Investment Outlook and Large Cap Portfolio Note

Positive Outlook and The Portfolio Outperforms by 6.2%

Report dated: 20th May 2015

JainMatrix Investments presents its Investment Outlook, and the May 2015 update of its Retirement LC Model Portfolio.

Investment Outlook Note

  • It’s now one year since the new government was elected in at the center. We are fairly pleased with this year in the economy. Without many flashy and headline oriented statements, the government is building stability and solidity in the governance. The achievements include successful auctions in Telecom and Coal mines, improvements in the Power and Coal sectors, efficiency in Parliament and improved foreign policy and exchanges. The LPG cylinder subsidy scheme is a successful pilot for other subsidy programs. Petrol and Diesel seem to be subsidy free.
  • Much more needs to be done, of course. But well begun is half done. Note that stock market investors till some years ago gained most from sectors free of government interference and control. Going forward, my confidence is growing that more sectors will be added that are free. The economy will reap benefits from improvements in ease of doing business, economies of scale and the Make in India – Export to the World initiative.
  • The INR/USD rate is now 63.73, and we now peg this to be in the range of 62-66.
  • The recent spate of volatility in the Indian stock markets is a normal short term correction after a strong rise over the last 20 months.
  • The Indian market continues to be a magnet for global investment funds, as the Indian economy has the best outlook of the BRICS countries. It is also among the few large economies growing fast.
  • Further we have seen over the last one year that the Indian investor too has come back to the markets. This is partly because other asset classes like Real Estate and Gold are not as attractive.

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In terms of outlook we expect the next few triggers to be:

  • Reductions in interest rates by RBI.
  • Improvements in the Gold asset class with the Gold monetization scheme, which may reduce imports and reduce illiquidity and improve returns from this asset.
  • Infrastructure improvements including fast tracking of projects and better PPP structures.

In terms of Risks we would identify

  1. Excessive volatility in INR-USD exchange rates or crude prices
  2. Opacity and slow resolution of foreign ownership and investment taxation issues (Vodaphone, Nokia, MAT, etc.)
  3. Poor or uneven rainfall in coming season

JainMatrix Retirement Large Cap Model Portfolio Theme

  • We renamed the portfolio as the JainMatrix Retirement Large Cap Model Portfolio.
  • The objective of the Retirement LCMP is to outperform the Sensex and Nifty by 5-10%. We have achieved this consistently over the last 29 months.
  • The seven stocks in the portfolio are from seven different sectors, but the overall focus is on Banking, Consumption, Exports and Infrastructure.

Portfolio Performance

  • The portfolio has only 7 BUY shares.
  • The RLCMP continues to perform well. On average the 7 Buy recommendation shares were up by absolute 55.5% and annualized 24.6%.
  • The Sensex and Nifty were up by 18.3% and 18.0% annualized in the same period.
  • The JainMatrix active Retirement LC Model Portfolio thus outperformed by 6.2%.
  • Investors need to continue to invest in these shares in a SIP mode for safe long term returns.

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Some previous notes for this Portfolio

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DISCLOSURES AND 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. JM has been publishing equity research reports since Nov 2012. JM is voluntarily 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 Large-Cap Portfolio Investment Note

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Date: 15th May 2014

Investment Note

JainMatrix Investments presents the May 2014 update of its Large Cap Model Portfolio.

  • The year 2014 has seen the Indian indices move into new high territory. The stock investment climate remains positive with events such as strengthening Indian rupee, fall in inflation, a high decibel general election and some stability at RBI and the banking sector.
  • FIIs were early on the trends with high investment inflows. This was also aided by the other BRICS and emerging economies not looking as good as India.
  • The next major trigger is the General election results. Elections closed on May 12th and the exit polls indicated a win for the BJP. The markets rapidly priced it in with a 6% appreciation in 3 days. We now expect Retail to enter the market in larger numbers, and the IPOs season to start again.
  • Risks at this stage are a weak domestic monsoon, inflation rise and a fractured election mandate.
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  •  We remain positive on the markets, and feel that it’s time for investors to Review their Investment portfolio, prune the lower quality/ underperformers and rebalance their holdings. JainMatrix Investments has launched its Portfolio Review Service to this end.
  • Theme: The Large Cap Model Portfolio investment theme remains – Sector leaders and undervalued but fundamentally sound challengers, from sectors we are positive on. The investor should continue his stable long term wealth building process with these Large-Caps.
  • Performance: In a volatile environment, the portfolio performed well. We also expect the performance to improve in the next few quarters.
  • The Large Cap Portfolio has 7 Buys and a Hold.
  • Investors need to continue to invest in these shares in a SIP mode. 

