Monthly Issue 201506

7
74
Investments into debt

instruments provide income,
certainty and stability to an
investment portfolio. Investors
have traditionally been inclined
towards investing in debt
instruments such as bank fixed
deposits and post-office schemes
as these instruments lower the
uncertainty of returns and help to
plan better. Bank fixed deposits
are simpler and continue to
dominate the investment
portfolio of investors in India.
However, unlike the perception,
Anup Bagchi
there are a large number of other
MD & CEO
debt instruments available today.
ICICI Securities Ltd.
Despite being clubbed as one
asset class, i.e. debt, investments like debt mutual funds, bonds,
company deposits can behave quite differently from a traditional
bank fixed deposit. As these new instruments become more
available and popular, it is important for investors like us to
understand this category of investments.
Debt instruments are considered as completely risk-free. Surely,
debt instruments in short term are less uncertain in their earning
as compared to equities, but they are not free from risk. Credit or
default risk (issuer's inability to pay back principal or/and
interest), inflation risk (possibility of earning negative real rate of
return), liquidity risk (nascent secondary market) and interest rate
risk (unexpected change in interest rate that could negatively
affect the investment value) are some of the risks that debt
instruments carry.
India has seen long periods of high interest rates on deposits.

They have even been in the range of 13-14% as recently as in the
late 90s.This has imprinted a perception of high returns. And
without taking the impact of taxes, the interest rates in India are
relatively high. However, interest rates have come down over the
years to 8-9% currently and would continue to trend lower as
India prospers further. As economies progress, risk capital is
more easily available and that also results in lower interest rates.
So expecting debt to contribute to the growth of your portfolio
will not hold in future.
That is not to say you should not invest in debt instruments. The
debt market in India has evolved through the years from
traditional deposits to more diverse products such as corporate
bonds and deposits, debentures, debt mutual funds, etc.
Understanding the risks and features can help invest in these
instruments for the right reason. There are strategies to benefit
from instruments that can give regular income and strategies to
deal from falling rates. It is time, if you have not already, to adopt
diverse investment strategies of debt to gain from the current
scenario. In this issue we bring forth a 360-degree perspective on
managing your debt portfolio.
Fundamentally, you should spread your investments across
asset classes - debt as well as equity - based on time horizon of
your investment goals. For your short-to-medium term goals,
debt asset class provides a good choice. For your long-term
goals, equity remains the best option. We have suggested the
systematic investment plan (SIP) mode of investment for long,
and still maintain, as the preferred mode of investment.
Our message remains the same Keep investing and stay
invested for your life goals. Through this magazine and our
website www.icicidirect.com we want to make an earnest
attempt to partner with you in setting and achieving your financial
goals. Give us an opportunity to serve you, walk into any of your
Neighbourhood Financial Superstore and talk to us.
ICICIdirect Money Manager
June 2015
There are several factors that affect our personal finances. Some of
them we have control over and some of them we do not. Micro
level factors such as getting over the inertia to start investing, risk
tolerance, health, investment choice, etc. are some of the factors
we can have some control over. However, macro level factors such
as inflation, interest rates, economic growth, market performance,
etc. are some which are beyond our control. By weaving the
information available with us for both levels, we can adopt
investment strategies that are better for our situation to have better
management of our finances.
Movements in these factors (macro level) present a good
opportunity for us to review our financial plan and consider new
strategies designed to benefit from the changing scenario. For
instance, changes in interest rates (current scenario of falling
interest rates) present good opportunity to review our loans and
investments Do read on as we share strategies to help you better
plan your finances.
Further, to help you give an overview of markets, economy and
sectors, we feature a panel interview with three equity fund
managers - Ravi Gopalakrishnan of Canara Robeco Mutual Fund,
Soumendra Nath Lahiri of L&T Mutual Fund and S Naren of ICICI
Prudential. All are positive on equities for the long run and
recommend to invest through SIPs and to follow asset allocation
model to reach our goals.
The edition also offers comprehensive information and analysis on
large-cap equity funds - the best way for retail investors to build a
strong equity portfolio for achieving various financial goals. So
read on, stay updated and involved. Do write in with your feedback
at moneymanager@ icicisecurities.com and share your thoughts.
Your magazine is now also available on www.magzter.com, a
digital newsstand.
Editor & Publisher
Abhishake Mathur, CFA
Coordinating Editor
Yogita Khatri
Editorial Board
Sameer Chavan, CWM, Pankaj Pandey
Editorial Team
Azeem Ahmad, Nithyakumar VP CFPCM, Nitin Kunte, Sachin Jain,

