Why Stocks and Investment Outlook Dec 2016

Hi Investors,

In this short video of 10 minutes, we share the simple concept of Compounding, showcase our services at JainMatrix Investments, and present the Investment outlook for the next quarter.

Please share forward if you Like it.

Happy Investing,

Punit Jain

JAINMATRIX KNOWLEDGE BASE 

See other useful reports:

  1. Short Term Pain, Medium Term Gain
  2. The Natural Quotient: A Sustainability Metric for Business
  3. PNB Housing Finance IPO: A Transformed Lender
  4. Balmer Lawrie – Is Traveling Fast Now
  5. Endurance Technologies IPO 
  6. ICICI Prudential Insurance IPO – An Expensive BUY
  7. GNA Axels IPO
  8. L&T Technology Services IPO 
  9. RBL Bank IPO 
  10. New Banks: Big Changes in Small Change 
  11. Equitas IPO – Leader in SF Banks
  12. Dilip Buildcon IPO 
  13. Do you want to be a value investor?
  14. Mahanagar Gas IPO 
  15. How will Brexit impact Indian investors?
  16. A Repurpose for our PSUs
  17. How to Approach the Stock Market – A Lesson from Warren Buffet
  18. Thyrocare IPO – Wellness for your Wealth
  19. Announcement – SEBI approval as a Research Analyst
  20. Alkem Labs IPO
  21. Goods And Services Tax (GST): Integration And Efficiency
  22. Syngene IPO: Good Pharma R&D spinoff from Biocon

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DISCLAIMERS

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an independent expert/advisor. Punit Jain is a registered Research Analyst and compliant with SEBI (Research Analysts) Regulations, 2014. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com.

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Investment Outlook – Short Term Pain, Medium Term Gain

  • 22nd Nov 2016
  • Report Type: News Analysis

Recently the global markets have been very volatile and the same is being witnessed in the Indian markets as well. The Sensex has fallen around 12% from peak of 29,045 on 8th Sept, after a 26% rise since the 2016 budget. Here are the key events which have likely affected the mood of the market.

I) Demonetization:

The high value currency notes of Rs 500 and Rs 1000 were demonetized on the 9th of Nov, 2016. Just overnight 86% of cash in INR has become obsolete. This measure was taken by the govt. to 1) tackle the widespread presence and hoarding of undisclosed (black) money and 2) destroy the counterfeit notes in the economy. A 50 day window till 30th Dec was given by the govt. to public to deposit or exchange these high value notes.

  • Per estimates about Rs 14.73 lakh crores is in the form of 500/1000 Re notes, and these will be replaced with new Rs 500/2,000 notes which are being distributed by bank branches /ATMs.
  • On 22nd Nov, the RBI eased NPA recognition norms as many SMEs, Agri and other business making cash based settlements/transactions could face repayment issues. RBI has given additional 60 day limit for Banks and NBFCs to recognize loans as NPA over and above standard regulatory limits for dues payable between 1st Nov – 31st Dec 2016 in cases where sanctioned limit is below Rs 1 crore.

The Cash categories are:

  1. Daily cash for individuals and businesses: There is a short term pain as people have to wait in queues outside banks and ATMs to deposit, withdraw or exchange money. We expect this to continue in urban areas for 10 days and semi-urban/ rural for another 2 weeks. Already limits are being raised for individuals & businesses. Online /mobile payments are gaining acceptance. New bank accounts will grow; usage of Jan Dhan Yojana accounts has begun.
  2. Black/ undisclosed cash: Over many years, cash has become a massive store of wealth in India. The reasons were convenience and lack of bank accounts on one side, and to avoid tax, under-declare property values, run illegal business, naxalite movement, etc. on the other. It is estimated that 25-40% of above 14.73 lakh crore of cash is undisclosed. This money is expected to either 1) be deposited in bank accounts and declared, accruing taxes and converting to white, 2) Some of this may leak out to other asset classes like currency, gold, real estate, forex and other people’s bank accounts 3) Be destroyed so as not to leave a trail.
  3. Counterfeit / fake currency: There is a reported presence of fake currency in the system, which is debasing the banking operations. By collecting all high value notes and issuing new ones, these will be flushed out of the system. It’s difficult to estimate this type of cash.
JainMatrix Investments

Fig 1: Ring out the Old, Ring in the New

Impact: For individuals and in business, there will be some disruption before we limp back to normalcy. This will be worse in rural areas with poor banking penetration.

