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• • • • • • • Market Outlook for the month Equity Market Outlook Derivatives & Commodities Market Outlook Large Cap and Mid Cap Investment Ideas Model Advisory Portfolios Recommended Funds key product to Successful Investing
Key Highlights for the Month
FIIs continued to be buyers with inflow of `9,712cr Monsoon has gained momentum, still 12% below normal Metal Sector to underperform due to falling international commodities prices Dear Investor, The Nifty for the month of August broke out of its range above 5350 and made a high of 5448, but, was unable to hold on to higher levels and reversed to close 29 points higher at 5259 level. FIIs continued to be buyers with inflow of `9,712cr, while DII were sellers to the extent of `1,600cr. The Monsoon session of parliament was a stalled after coal allocation report tabled by CAG. Overall expectation of reforms was completely washed out in this drama with no major bill being passed. On the positive side monsoon has picked momentum, as per IMD it is 12% below normal against 19% last month. Quarterly GDP data came in at 5.5%, and July inflation at 6.9%, a 32 month low surprised market positively. FED policy meet towards end of month kept the possibility of QE3 open. 1QFY13 Earning Review aggregate performance were in line with estimates, companies in our universe that beat estimates outnumber the laggards by over 1.5:1. This has been led by Financials, Healthcare and Cement. For FY13 Sensex EPS is expected to grow 8% to 1,213 and FY14 EPS to grow 14% to 1,380. Post results we have downgraded Bharti Airtel to Neutral and maintain underperformer view on Metal Sector largely due to falling commodities prices, we have sell rating on Tata Steel, JSW Steel & SAIL.
Market at a glance
Index Sensex Nifty FTSE 100 Dow Nasdaq Hang Sang 31-Aug-12 17,430 5,259 5,711 13,091 3,067 19,483 MoM (%) 1.1 0.6 1.3 0.6 4.3 -1.6 YoY (%) 4.5 5.2 -1.8 12.7 18.9 -5.1
Key Indicators IIP (Jun) WPI (July) 10 Year Yield USD/ INR Crude ($) Gold (10 gms) Current Month -1.80% 6.87% 8.24% 55.41 114.57 30735 Change 2.40% 7.25% 8.24% 55.7 104.92 30199
Rikesh Parikh - Vice President
RBI meet on Sept 17th in backdrop of inflation below 7% and manufacturing growth at just 0.2% in overall GDP growth keeps expectation of rate cut alive. Shome committee recomending GAAR to be deferred by 3 years and Mauritius tax treaty to be continued, if accepted, would bring some confidence back among FII's.
Thought for the month
Logjam in parliament due to Coalgate reports and its impact on companies. Brent Crude price rebounding back to $114.50 will put a strain on fiscal condition.
Continuation of FII flow to lend support as market is trading below its historical valuation. Pick up in monsoon will lend support to sustenance of rural consumption theme.
com/motilaloswalLtd http://www. Vix has been quoting at the lower band and uptick from the same can be supportive to the seasonality effect. On the weekly chart. Next support area for the index on the short term scale is around 5200 which is the gap area on the daily chart with medium term support at 5030.motilaloswal. Long positions could be made above 5350 for a potential of 5450 & a stop below 5295.youtube. weakness was indicated by the formation of a shooting star pattern which was confirmed with a break below 5360. 5450 can turn into a strong resistance and a move above it could induce sustainable advances possibly backed with good momentum.com/MotilalOswalLtd http://www. After opening flat. FMCG and Media • Nifty • 5450 5030 BANK NIFTY Banking has been underperforming in relative terms Relative strength chart is placed at a verge of breakdown Immediate support is placed at 9900 Band of 10300-10350 can act as an exhaustion area Breach of support can lead to the thrust of 9650 10650 9000 Sectoral Highlights Sector Pharma Media FMCG Metal #Technical view for 1 month perspective Our Views Positive Positive Positive Negative Top Pick Glenmark Zee Ltd Tata Global Tata Steel Recommendation# Buy above 435 Buy above 170 Buy above 134 Sell below 355 EMAIL: http://www. index moved above its important resistance point of 5350 but failed to sustain and close above the same.4% retracement of the fall from 5630-4770.e. 76. Nifty for the month of August ended with a gain of 29 points.September 2012 wealth Equity Market Outlook Technical Outlook • MOSt On This Page Equity Market Outlook Markets & Our Recommendations MOSL's Recommendations • • Sell positions could be made below 5200 for a potential of 5030 & a stop above 5315. it was unable to sustain and reversed back into its trading range.com 2 Lite-Desktop : 24*7 Online Acess | Transfer Funds Online from 46+ banks | Leverage & Margin Multiple benefit | Integrated Research .com/blogs http://twitter. On the upside.com/mofsl info@motilaloswal. The seasonality effect on Nifty indicates that post August market has higher odds of entering a directional trend which could last throughout the calendar year. Monthly chart failed to close above the hurdle of 5350 Resistance for Nifty is placed at 5450 with support at 5030 Seasonality chart indicates directional movement post August Outperformance should continue in Pharma.facebook. After reporting a high around 5450 i.