Sheetal Ashar
June 2015
MD Desk....................................................................................................1
Editorial .....................................................................................................2
Contents.....................................................................................................3
News.........................................................................................................4
Equity Market Round-up & Outlook................................................................5
Debt Market Round-up & Outlook..................................................................8
Getting Technical with Dharmesh Shah....................................................... 11
Derivatives Strategy by Amit Gupta.............................................................13
Stock Ideas: Torrent Pharma and Dr. Reddy's...............................................19
Flavour of the Month: Interest Rates... How do they impact you
Read on to understand how interest rates are linked with your
personal finances including loans and investments to better manage
your portfolio.........................................................................................26
Tte--tte: Fund managers discuss market, economy & sectors
A panel interview with Ravi Gopalakrishnan of Canara Robeco Mutual
Fund, Soumendra Nath Lahiri of L&T Mutual Fund and S Naren of
ICICI Prudential Mutual Fund.............................................................34
Ask Our Planner: Taxation of mutual fund SIPs
Your personal finance queries answered..........................................44
Mutual Fund Analysis: Investing in large-cap equity funds
The best way for retail investors to build a strong equity portfolio for
achieving various financial goals...................................................... 47
Mutual Fund Top Picks
Here we present our research team's top mutual fund
recommendations, across equity and debt categories....................57
Equity Model Portfolio................................................................................59
Quiz Time..................................................................................................64
Monthly Trends.........................................................................................65
Premium Education Programmes Schedule..................................................69
June 2015
NPS becomes more attractive

In the 2015-16 Budget, the Centre granted additional tax deduction of ` 50,000
to contributions made to the National Pension System (NPS). Now, it has made
this pension scheme more attractive. All individuals who have been making
contributions to NPS for 10 years or more will be now given the option to
withdraw up to 25 per cent of the corpus. To check needless drawing of money
from the corpus, withdrawals will be allowed only on four grounds. These are:
child's education, marriage, purchase (or construction) of a residential house, or
treatment of any illness (either of the individual himself, his spouse or children).
However, it has been stipulated that only a maximum of three withdrawals will
be allowed and that too at an interval of five years. The new regulations say that
corporate subscribers (who contribute through their employer) and normal
citizens (other than those subscribed for NPS Lite and Swavalamban), if they so
desire, can continue to contribute and keep money invested in the NPS account
and not withdraw it till the age of 70. There is also a leeway now to defer the
purchase of annuity by three years from the date of exit. Earlier, 40 per cent of
the amount was to be converted into annuity at maturity. Also, if the corpus is
less than `1 lakh at maturity (in the case of corporate subscribers and normal
citizens) one can withdraw it completely and not necessarily buy an annuity at
the time of exit.
Courtesy: The Hindu Business Line
EPFO makes UAN mandatory for all employers under its purview
Retirement fund body EPFO (Employees' Provident Fund Organisation) has
notified an order to make Universal Account Number (UAN) mandatory for all
employers covered under the Employees Provident Funds (EPF) and
Miscellaneous Provisions (MP) Act 1952. "We have notified the draft order to
make UAN compulsory for all organisations covered under the EPF & MP Act,"
EPFO's Central Provident Fund Commissioner K K Jalan said. The government
was considering the proposal to make UAN mandatory for availing of benefit of
the scheme. The UAN facility was launched by Prime Minister Narendra Modi in
October last year.
Courtesy: The Economic Times
All I-T refunds to be put directly in bank accounts: CBDT

In a step that would bring delight to taxpayers, the Income Tax department has
put in motion a new plan which will ensure that any refund on tax paid is safely
deposited in their personal bank account as soon as it is processed and
released. The department is also planning to fully adopt and use banking
services to end the current system of sending I-T refunds over the value of Rs
50,000 via cheques through the postal department.
Courtesy: Business Today
June 2015
EQUITY MARKET ROUND-UP