  • But 30 years of cumulative black money will in one stroke be converted or destroyed.
  • This cash exchange, coupled with GST, may radically alter consumer behavior. Bank accounts usage will multiply, as also money transfer facilities and transparency.
  • The govt. is trying to switch from equilibrium in Tax Non-compliance to one in Compliance. In other words break a vicious circle of saving in black money to a virtuous circle of white money.
  • The market sentiment in the short term is affected as several cash oriented sectors may be impacted. Real estate, jewellery, microfinance / NBFC and retail operations may be affected. However the new 22nd Nov rule will ease liquidity for NBFCs and allow operations to stabilize.
  • Data available today indicates the money deposited with banks by customers crossed Rs 6 L crore from Nov 10, after demonetization. Withdrawals, including exchange of old notes, were above of Rs 1.35 L crore (per IBA). We estimate that in another 10 days, the depositing should be complete. The withdrawal / exchange of notes may take 2-3 weeks more to meet daily cash needs.

II) US election results:

Donald Trump won the 45th US Presidential elections on the 9th Nov, 2016. This was against the market consensus of various polls indicating a win for Hillary Clinton, thus shocking many Americans and investors worldwide. After the initial surprise, the US markets stabilized.

Impact: We expect the US policies to change once Trump takes over presidency in Jan 2017. The immigration, foreign business treaties, tax rates and a host of domestic policies may change. The impact on Indian investors too will unravel over 6 months. There is a higher uncertainty in US markets. Some FIIs are pulling out funds from Emerging Markets in a Risk off move. However after an initial knee-jerk reaction, this may not continue.

III) Tension along the India – Pak Border:

Indian stock markets fell almost 2% on 29th Sept, 2016 after the Indian army conducted “surgical strikes” on terror launch pads across the Line of Control (LoC) in Jammu and Kashmir amidst rising tensions between India and Pakistan. Thus the Indian side has taken a firm stand against terror from Pakistan. This event has been followed up with many incidents of firing on both sides and disruptions along the border.

Impact: We feel that there will be ongoing tensions between India and Pakistan. However a war like situation might not come up. Though the issues are unlikely to be solved soon, negotiations and dialogues should happen. Any aggressive attacks from either side could lead to a short term fall in markets. There is a higher uncertainty.

IV) Tata Group Clash:

The Chairman of the Tata Group, Cyrus Mistry was ousted from his post. The past Chairman Ratan Tata took over and will appoint a new Chairman within 2-3 months. The main reason for this was stated to be a loss of confidence in Mistry. This sounded like a painless coup for investors but the spat between the two has gone public, and it may be some time before the changes are rolled out across the group.

Impact: We feel that the operations of most companies will not be affected in the near term. Some strategic direction may be changed. The aggressive and combative stand of Tata group seen in recent cases like Tata Corus and Tata Docomo may soften in line with group philosophy.

Indices movements: Sensex, Nasdaq, S&P 500 and Dow Jones

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Fig 2 – Index movements – 1 year

  • We can see that there has been a fair correlation between Indian and USA markets over 1 year.
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Fig 3 – Index movements – 1 week

  • But over the last week, perhaps thanks to demonetization and the Trump election, Sensex has fallen relative to other markets.

Conclusions

  • There has been a sharp fall in Indian indices and many stocks from recent peaks. The fall reflects a break in the positive run, an increase in uncertainty and sudden unexpected events. It’s not all bad news. We feel that most of the events are short term disruptions, with a recovery possible in a period of 2 weeks to 3 months.
  • This is a correction in an overall bull run as we are seeing a lowering of interest rates, positive moves on GST and 7th pay commission and until recently, steady investments from FIIs and domestic retail. The IPO market too has been euphoric with a lot of pent up demand from retail investors.
  • This short term fall is a buying opportunity if you have a time horizon of a period longer than 3 months.

