleum Exporting Countries (OPEC) to support oil prices. The U.S. shale industry, meanwhile, surprised the worldagain with its ability to survive rock-bottom crude prices, churning out more supply than thought, even as the sell-off in oilslashed by two-thirds the numberofdrilling rigs in the country froma yearago.The UnitedStatesalso tooka historicmove inrepealing a 40-year ban on U.S. crude exports to countries outside Canada, acknowledging the industry's growth. Thedownturn has caused pain across the energy supply chain, including shippers, private oil drillers and oil-dependentcountries from Venezuela and Russia to the Middle East. Global crude production is expected to exceeds demand byanywhere between half a million and 2 million barrels every day. Natural gas prices rose over 14% as updated weather forecasting modelspredicted that chillywinterconditionsacross theU.S. Midwest andNortheastarenotexpected to last formore than a week. Prices also seen supported after data showed U.S. natural gas supplies in storage fell more thanexpected lastweek. TheU.S. Energy InformationAdministration said in itsweekly report that natural gasstorage in theU.S.in the week ended December 25 fell by 58 billion cubic feet, broadly in line with expectations for a decline of 57 billion. That
comparedwitha drawdownof 32billioncubicfeetin the prior week, 26 billioncubic feet in the sameweek last year, while thefive-year average change for the week is a drawdown of 98 billion cubic feet. Total U.S. natural gas storage stood at 3.756trillion cubic feet, 14.2% higher than levels at this time a year ago and 12.0% above the five-year average for this time of year. Prices seen supported the whole week as updated weather forecasting models predicted that chilly winter conditionsacross the U.S.Midwest and Northeast are not expected to last for more thana week. Despite recentgains,pricesof the fuelarestill dropped nearly20%in 2015,as weak demandandhealthy stockpilesweighed.
ICICI Prudential Long Term Equity Fund (Tax Saving) has been one of the top performing Equity Linked Savings
Schemes (ELSS) over the last 15years. If you had investedRs5,000 monthly in ICICIPrudential Long Term Equity Fund(Tax Saving) over the last 15 years, you would have saved up to Rs 270,000 in taxes over this period (assuming you are in
30% tax bracket) and on top of this accumulated a corpus of close to Rs60 lacs. Noother tax saving investment would have
giventhiskindof returns in thisperiod. The performance ofthisfundis a testimony of the wealthcreationpower ofELSS.
ICICI Prudential Long Term Equity Fund (Tax Saving) has been a top ELSS performer even over the last three to five years.
Thisfund launched inAugust1999, hasa fantastic track recordof generating alphassince its inception. Seethechart below,
for the comparison of annualized returns over one, three, five and ten year periods, of the fund, the ELSS Category and the
benchmarkNifty500index (NAVsasonDec142015).
Even in terms of annual returns the fund’s performance has been outstanding, making this fund one of the most long term
consistent performers in the ELSS category. The chart below shows the annual returns of the ICICI Prudential Long Term
Fund Overview of ICICI Prudential Long Term Equity Fund
Portfolio Construction of ICICI Prudential Long Term Equity Fund
The ICICI Prudential Long Term Equity Fund is suitable for investors looking for tax planning investment options under Section 80C with the expectation of long term capital appreciation. However, since this is essentially a diversified equity
fund, it is subject to market risk and volatility as compared to other tax saving instruments like PPF, NSC etc. However,
equities as anasset class generatesuperior returns over thelong term andservesas aneffectivehedge against inflation.As
such, the fund is suitable for investors planning for long term financial objectives like retirement planning, children’s
education, marriage etc.The fundhas anAUMbase of overRs2,840 crores, withan expense ratio of 2.41%. GeorgeHeber
Joseph is the manager of this fund. Prior to George, Chintan Haria was the fund manager from 2011. Before Chintan, this
fund wasmanaged by ICICIPrudential CIOShankaran Naren.
The fund has a large cap bias. The investment style is growth focused. 65% of the fund’s assets are invested in large cap
companies. However, relative of the average portfolios of ELSS as a fund category, the fund has a higher allocation to small
and midcap companies. From a sector perspective, the portfolio has a bias for cyclical sectors like Banking and Finance,
Automobiles and Auto Ancillaries, Mining and Minerals, Capital Goods etc, but it also has substantial allocations to sectors
like IT and Pharmaceuticals. This portfolio construction enables the fund manager to get good returns across different
market conditions. In terms of company concentration, the portfolio is very well diversified with its top 5 holdings, HCL
Technologies, HDFC Bank, Cipla, Thomas Cook, and Power Grid accounting for only 34% of the total portfolio value. The
Comparison of ICICI Prudential Long Term Equity Fund with Peer Set
Conclusion
From a risk perspective, the volatility of the ICICI Prudential Long Term Equity Fund, measured in annualized standarddeviation overa three to fiveyearperiod is in linewith that of the ELSScategory. However, ona riskadjusted returnbasis, as
measured by Sharpe Ratio the fund has outperformed the ELSS category. Over the last three years the Sharpe Ratio of the
fund is 0.87 versus 0.73 for the category. Over the last 5 year period the Sharpe Ratio of the fund is 0.4 versus 0.25 for the
category.
Comparison of annualized trailing returns of ICICI Prudential Long Term Equity Fund, with its ELSS peers across different
time-scales shows why this fund is considered a top performer. While many of its peers have performed very strongly over
theyears, theperformanceof ICICIPrudential Long TermEquity Fund haseithermatched their performance oreven beaten
them.
By virtue of its outstanding long term track record of wealth creation, ICICI Prudential Long Term Equity Fund (Tax Saving)
has established itself as one the top Equity Linked Saving Schemes (ELSS) funds. Investors planning for tax saving
investments can consider buying the scheme through the systematic investment plan (SIP) or lump sum route with a long
time horizon. Investors should also ensure that the investment objectives of the fund are aligned with their individual risk
profilesandtime horizons.
ICICI Prudential Long Term Equity Fund Tata Long Term Equity Fund
Franklin India Tax Shield Birla Sun Life Tax Relief