& OUTLOOK
Poor monsoon prediction, downward revision of

global growth to weigh on sentiments
Domestic equity markets
showed contrasting
movements during the month
taking cues from corporate
earnings, foreign institutional
investors (FIIs) activity and
mixed reactions to the
completion of one year of the
Modi government. The
markets ended the month up
3% with sentiments getting a
boost from the rate cut
expectations of 25 basis points
(bps) owing to the in line
consumer price index (CPI)
April 2015 data, which came in
at 4.87% and lower March
index of industrial production
(IIP) numbers, which came in at
2.1%.
amortization) declined 11.3%

YoY to ` 79,253 crore on the
back of a 60 bps drop in
EBITDA margins. The
companies benefited from the
drop in global commodity
prices but that was nullified by
higher employee and other
expenses. The management
commentary was neutral to
positive, with a turnaround
expected in H2FY16, although
subdued monsoons could be a
risk. On the sectoral front, the
banking space witnessed a
further deterioration of asset
quality with gross nonperforming assets (GNPA)
rising 25.2% YoY to ` 3,10,772
crore forming 4.5% ofcredit
(vs. 4.1% in Q4FY14). In the
auto space, original equipment
manufacturers (OEMs)
witnessed an expansion in
gross margins due to subdued
raw material (RM) costs. In the
capital goods space, topline
growth remained muted due to
a delay in project execution
while in the commodity space,
the performance of oil & gas
and metals was muted due to a
The month continued to be

influenced by several earnings
announcements. In Q4FY15,
the Sensex (ex-banks, nonbanking financial companies
(NBFCs) and Sun Pharma)
topline declined 8.4% YoY
(year-on-year) to ` 4,52,897
crore while EBITDA (earnings
before interest, taxes,
depreciation, and
June 2015

& OUTLOOK
global fall in commodity
prices. In the fast-moving
consumer goods (FMCG)
segment, volumegrowth
remained subdued.
Nevertheless, the companies
benefited from a drop in RM
prices. In the telecom space,
telcos resorted to robust
subscriber addition,
registering 5.4% growth in
overall voice minutes but a
3.8% decline in the voice
ARPM (average revenue per
minute).
(US Federal Reserve) minutes

there was no major conviction.
It seemed to reaffirm the fact
that the central bank will not
raise interest rates in June.
However, with the batch of
positive economic data, new
home sales grew 6.8% in April,
the interest rate concerns
resurfaced.
The US markets ended on a
positive note on the back of a
positive batch of economic
data and mixed corporate
earnings. The Dow Jones, S&P
500 and the Nasdaq were up
1%, 1% and 2.6%,
respectively, during the month.
The European markets were
flat with the UK FTSE up 0.3%
and the French CAC and
German DAX down 0.8% and
0.4%, respectively, during the
month. Asian markets were
mixed with Japan Nikkei and
Shanghai SSEC up 5.3% and
3.8%, respectively, and the
Hong Kong Hang Seng posting
losses of ~2.5%. The Indian
markets posted gains wherein
both the Sensex and Nifty were
up 3% and 3.1%, respectively.
The benchmark 10-year

bondyield ended the month at
7.64%, down 22 bps on an
MoM (month-on-month) basis
owing to the new 10-year
benchmark bond paper. Crude
( B r e n t ) e n d e d a t
~US$63.8/barrel vs.
US$64.8/barrel at the end of
April. Gold prices ended the
month at US$1190.5/ounce,
flat on an MoM basis.
Markets across geographies
Global markets continued to
be influenced by the situation
in Greece and worries about
the long term outlook for
interest rates. In the latest Fed
June 2015