JAINMATRIX KNOWLEDGE BASE 

See other useful reports:

  1. The Natural Quotient: A Sustainability Metric for Business
  2. PNB Housing Finance IPO: A Transformed Lender
  3. Balmer Lawrie – Is Traveling Fast Now
  4. Endurance Technologies IPO 
  5. ICICI Prudential Insurance IPO – An Expensive BUY
  6. GNA Axels IPO
  7. L&T Technology Services IPO 
  8. RBL Bank IPO 
  9. New Banks: Big Changes in Small Change 
  10. Equitas IPO – Leader in SF Banks
  11. Dilip Buildcon IPO 
  12. Do you want to be a value investor?
  13. Mahanagar Gas IPO 
  14. How will Brexit impact Indian investors?
  15. A Repurpose for our PSUs
  16. How to Approach the Stock Market – A Lesson from Warren Buffet
  17. Thyrocare IPO – Wellness for your Wealth
  18. Announcement – SEBI approval as a Research Analyst
  19. Alkem Labs IPO
  20. Goods And Services Tax (GST): Integration And Efficiency
  21. Syngene IPO: Good Pharma R&D spinoff from Biocon

DO YOU FIND THIS SITE USEFUL?

  • Visit the Investment Service offering page to find how you can get more.
  • Register Now to get our Free reports and much more, on the top right of this page, or by filling this Signup Form CLICK.

Disclaimers

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an independent expert/advisor. Punit Jain is a registered Research Analyst and compliant with SEBI (Research Analysts) Regulations, 2014. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com.

JainMatrix Investments presents the Outlook for 2016

Date – 21st Dec 2015

At JainMatrix Investments, we expect the following to happen, in the rest of 2015 and 2016:

  • US Fed to start raising interest rates. The US Fed has to get off the floor in terms of interest rates, and try to restore normalcy in its outstanding debts, asset prices and liquidity. Painful but necessary.
  • Crude Oil prices to stay depressed. Crude oil production is not slowing down. OPEC is happy to boost volumes. Low prices boost savings and wealth in India. On the other hand, growth in the economies of Europe, Japan and China are flat or worse. The surprise may be renewables, where new power generation capacities may match fossil fuels in terms of (unsubsidized) power costs, crossing an economic tipping point.
    • Sectors such as paint, tyres, FMCG, airlines and lubricants are gaining from lower costs.
    • Indian Oil and Gas – Exploration and Production firms will need to get used to lower profits.
  • GST to see the light of day but in a diluted, trial fashion. After a decade of parry and thrust, the law makers may have to bow to the inevitable. GST should roll out in 2016. However it will have to be introduced in a calibrated fashion so that States are able to handle the losses & gains across sectors.
    • We feel that FMCG, pharma, power sector, logistics and auto & auto ancillaries would be the sector gainers from GST implementation.
  • Structural reforms to continue in India, capex cycle to revive. The fall in costs across crude, fuels, metals and agro commodities will continue to boost the economy for 2-3 years. Flush with both funds and purpose, the Govt. of India will spend its way out of slow growth. Subsidies and inefficient expenditures may reduce, while investments in infrastructure, urban development, transportation and government reform look likely.
    • In the private sector, our positive sectors are infrastructure, capital goods, consumption, pharma, exports, IT, textiles, autos and auto ancillary.
    • Several profitable PSUs will also be operationally freed up, and even undergo disinvestment.
    • The dynamic firms in BFSI will gain a lot but others will weaken and see some M&A.
  • India to continue as an emerging markets leader. With some financial stability controlled by a visionary RBI, India could top growth rates among large and emerging economies for many years. The current economic cycle uptick will also attract global funds.
  • In the telecom sector the Reliance Jio launch will see incumbents face off with this new player.
  • The sectors to avoid are Oil & Gas (E&P), metals and telecom. The real estate industry may grow even as prices remain depressed.

