FII Activity on 12-06-2008

The FIIs Thursday stood as net seller in equity. The gross equity purchased was Rs3,768.40 Crore and the gross debt purchased was Rs0.00 Crore while the gross equity sold stood at Rs3,919.90 Crore and gross debt sold stood at Rs0.00 Crore. Therefore, the net investment of equity reported was Rs(151.50) Crore and net debt was Rs0.00 Crore.

ABN Amro MF Appoints New CIO

ABN Amro Mutual Fund has announced the appointment of Mr. Mr K C Reddy as the Chief Investment Officer (CIO). Mr Reddy will be responsible for leading a dedicated team of investment professionals. He has more than 14 years of experience in equity markets. At ABN Amro Asset Management, India, Reddy will also be the fund manager for ABN Amro Opportunities Fund and ABN Amro Future Leaders Fund.

Steps to consider before investing

When it comes to investing, it is commonly observed that investors tend to replicate the investment strategy followed by their colleagues, friends or relatives. It is generally believed that an investment strategy that has worked for one will also work for others. However, this is the wrong approach, simply because ‘one size does not fit all’ while investing. Instead, investors need to build an investment portfolio that is right for them.

Building an investment portfolio requires the investor to put in a fair degree of thought and time. The need for the latter is only accentuated in light of the overwhelming choices available. Here you will find 4-step strategy that will help investors build an investment portfolio.

1. Identify the investment objective

The first step should be to identify the investment objective and tenure. In our view, no investment must be undertaken without defining these parameters. For this, you need to ask yourself – “what am I investing for”. At any given point, there are likely to be multiple investment objectives that you wish to accomplish, ranging from buying a car to providing for retirement. And each of those objectives will have to be achieved over varying time frames. For instance, buying a car is a relatively short-term need, while retirement planning is long-term in nature.

2. How to achieve your investment objective?

Once you have defined the investment objective, the next step is to outline a plan to achieve it. While there are a range of investment options (stocks, mutual funds, small savings schemes, fixed deposits, gold, real estate) available, mutual funds should suit a majority of the investors. Mutual funds are managed by professional fund managers and can be expected to do a better job at managing money than most investors. By investing through the mutual fund route, investors are left with time and energy to pursue their own work.

Of course, not all asset classes are available through the mutual fund route in the domestic context. But it’s only a matter of time before that changes; for instance, regulations are already in place for the introduction of real estate funds, one of the big innovations in the mutual fund industry. Investors can already invest in debt, equities and gold through mutual funds.


Depending on your investment objectives you can select the mutual fund option most suited to you. Typically, for a long-term investment objective like retirement planning you can take risk and equity funds can prove beneficial. For short-term needs like saving for a car, debt funds are your best bet.

3. Select the fund house/AMC

Once you know that you want to achieve your investment objective the mutual fund way, it’s time to select the right fund house/Asset Management Company (AMC). With an increase in the number of fund houses/AMCs, choosing the right one can be challenging. However, this is easier said than done.

Why is it necessary to invest in the right fund house? Because the fund house must first qualify as a viable investment proposition before its schemes can attain that position. While short-listing an AMC, look for the ones that are process-driven as opposed to individual-driven. Processes are more enduring and serve investors well over the long-term. Individuals (read star fund managers) can be expected to perform only till the time they are associated with the fund house, once they leave they take the performance with them.


4. Select the scheme

Once you have chosen the right fund house, the next step in the investment sequence is to select the right mutual fund scheme. Like with the fund house evaluation, there is an elaborate process to select the right mutual fund scheme. Put briefly, mutual fund schemes are selected after they have passed the test on various parameters like risk, returns and performance over market cycles, especially the downturns.


A word of advice…
These are some of the basic steps while investing. Adherence to these steps can ensure that there are fewer surprises along the way. Taking short cuts may prove detrimental to your financial plans. Of course, given that your financial planner is always around to guide you, taking the step-by-step approach to investing should not prove very difficult.

Mirae Asset mutual fund planning for nine equity products by March 2009

Mirae Asset mutual fund is planning to introduce nine equity products by March 2009. Out of nine products, four will be local products; another four will be international products and one hybrid product. In all, Mirae Asset has a total of 10 India dedicated funds with AUM of $ 3.5 billion. The fund house is planning to increase its AUM to $ 200 billion by 2013. Mirae Asset mutual fund is also planning to get its China and India dedicated funds to be registered in Luxembourg.

SBI Mutual Fund appoints Achal Kumar Gupta as the new MD

Achal Kumar Gupta, chief operating officer (COO), has been appointed as the new MD of the asset management business of the country’s largest bank. The fund house has confirmed Mr. Gupta the new designation on back Mr. Syed Shahabuddin’s retirement. The appointment of Mr. Gupta as the managing director of the asset management company is with effect from May 15, 2008.

Fund Manager Sandip Sabharwal's view about MARKET

As the stock markets continue on their volatile movements over the last few months it is now important to sit back and evaluate the various factors impacting the markets and correlate from them the direction that the markets are likely to take going forward.


There are various factors at play today, There is the slowing global economy and the stress in the financial sector globally which has led to a squeeze on liquidity and credit flow. The germination of the same was the US subprime problem and has rapidly spread to other parts of the US economy and has also flown abroad through complex derivative products which have impacted financial institutions all over the world, more so in the US and Japan. Rapid interest rate cuts by the US Fed have limited the damage to some extent but seem to have created a US dollar carry trade which has led to a huge flow of money into commodities. This has inturn created strong inflationary pressures due to the increase in prices of commodities across the board from oil to agricommodities to metals. It has also flown through to secondary products made from primary commodities lately.