Stocks witnessing drop in near month OI series after rising for the last 3 series include Bhel. : Nifty failed to sustain above 5400 level and has formed shooting star pattern on weekly chart which is bearish in nature. Maruti. Mcleod Russel. It is seen that London Metal Exchange (LME) lead stocks have dropped steeply in the past two weeks of August. The draw downs are partly due to the fact that battery makers in Southeast Asia are scrambling to get supplies of high-grade lead.September 2012 wealth Derivatives Market Outlook 3 Aug Series witnessed Total Rollovers of 81% (6m-avg 82%). ICICI Bank.2bn at the start of Aug'12 expiry.com/MotilalOswalLtd http://www. 13.Lead Lead Commodity Lead Data as on 31st August 2012 CMP 107 Stop Loss 103 Target 117 Duration 1 Month My Motilal Oswal : Personalized Website Experience | Single SignOn | Uniform Report Formats | Integrated view of BackOffice EMAIL: http://www.9% purity. Our Recommendation Commodity Gold Copper Crude Turmeric 1 month Return 5. Commodities Market Outlook 3 Lead which is mainly used in batteries closed with a positive note for the second straight month and is expected to continue its positive bias in the short-run. SBI whereas stocks which have witnessed drop in near month OI over the last 3 expirys include Tata Steel. BPCL whereas stocks with rise in near month OI after falling for the last 3 months is Petronet. Nifty rollovers of 61% (6m-avg 62%).600/.motilaloswal. or 32%. after a drop-off in production from Japan and in exports from China. Highest OI built up for Nifty for Sept Series is between 5200 to 5000 level indicating mar ket to take support in that range. 3 Taking the above facts in to consideration. 3 In Sept series for Nifty.6bn as against `916. but the ongoing worries of slowdown in China which is a major consumer of metal may cap the gains.12% 5.2 mn shares. since Aug. highest Call OI is at 5500 strike with 7 mn shares and highest Put OI is at 5200 strike with 7. at 99.facebook.com/mofsl info@motilaloswal. MOSt On This Page Derivatives Market Outlook Commodities Market Outlook Markets & Our Recommendations Our Recommendation INDEX: NIFTY Strategy Premium Outflow Span margin : : : LOT SIZE: 50 Bear Spread `2.000/.com/blogs http://twitter.47% 9.com 3 .(Per Pair) `14. we expect upside in lead prices in short term.youtube.92% Buy Sell Buy Buy Buy Buy Pick of the Month .com/motilaloswalLtd http://www.000 tons.04% 0.(approx) Pay off Profile On Expiry Break Even Point 5248 Maximum Profit 7400 Maximum Loss 2600 Strategy of the Month • • • Strategy Trade View : Bear Spread : Buy Nifty 5300 Put & Sell Nifty 5100 Put. 3 Stocks which have witnessed rise in near month OI over the last 3 expirys include Bharti Airtel. Available stocks in LME registered warehouses have slumped by around 92. Total Open Interest at the start of Sep'12 expiry is `930.