 

Disclaimer

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an independent expert/advisor. Punit Jain has applied for certification under SEBI (Research Analysts) Regulations, 2014. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com

 

High Risk and High Return in Equity

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Here is a short article that re-examines the myth of High Risk and High Return in Equity.

What is Risk?

Risk defined by Investopedia is “The chance that an investment’s actual return will be different than expected. Risk includes the possibility of losing some or all of the original investment”.

One of the rules that is commonly believed is that ‘higher risk needs to be taken in order to earn higher returns’. This is intuitively obvious. The entrepreneur invests in a new business knowing that there is a probability of failure. The Venture Capitalist invests in a portfolio of businesses knowing that some may give him 30X returns and others may fail.

But lets review this in the context of Equity investments.

Asset Classes

In investing, this risk-return rule is true across asset classes. The following graphic Fig 1 illustrates the Risk and Return rankings across different asset classes. Fig 1.

JainMatrix Investments

Fig 1 – Asset Classes (click to enlarge) JainMatrix Investments

  1. Here we can see that Cash is the safest asset.
  2. FDs come next, as they are of fixed duration and fixed returns, guaranteed by a Bank.
  3. Next come Debt, Bonds, and Endowment Life insurance. Insurance of course is a very high gestation investment product.
  4. Debt and Bond MFs are products packaged by the Mutual Fund industry into Units.
  5. Gold and Gold ETFs are another investment option.
  6. Real estate may come next. It of course varies by location, and commercial/ residential.
  7. Equity ETFs and Equity MFs.
  8. Direct equity is the highest risk investment product. It also provides potentially the highest returns of these asset classes.

Note that these are strictly the author’s personal views of the most likely scenarios, and these may vary under different circumstances. The graphic Fig 1 is only a conceptual map, and indicates relative values.

Risk in Equity

Direct Equity as an asset class has two types of Risk:

  1. Systemic risk is applicable across all sectors. A significant political event, for example, could affect your entire equity portfolio. It is virtually impossible to protect yourself against this type of risk.
  2. Unsystematic risk is sometimes referred to as “specific risk”. This kind of risk affects a few of the assets. An example is news of a sudden strike by employees, that can only affect a specific stock. Diversification is the only way to protect yourself from unsystematic risk.

Even equity can be split into equity classes, where the risk profiles are different, see Fig 2. Speaking in general, Large Caps are most stable, and have lower risk, next are Mid-caps and next Small caps.

JainMatrix Investments, Equity Risk

Fig 2 – Equity Risk (click to enlarge) JainMatrix Investments

The Risk-Return Relationship

However, once we look at individual stocks for investing, higher risk may not give higher returns.

  1. The high performing firms in the stock exchange over longer periods are those that are more predictable in terms of growth, costs, investments, new projects and brand strength.
    • Example – HDFC Bank over the period of 2009-13 has given fairly predictable 30% YoY growth in profits. As a result investors gave it a superior valuation and it became the bank with the highest market capitalization, even though it was smaller than peers on other parameters.
  2. Sharp swings for a firm from profit to loss and the reverse too are not seen positively, especially if these happen unexpectedly.
  3. The ability of growth companies to execute on new initiatives is very important. Such firms need to launch in new markets, create new products or set up new manufacturing plants. Here the track record of such firms in these initiatives is important.
  4. Monopolies are seen as very positive situations for firms.
    • Example – ITC has for several decades dominated the Indian cigarette industry with 75-80% market share. This is a profitable and steady growth industry and so the ITC share has performed well over 10-15 years.
  5. Typically the fundamentals based approach to the stock market involves projecting financials for a company over 1-3 years, assigning target prices and identifying high potential investments.
  6. Warren Buffet has taken predictability to the extreme by investing in a bunch of consumer companies (Coca Cola, Procter & Gamble, Kraft Foods, Wal Mart, etc.) where these products are strong brands that are daily consumption habits and so growth is quite predictable over decades rather than years.