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

Some previous Updates for this 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 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

Investment Note, Nov 2013

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The New Index highs actually seems like the early phase of a new Bull Run

This is an environment where the Indian economy looks sluggish, interest rates and inflation are not coming down. At the same time, the indices are up to the new highs.

Poll: The recent Diwali surge to highs did take people by surprise. A Poll was conducted on this website with the question: As on Oct 8th, with  Sensex at 19,998 and Nifty 5,931, will the Indices rise or fall by Diwali? The results:

A Poll conducted by JainMatrix Investments

A Poll conducted by JainMatrix Investments

In fact the Sensex rose by over 6% to highs by Diwali, before the recent profit booking related fall. It looks like a lot of people got it right, but I noticed that in the first 2 weeks, the mood was very bearish, before recovering.

Outlook: The current surge is driven by the FIIs who seem to prefer India at this stage. In addition, the second half of the year looks better because of:

  1. Effect of good rainfall this year
  2. Stability in banking sector and interest rates, due to RBI actions
  3. Recent Rupee stability against the USD
  4. The Q2FY14 results have been fairly good and held up well.
  5. Certainly the new high of Sensex and Nifty have been achieved at fair valuations, with the Price Earnings of the Nifty stocks at 17.8 times, below a 10 year average of 18.7 times. (NSE data)

As a leading indicator, the market may be telling us not just that it is happy about Diwali, but that the year ahead looks better.

Going forward, the outlook for the exports (particularly IT software), banking and domestic consumption sectors are good. Infrastructure may show a slow recovery.

JainMatrix Investments is pleased to present paying subscribers the Nov update on the JainMatrix Large Cap Portfolio 2013. And the Dec update of the Mid/Small Cap Portfolio 2013. 

While in the near term post Diwali there may be some profit booking, we expect stability and recovery of Indices post that. The Mid and Small cap shares have also exhibited some recovery from beaten down levels. The Indian Retail investor is still wary and yet to enter the market in a big way. This may be an early phase of a bull run.

Risks: The risk factors that we need to watch out for are:

  1. Rising inflation. RBI is quite focussed on this, but how long before we see improvement is unknown.
  2. Fed taper of quantitative easing program, and consequent ‘hot money’ movement back to USA.
  3. Election year populist measures and government fiscal slippages.
  4. Elections start in Nov-Dec 2013 as 5 states of  Chhattisgarh, MP, Mizoram, Rajasthan and Delhi go to Polls. These can be a preview to the 2014 National and other State elections. All these can affect investor sentiment.

The JainMatrix Large Cap Portfolio 2013 captures some of these variables and suggests a long term investment portfolio. The Mid/Small Cap Portfolio 2013 looks at more stock specific investment opportunities.  

The

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Large Cap Model Portfolio Update Feb 2013

JainMatrix Investments is pleased to present subscribers the Feb update on the JainMatrix Large Cap Model Portfolio 2013.  

This is an environment where the Indian economy looks sluggish, interest rates and inflation are not coming down, and the markets seem to have lost some steam. The Q3 results are more or less behind us, and their aggregates are positive. We now expect a quiet period of anticipation before the Budget. 
There may however be some pockets of activity. PSU divestment is gathering pace. Telecom auctions are expected. The government is trying to clean up its act and finish FY13 with a hurrah. 
The Large Cap portfolio held up well overall in this short period. Investors are advised to continue to invest in SIP fashion. 

JainMatrix Knowledge Base:

JainMatrix Large Cap Model Portfolio 2013
JainMatrix Mid Cap Model Portfolio 2013
L&T: At the Business Crossroads
Arshiya International: A Collapsing Star
Make Equity Investing less tricky: the JainMatrix Eleven 
Bharti Airtel – This is a year of consolidation –LINK
Titan Industries – The Jewel in the Crown

Disclosure: It is safe to assume that if the JainMatrix website recommends a stock, the researcher has already invested in it.

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Disclaimer:

These reports and documents have been prepared by JainMatrix Investments Ltd. They are not to be copied, reused or made available to others without prior permission of JainMatrix Investments. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com

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