com 4 . 3 GMDC is the only company in Gujarat licensed to sell lignite and enjoys good visibil- GMDC CMP*: Target: `190 `232 BUY ity of volume and pricing growth because of lack of competition. 3 At current price of `190.5x. 3 Excellent proxy to play consumer demand in India. 3 BUY with a target of `232 (12.com/motilaloswalLtd http://www.com/mofsl info@motilaloswal. 3 Strong cash flows will ensure strong addition of stores through internal accruals - This is helping transform the company into a marketing entity rather than a producer.6x P/E. Bauxite and Power were 76%.5xFY13E). Mid Cap Investment Ideas 3 The largest organized player in footwear with one of the best balance sheet and return ratios in the industry.com/MotilalOswalLtd http://www. 3 GMDC has lignite mines with ~15cr tonnes of reserves.youtube. 3 We will be more comfortable if JSW Steel rejigs its strategy to focus on deleveraging rather than pursuing aggressive growth.9x EV/EBITDA and 12. Stock is trading at FY14 EV/EBITDA of 6. Stock is trading at expensive FY14 valuation of 6. 3 Healthy EBIDTA margin of ~45% and very strong cash generation.4. Reiterate SELL. 3 Tata Steel (TATA).facebook. However. JSW Steel CMP*: Target: `694 `542 SELL 3 JSW Steel post merger with JSW Ispat will have net debt of `362bn by March 2013 and net debt/equity of 2.motilaloswal. Tata Steel CMP*: Target: `361 `244 SELL 3 TSE operational issues have now been largely resolved. Lignite. it controls 14mtpa capacity. which will ensure good stock Bata India CMP*: Target: `888 `1. the stock is quoting at a P/E of 10x on FY13e earings. the European steel demand has weakened further and prices are lower. 3 BUY with a 12 month target of `1025 (27x CY13E) for 15% upside. 5% and 18% of revenues.com/blogs http://twitter. 3 We expect Tata Steel India's margin to shrink to USD278/ton in FY13 and USD251/t in FY14 (vs USD347/t in FY12). With the acquisition of Ispat Industries and Salem Steel.September 2012 wealth Large Cap Investment Ideas MOSt On This Page Large Cap Investment Ideas Mid Cap Investment Ideas Must Act 3 JSW Steel (JSTL) has expanded its capacityMarket & Our Recommendation 6x to 10mtpa through brownfield expansions. *Data as on 31st August 2012 My Motilal Oswal : Personalized Website Experience | Single SignOn | Uniform Report Formats | Integrated view of BackOffice EMAIL: http://www. has become the sixth largest steel maker in the world after the acquisition of Corus.3x. the lowest cost steel producer in India. Reiterate SELL. We have cut consolidated FY14 EPS by 9% to `46.025 BUY performance in the short run because of investor's flight to safety due to prevailing uncertainty in the economy. We expect both volumes and prices to be under pressure in 2Q and 3Q for TSE.
00 5.45 12. 7.55 11.50 7.com/mofsl email@example.com 5.com/MotilalOswalLtd http://www. 10 10 10 10 10 10 5 5 5 5 5 15 100 Sectoral Allocation For Whom Long Term Investors to a year Investment Duration For few months Risk Profile Defensive Investors What’s In Coal India What’s Out Infosys Reliance MOSt Velocity 10 Scrip SBI Dr Reddy Engineers India JP Associates HDFC Ltd Hindalco Oberoi Realty NIIT Tech JSW Energy GMDC Ltd PFC Ltd Cash Total Model Advisory Portfolio for Positional Traders Wtg.40 11.25 10.50 7.com/blogs http://twitter.com 5 .50 7.00 32.motilaloswal.50 7.50 100.September 2012 wealth MOSt Value Scrip ICICI Bank Dr Reddy SBI Maruti HCL Tech L&T Sintex Industries Coal India CESC Hindalco Oberoi Realty Cash Total MOSt On This Page MOSt Value MOSt Velocity MOSt Mid-Cap Build a Portfolio Model Advisory Portfolio for Investors MBP 920 1680 1875 1150 550 1350 55 355 310 110 230 Wtg.31 9.facebook. 12.48 100 Sectoral Allocation For Whom Long Term Investors to a year Investment Duration For few months Risk Profile Aggressive Investors My Motilal Oswal : Personalized Website Experience | Single SignOn | Uniform Report Formats | Integrated view of BackOffice EMAIL: http://www.00 5.youtube.0 MBP 1875 1680 215 70 740 110 230 280 48 195 165 Sectoral Allocation For Whom Medium Term Investors horizon Investment Duration Few months Risk Profile Moderate Investors MOSt Mid CapScrip Eicher Motors Madras Cement Bajaj Finance GMDC Emami NIIT Technologies Allahabad Bank Engineers India VST Industries Mcleod Russel Total Model Portfolio for Aggressive Investors MBP 2150 180 1070 195 490 280 125 215 1700 320 Wtg.50 5.46 6.00 5.com/motilaloswalLtd http://www.98 9.00 5.62 10.00 5.