The Role of the Equity Researcher

It is the task of an equity researcher to identify, prioritize and assess the risks associated with an investment in a firm. Thus a good equity researcher is actually able to lower the ‘specific risk’ of making an investment, identify potential situations of a company’s future and increase the chance of profitable investments.

JainMatrix Investments approach to Investing

  1. The JainMatrix Investments approach to investing is to start with a top down approach to first identify the attractive sectors that are likely to outperform the next 1-3 year perspective.
  2. Next we drill down to the company level to analyse the fundamentals of firms and identify outstanding Large, Mid and Small cap firms. This research is published periodically.
  3. From this universe of good firms, a few are hand-picked and sorted into Model portfolios. By aligning the portfolios with their risk appetites, we help investors invest better.

Large Cap Model Portfolio

  • The objective of the LCMP is to outperform the Sensex and Nifty by 5-10%.
  • It consists of 7 large cap shares which are the current or future leaders from attractive sectors of the Indian economy.
  • This is a low risk portfolio.

Mid and Small Cap Model Portfolio

  • The objective of the MSCMP is to outperform the Mid and Small Cap indices by large margins.
  • It consists of 7 mid and small cap firms that are emerging out-performers from identified 3-5 high potential sectors.
  • This is a medium to high risk portfolio.

The performance of these portfolios over the last 20-21 months has been excellent –

JainMatrix Investments Model Portfolios

Fig 3 – JainMatrix Investments Model Portfolios

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MidCap Portfolio – Come, Invest in India

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Date: 19th Aug 2014

JainMatrix Investments launched its Mid and Small Cap portfolio in Feb 2013. This is the fifth update report on this portfolio, along with a brief investment note.

(Our portfolio is only shared with Subscribers, but here’s the Investment Outlook from this report). 

Mid/Small Cap Model Portfolio – Aug 2014 – Investment Outlook

  • It’s been only 4 days since Independence day, but in these 4 days, a lot has changed in terms of our business and economic outlook. On I-day, India’s PM addressed the country and spoke about his concerns, his desires as PM, and his new initiatives through governmental action and funding.
  • I will not go into any specifics. All I can say is that the PM feels strongly about the right things. This is a PM of stature. He is the right man in the right place. In 5 or 10 years as ‘Prime Sewak’ he will be able to give a new direction to governance, business and economy in India. He has also set up a powerful team to execute on his ideas.
  • Indian business has in the past made their achievements in a tough environment in terms of govt. policies. So if these improve, things can only get better and easier from here for business.
  • The PM’s brilliant call rings in my ears – Come, Make in India. On these lines, our title theme is – Come, Invest in India
  • Post budget, the markets were in a down mood after those heady days, and had some doubts over the next few weeks, but we are now past that. More than before, it’s now time to be positive in the market. Stay invested in well-chosen stocks.
  • We notice a pattern in the mid & small cap shares. After highs around the budget time, many of these have corrected sharply thereafter. And after a fall, started recovering. Investors need to understand that by their nature, these shares are volatile and move rapidly in both directions in the short term. In general, investors need not get overly concerned about sharp movements. Typically a positive event (budget) that gave new highs to many firms, may be followed by a technical correction, which again may be followed by a recovery (if fundamentals are strong).
  • The INR/USD is at 60.7, and should be in a 60 +/- 2 band for a few months barring extreme events.
Embed from Getty Images

Portfolio Theme and Performance

  • The investment theme continues to be – IT and Auto ancillary exports, infrastructure and rural/ semi urban consumption. The investor should continue his wealth building process with Mid and Small Caps.
  • In a very positive environment, the portfolio performed very well. On average the 7 Buy recommendation shares were up by absolute 104% and annualized 89%. But including the two Holds the portfolio gained by absolute 77% and annualized 67%.
  • The CNX Midcap, BSE Midcap and BSE Smallcap are benchmark Indices, and were up by 33.7%, 33.8% & 44.6% absolute in the period. The JM active Mid/Small Cap portfolio outperformed by 59%.
  • Investors need to continue to invest in these shares in a SIP mode.