This has now created a dichotomy where central bankers across the world are faced with slowing growth and strong inflationary pressures. We believe that the central bankers will be more focused on controlling inflation at this stage and that is also reflected in the statements of the US Fed where they are indicating a steady policy going forward. European central banks are also holding steady and in the developing world we are either seeing a standstill policy or liquidity tightening measures being pursued as in most countries inflation has gone above the targeted levels.

We believe that a combination of slowing global growth and reduced liquidity flows will lead to a collapse of the commodity bubble going forward. We have already seen several agri commodities and base metals already correcting. However crude oil and steel are yet to see any significant correction. A correction in these commodities is now imminent.

As commodities correct they will lead to a reduction of inflationary pressures and we expect that inflation in India which is today at 8 percent plus should trend down to 5-6% over the next one year.


Domestically today we have a macro situation that does not look very healthy with a ballooning fiscal deficit situation, high inflation,increasing trade deficit and slowing growth. However on the micro front as we evaluate company results and the guidance given by companies across sectors is concerned the situation does not seem to be as grim. Most capital goods and construction companies have guided for a growth of 30-40%. Companies in the technology sector have guided for a growth of 20-25% and that guidance factored in rupee at Rs 39 levels. Given the way rupee has fallen over the last few months this guidance is likely to be exceeded. Pharmaceutical companies that were not doing well over the last few years are bouncing back strongly and are likely to grow at 20%. High steel and base metal prices are likely to see strong growth in commodity companies. FMCG is seeing a revival and growth in earnings is likely to be 15-20%. Telecom companies are likely to grow at 30% plus. Automobile and real estate sectors are likely to slow down but still grow earnings. Overall as it seems earnings are likely to see a 20-25% growth. Current market expectations are for a 10-15% earnings growth and the markets in their valuations are factoring in this slow growth. The stock markets are down nearly 30% from the peaks and the mid cap index is down over 40%.


Overall we believe this is the right time for long term investing and lot of the macro issues will get addressed over the next one year. Given strong earnings growth we believe that markets over the next one year are likely to deliver a return of 30-40%. Monsoons are first quarter corporate results are likely to trigger the upmove and the pace of the move will depend on various factors like the rate of change of inflation, commodity price movements as well as clarity on global economic growth. Valuations at around 15X 2009 earnings and 12-13X 2010 earnings are now reasonable. Irrespective of short term volatility or weakness the long term trend is very much intact and it is time to focus on long term upsides rather than short term downsides.

DSP ML Top 100

In the context of Indian stock markets, there is lack of consensus with regards to the definition of large caps, mid caps and small caps. So most fund houses have their own definitions for various stock categories.

The situation is no different on the mutual fund side. There is no unanimity in what constitutes a large cap fund. Basically, there are two breeds of large cap funds. One is the predominantly large cap variety, whereas the other is the ‘true blue’ large cap category.

Predominantly large cap funds have the liberty to invest smaller portion of their assets in mid caps, thereby diversifying their holdings. Conversely, ‘true blue’ large cap funds invest only in large cap stocks. While the former is a common breed in the domestic mutual fund industry, the latter is bit of a rarity.

DSP ML Top 100 Equity Fund (DMLT) belongs to the rare breed of pure large cap funds. But before venturing into its investment proposition, let’s first understand the benefits of investing in large cap funds.

Benefits of investing in large cap stocks/funds

Large cap companies typically have well-established track records in terms of earnings/profitability among other factors. These companies are also well-researched as information on them is widely available, so the chances of making a wrong investment call are relatively lower. This makes their performance more predictable when compared to their mid/small cap peers. Large cap funds, given their investments in large cap stocks, imbibe similar traits. These funds are also less risky compared to mid and small cap funds. It is due to these reasons we advocate that investors with risk appetite must invest in well-managed large cap funds, so as to infuse stability in their portfolios over the long-term.

DMLT’s investment proposition

DMLT is an open-ended diversified equity fund from the stable of DSP Merrill Lynch Fund Managers. The fund’s name as well as its investment objective - ‘to invest in equity securities and equity related securities of the 100 largest corporates, by market capitalisation, listed in India’, clearly defines its investment mandate. And in line with its investment objective, large cap stocks dominate the fund’s portfolio.

The fund is mandated to invest atleast 90% of assets in equities and related instruments, while upto 10% of the assets can be invested in debt and money market instruments. For stock picking, it adopts a combination of the top down and bottom up approaches. It invests in both, growth as well as value stocks.

Being rich and looking rich

There are two kinds of people. The first type are ones-- who look rich i.e those who have a flaunting lifestyle. The other one's are rich but you cant gauge the richness from their lifestyle.
There are a lot of salaried middle class class people who belong to the first category. They flaunt a rich life style ( Thanks to the high salaries and EMI facilities !!).Nothing wrong in enjoying one's money. But one shouldn't end up eating out all his current income and future income. You should also save and invest for your future.
If you do not save even for contingencies, you may face a disaster when some unforeseen event happens. In this fast moving world, all things including permanency of employment, longevity of work life, etc have changed drastically. We should really work towards financial independence. i.e making money work for us , so that it can take care of all our future needs. So, being rich is more important than looking rich when you are working towards financial independence.