E: Equity.20crs in S&P CNX Nifty.87 9.G Total Templeton India Income Opport F .G HDFC Short Term Plan . Glaxo Consumer.24% of CNX Midcap.07crs vs. Value Strategy has the investment style of buying Undervalued stock & Sell overvalued stocks.51 3yrs 9.12 7.G Total G: Growth . Value Strategy has delivered 9.10 8. run by great business managers for superior wealth creation.17 10. D: Debt D My Motilal Oswal : Personalized Website Experience | Single SignOn | Uniform Report Formats | Integrated view of BackOffice EMAIL: http://www.66 9.18 Data as on 31st August 2012 MOSt PMS NTDOP Strategy • Top Holdings in NTDOP Strategy Scrips Page Industries Ltd.60 9.91 Data as on 31st August 2012 All the above figures are of a model client.26 9. It aims to predominantly invest in Small & Mid Cap stocks with a focus on Identifying emerging Stocks/Sectors.facebook.46 7.28 11.14 7.45 9.15 10.15 10.09% of CNX Nifty. NTDOP Strategy has delivered 15.61 18.91 • • • Sector Allocation Auto & Auto Ancillaries Banking & Finance Textiles Engineering & Electricals FMCG (%) 20.63 -7. delivering an annualized alpha of 11.43 6.19 18.com/motilaloswalLtd http://www.com/mofsl info@motilaloswal.G D DSP BlackRock MIP Fund .02 9.04 % of S&P CNX Nifty.motilaloswal.47 8.67 Wtg% 20% 15% 15% 15% 20% 15% 100 DEFENSIVE . Hero Motocorp Ltd.01 13.com/MotilalOswalLtd http://www. More than Double the returns compared to Benchmark. The strategy aims to deliver superior returns by investing in focused themes which are part of the next Trillion Dollar GDP growth opportunity. Since Inception NTDOP Strategy has delivered annualized 7. % Holdings 15. 4.63 Wtg% 15% 15% 20% 20% 15% 15% 100 Data as on 31st August 2012 ICICI Pru Focused Bluechip Eq F-Ret-G UTI Opportunities Fund .G Type E E E D Return % 1yr 4.14% returns vs. Bajaj Finance Eicher Motors Ltd.Savings 5 . HDFC Ltd The Strategy aims to benefit from the Long term compounding effect on investments done in good businesses. Banking & Financial Services & Infrastructure in the Indian Economy. 5.99 HDFC Bank Ltd Bosch Ltd Nestle India Ltd.youtube.73 15. Bosch Ltd.52 23.32 13. Since Inception Value Strategy has delivered CAGR returns of 27.Model Portfolio AGGRESSIVE .G ICICI Prudential Discovery Fund .com 6 . 4.95 10. The strategy aims to capitalize on the themes of Consumerism. In last 3 Years.17 11.58 15.Model Portfolio Managed Funds Top Holdings in Value Strategy % Holdings 12.86 7.G HDFC Short Term Plan . `1 Cr invested in Value PMS in March 2003 is worth `10.91% of CNX Midcap and generated an annualized alpha of 10. 4.45 9.02 8.September 2012 wealth MOSt PMS Value Strategy • Scrips MOSt On This Page MOSt PMS MOSt Mutual .11 8.G Birla Sun Life Dynamic Bond F-Ret-G Templeton India STIP .33% annualized returns vs.70 11.G Birla Sun Life MIP II . In last 3 years.Low Risk Scheme Name Type E E D D D D Return % 1yr 6. Returns shown above are calculated on NAV method "Returns shown above are post fees & expenses MOSt Mutual .26 3yrs 11. Money multiplied by 10 times in just 9+ years.13 7.39%.38%.70 % Vs.High Risk Scheme Name Franklin India Bluechip .72% annualized returns vs.63 7.com/blogs http://twitter.34 7. irrespective of Index Movements.12 6.G Reliance Equity Opportunities F . • • • • Sector Allocation Banking & Finance Auto & Auto Ancillaries FMCG Pharmaceuticals Infotech (%) 26. 19.
youtube.August 2012 September 2012 wealth Guiding Philosophy • Blue chip investing • Apt diversification • Rupee Cost Averaging • Disciplined Investing MOSt On This Page Scenario Today Operatives How it works MOSt Pyramid Markets Range-bound Nifty traded in a narrow range. stocks trading below historically low price to earnings multiple Steady Earnings Growth Stock Picks We conducted in-depth analysis and arrived on the below list of blue chip stocks which are market/sectoral leader with strong fundamentals: • ICICI Bank • SBI • Dr.com/motilaloswalLtd http://www. Lite-Desktop: 24*7 Online Acess | Transfer Funds Online from 45+ banks | Leverage & Margin Multiple benefit | Integrated Research EMAIL: http://www.com/blogs http://twitter. reducing acquisition costs • Strategic entry and exit @ -5% & +6% respectively Attractive Valuations Valuations look attractive. reducing earning opportunity from passive investing Approach • Portfolio diversification in 4-5 sectors • Investment in specific blue chip stocks • Investment in 4 tranches • Value averaging by buying at lower levels • Regular profit booking.facebook.motilaloswal.com/MotilalOswalLtd http://www.com/mofsl firstname.lastname@example.org 7 . Reddy • Coal India • L&T List is indicatives & might change with a change in research view io ar en Sc Op er at ive s MOSt Pyramid Our research predicts steady growth in earnings in the near future y da To Rationale • Creating short-term earning opportunities • Reducing investment risk through Blue chip investing • Stabilizing portfolios by investing in fundamentally good stocks The smarter way to invest How it works Bullish Market Bearish Market Please note: This is only a suggested investment strategy and in no means should be considered as a tool for guaranteed return or a Portfolio Management Service.
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