The rest of this report is shared with only current subscribers. 

Some previous updates for the JainMatrix Investments Mid and Small Cap Model Portfolio

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Disclaimer

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an independent Financial Expert/Advisor. Either JM or its affiliates or its directors or its employees or its representatives or its clients or their relatives may have position(s), make market, act as principal or engage in transactions of securities of companies referred to in this report and they may have used the research material prior to publication. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com

JainMatrix Track Record Aug 8th

JM logo Nov12_V5

JainMatrix Investments has provided investors with great returns on equity investments. There is a certain sobering of the mood at the exchanges, after the Indian elections and budget excitement. Sign up with us to get the long-term perspective. 

 

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08th August 2014

Dear Investor,
JainMatrix Investments is a premium Investment Service for Indian equity. It’s independent, honest and direct. And sharply focused on Investor Returns.
  • JainMatrix Investments announces a continued excellent performance of its research portfolio. The Top Ten stocks’ annualized returns came to 159% on 8th Aug 2014, compared to 195.7% on 4th July 2014. This is to be expected after the amazing, but unsustainable run we had till the government budget.
  • These Top Ten are from a total portfolio of 48 stocks and 1 ETF, which have together appreciated at an annualized rate of 58.6% over an average period of 20 months.
  • The Large Cap Model Portfolio has pulled ahead of the benchmarks. The annualized return was 20.4% for the 7 stocks, bettering the indices of Sensex 19.1% and Nifty 17.7% over 19 months.
  • The Mid & Small Cap Model Portfolio continues its aggressive out-performance with an annualized return of 97% for the 7 stocks, better than indices of CNX Midcap 19%, BSE Midcap 20% and S&P BSE Smallcap 27% over 18 months.
This is a time of some resetting of expectations. Some amount of pause and catching of breath. Those who have been waiting on the sidelines, can now look to enter the market. It is definitely a wonderful time to be in the market, and also a great time to be a subscriber of JainMatrix Investments.
The budget is, in my opinion, a first small salvo from the new government. They have shown some good intent now, and will have ample opportunities to revive the policies and governance in the economy over the next 6 months till the 2015 budget.
Sign up for the JainMatrix Investment Service to take the right decisions, whatever the event, in your investing journey. ..

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Performance Tracker

See the compilation of performance of the Top Ten stocks and Model portfolios from JainMatrix Investments.
   
TrackRec_Aug
Revert to me using the Contact Form – FORM if you would like to know more.

How is this performance calculated? 

..

Report of 4th Dec 2013

Here is an older calculation table, done on 4th Dec 2013. It contains 8 Buys and 2 Sells. A Sell call based on fundamentals is very valuable, and investors may exit/ short trade based on this.
I share with you the entire data – the research on these companies, the share prices on the day of reporting and today. My top ten picks had an annualized returns of 73.2%, as on 4th Dec 2013. See for yourself.
..
Stock Call  Report  Date Price on Call Price on  4:12:13 Abs. % Price Change Days since Call Annual -ized Return Click for Report
1 Mindtree Buy 12:6:13 400 693 73 172 155 Mindtree
2 BHEL Buy 7:8:13 116 164.8 42 117 131 BHEL
3 Balkrishna Buy 6:9:13 238 282.3 19 88 77 Balkrishna
4 ArshiyaInt* Sell 15:1:13 56.9 16.75 -71 319 71 Arshiya
5 Bajaj Fin Buy 31:1:12 723 1460 102 664 56 BajajFin
6 RamkyInfr* Sell 26:6:12 90.3 42 -53 518 53 Ramky
7 TCS Buy 18:4:12 1091 2000 83 586 52 TCS
8 Motherson Buy 4:2:13 131 185 42 300 51 Motherson
9 Tata Motor Buy 1:6:12 225 393 75 543 50 Tata Mot
10 GodCon Buy 7:7:12 576 857 49 507 35 GCP
  • The average Annualized Return from above 10 stocks is 73.2%.
  • * – these are absolute returns on Sell calls.
  • Note that Mindtree and Motherson Sumi shares are adjusted for recent splits and bonus.
  • Also we only include firms in our portfolio 90 days after publishing the report, to avoid errors from short-term price movements.
Note that Equity investments are inherently risky. Take help from your ‘Investment Adviser’ before allocating funds for the equity asset class.