& OUTLOOK
Domestic markets
(IMD) has lowered its forecast

of rainfall from 93% of long
period average (LPA) to 88% of
LPA for the monsoon season,
which is likely to have definite
repercussions in the near term
as the 25 bps rate cut by the
Reserve Bank of India (RBI) was
easily digested by the markets
being in line with expectations.
With the possibility of the next
rate cut getting postponed sine
die, sentiments are likely to
remain muted as markets
brace for a possible consensus
earnings downgrade. The
global situation is likely to
remain fluid with Greece
flirting with IMF (International
Monetary Fund) payments,
thus endangering the EU
(European Union) recovery
and the IMF downgrading the
global growth forecast with a
sharp US CY15 downgrade
from 3.1% to 2.5%. Besides
this, it has also urged the US to
postpone rate hikes till 2016,
thus stamping on a global
slowdown. In this backdrop,
we expect muted market
movements with a negative
bias.
Foreign institutional investors

(FIIs) were net sellers to the
tune of ~ ` 2,689.6 crore
whereas domestic institutional
investors (DIIs) were net
buyers to the tune of ~` 4,608
crore.
The Nifty and Sensex posted
gains of 3% and 3.1%,
respectively, during the
month. All major indices such
a s t h e B S E Te c h n o l o g y
(+5.6%), BSE FMCG Index
(+3.2%), BSE Healthcare
(+4.4%), BSE Auto Index
(+4.1%), BSE Oil index
(+4.8%), BSE Bankex (+2.3%)
were in the positive territory.
BSE Power (-1.2%), BSE Realty
(-2.2%) and BSE Metal (-0.7%)
were among losers.
Outlook: After Q4 earnings and
expected rate cut, markets to
watch monsoon progress, global
events
May witnessed some buying
amid a sell-off in April even as
residual Q4 earnings
continued to portray the weak
trend. The Indian
Meteorological Department
June 2015
DEBT MARKET ROUND-UP

& OUTLOOK
Time to lock in higher interest rates

The Reserve Bank of India (RBI)
cut the policy repo rate in its
June 2, 2015 policy meeting by
25 basis points (bps) to 7.25%
as was widely expected. The
RBI cited lower inflation while
leaving the cash reserve ratio
(CRR) and statutory liquidity
ratio (SLR) rates unchanged.
The tone of the policy was,
however, hawkish stating
multiple concerns over
inflation and external global
environment particularly
below normal monsoon and
firming up of global crude oil
prices. The RBI practically
ruled out a rate cut in the
immediate near term by saying
it has front-loaded a rate cut in
this policy meeting and will
wait for data that clarifies
uncertainty. However, the RBI
after many policy meetings has
explicitly cited weak growth as
one of the reasons for rate cuts.
Therefore, monsoon outcome
and its impact on inflation
remain major determinant for
future rate cuts.
Debt markets witnessed selling

pressure as the hawkish
statement by the RBI ruled out
further rate cuts in the near
term. Benchmark 10-year
Government Security (G-Sec)
yield rose 7-8 bps. Old 10-year
benchmark G-Sec yield
currently trades at around 8%
while other maturity papers (5
15 years) are in the range of
8.05-8.12% range. Effectively,
G-Sec yields are up around 30
bps since January 2015 as
investors booked profit after
the sharp rally in 2014.
Overall, inflation continues to
trend down with both latest
consumer price index (CPI) and
wholesale price index (WPI)
data prints coming in below
market expectations. CPI April
2015 came in at 4.87% while
WPI softened to -2.65%. Prices
of vegetables have been
declining in the last few
months. The same coupled
with a high base led food
inflation to ease to 5.1%
June 2015

& OUTLOOK
While the G-sec yields have moved up, corporate bond yields, so
far, have also followed it with similar rise in yields.
RBI has cut repo rate three times this calendar year by 75bps
8.5
7.5
Repo rate
Source: Bloomberg
7.0
4.0
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
6.0
5.0
4.4
5.0
5.5
5.4
5.2
4.9
6.5
8.0
5.5
(%)
10.0
9.0
8.8
8.0
8.3
8.6
8.3
7.5
8.0
7.7
11.0
9.9
12.0
11.2
CPI inflation remains well below RBI projections
Source: Bloomberg, ICICIdirect.com Research
June 2015
Jun-15
Mar-15
Dec-14
Sep-14
Jun-14
Mar-14
Dec-13
Sep-13
Jun-13