Investment Approach 

  • We research stocks based on their fundamentals including financials, industry prospects, management, etc.
  • We cannot assume that these stocks above will give you similar returns in future. Past performance is no guarantee of future results. Some volatile stocks have moved within months from the top to negative returns.
  • Much more important than past share price performance is the stability and quality of the businesses, their management, cash flows, etc. As these will reflect in the future share price.
  • These are captured in the JainMatrix Investments recommended portfolios such as the Large Cap Portfolio 2014the Mid Cap Portfolio 2014 and the Post Elections Investment Seven. These model portfolios align your investments and risk appetite to get appropriate gains.
  • The JainMatrix Investment Advisory Service is available for a subscription fee.

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JainMatrix on The Real Estate Industry

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  • Date: Aug 1, 2014
  • Sector: Real Estate
  • Advice: The sector is on a resurgence path with high upside potential for investors. At the same time, we have to watch out for the regulatory and project management risks

Dear Readers,

JainMatrix Investments has published an equity research report on a pick from the Real Estate sector for its Subscribers. As part of our commitment to them, we cannot share this yet with you. Instead we share this report on Real Estate Industry Insights.

The JainMatrix Investment Service is available for a subscription fee

Industry Insights 

Importance

  • Real estate sector plays a crucial role in the Indian economy, contributing to 5-6% of the country’s Gross Domestic Product (GDP). It is the second largest employment generating sector after agriculture.
  • Apart from generating direct employment it also stimulates the demand in over 250 ancillary industries such as cement, steel, paint, brick, building materials, furniture, consumer durables, fittings, etc.

Demand Drivers

  • Rapid urbanization, positive demographics, growing nuclear families, infrastructure development and rising income levels are the key drivers for real estate development in India.
  • There will be a shortage of 7.55 crore residential units by 2014 end (CRISIL).
  • Commercial real estate demand is highly correlated to the GDP of the country, and the recent fall in growth has adversely affecting demand.
  • In addition, the decline in demand is due to deteriorating macro-economic fundamentals such as increasing prices and recent regulatory changes (pertaining to development control rules), which have led to prolonged period of lull for the sector.

Projections

  • Despite these headwinds, the $70-75 billion Indian real estate market size is expected to touch $180 billion by 2020, while foreign direct investment (FDI) in the sector is expected to increase to $25 billion in the next 10 years from present $4 billion.

Outlook including Budget Proposals

  • Budget 2014: the govt. announced relaxed norms for FDI in real estate, which will give a huge boost to housing projects. The Center eased criteria for FDI by reducing the minimum size of projects from 50,000 sq. m. to 20,000 sq. m. and investment in projects from US$10m to US$ 5m (Rs 30 cr.)
  • The budget also allowed (tax) pass-through status to real estate investment trusts (REITs). REITs allow small investors to own a share in big expensive commercial properties. This is expected to drive substantial investment demand into commercial property.
  • The industry is overall poorly regulated and there are few norms around housing project launch, sale and execution by developers.
  • Bank funding for developers has been a challenge, due to poor loans performance (by the sector) in the past. Hence debt costs are higher for developers.
  • However the next few years could be positive for the sector in a scenario of improving GDP and economic activity, government thrust on investments and better regulation, falling interest rates, FDI, redevelopment, R&R and rising standards of construction.

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Disclaimer:

This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in case of doubt, advice should be sought from an independent Financial Expert/Advisor. Either JM or its affiliates or its directors or its employees or its representatives or its clients or their relatives may have position(s), make market, act as principal or engage in transactions of securities of companies referred to in this report and they may have used the research material prior to publication. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com