& OUTLOOK
Apr-15 -2.7
Mar-15 -2.3
-2.2
-0.9
Jan-15
Feb-15
-0.5
Nov-14
Oct-14
Sep-14
-5
Aug-14
-1
-3
Dec-14
-0.2
5.4
Jul-14
1.7
5.7
Jun-14
(%)
5
3
2.4
6.2
May-14
3.9
5.5
A pr-14
WPI remains in negative territory
Outlook
banking system rates

southward and government's
effort to remove regulatory
bottleneck and improve
business environment, the
credit profile in general is likely
to improve. We believe the
short-term credit opportunities
funds that take the advantage
of mis-priced credit risk by
investing in the below AAArated papers to earn higher
accruals are better placed in
the current environment.
These funds provide
opportunity to lock in higher
returns with low volatility and
should be held for more than
three years to take taxation
advantage as well.
Structurally, the current rate

easing cycle cannot be called
to have come to an end. If
incremental data proves
conducive, markets will
quickly build in the next rate
cut.
The movement in yields across
government securities and
corporate bonds does not
have a direct relationship with
the RBI rate move. The current
level of G-Sec yields still offer
investment opportunity even if
RBI resort to a near term
pause.
With macroeconomic data
prints expected to turn
positive, trend in the overall
10
June 2015
TECHNICAL OUTLOOK
Consolidation; but at >28250 bulls will charge
in the coming month.
Conversely, failure to steer past
the earmarked hurdle of 28250,
8600 would lead to a range
bound market and see
benchmarks consolidate at
28250-26750, 8600-8100 band
in the next few months.
The markets ignored the old

adage of 'Sell in May and go
away' as equity benchmarks
halted the two month
correction after taking support
precisely at our earmarked
value area of 26300, 8000
(Sensex, Nifty) levels,
respectively, as highlighted in
the May 2015 edition. After a
three week basing formation
above the important support
region, the benchmarks have
registered a bullish breakout
and are on track to achieve our
target of 28250, 8600 levels.
Might of bulls to be tested at upper

band of falling channel
The entire correction after
hitting life-time highs of 30024,
9119 in March 2015 have
occurred in a well defined
falling channel marked by
joining lower peaks and
troughs formed in last three
months. At the May 2015
bottom of 26424, 7997,
benchmarks rebounded after
testing the lower boundary of
this channel. The upper band
of this falling trend channel for
the coming month is around
28250, 8600. The confluence of
50% retracement of the
MarchMay 2015 correction
(9119 to 7997) around the
28224, 8560 region makes this
a crucial hurdle for
benchmarks. A decisive
breakout above 28250, 8600
will signal a reversal of the
corrective trend in force since
The markets would approach

important crossroad as they
head towards our target of
28250, 8600 in the coming
month. A decisive triumph
above these levels would
herald an end of the ongoing
corrective phase since March
2015 and trigger a bullish trend
reversal opening the door for a
rally towards April 2015 high at
respective 29094, 8844 levels
11
June 2015
TECHNICAL OUTLOOK
March 2015 and propel
benchmarks to challenge April
2015 highs of 29094, 8844 in
the coming months.
benchmarks would extend the

corrective phase and
consolidate in the 28250 26750, 8600-8100 band over
the next few months. The
progress of monsoons will
influence market sentiments in
the coming month.
However, in the event of failure

to make headway above the
upper boundary of the falling
trend channel, we believe the
BSE Sensex Monthly Candlestick Chart

The index is approaching an important crossroad as it
heads towards the upper band of the falling channel
(28250) which encompasses the entire correction since
March 2015.
30024
28250
Dec14
26469
The index respected its earmarked

value area of 26300 as per our
expectation as it rebounded after
making a low of 26424 in May 2015
52 week EMA @ 26848
The weekly MACD has approached its trigger line for the first time since
September 2013 which will lead to supportive efforts at lower levels.

The views expressed in the article are personal views of the author and do not
necessarily represent the views of ICICI Securities.
12
June 2015
DERIVATIVES STRATEGY
Reiterate last months view: Sustainability above 8250/8050
likely to lead pullback towards 8650
Amit Gupta
Head - Derivatives Research,
ICICI Securities
After falling for three consecutive months,

Nifty closes May series with gains of 1.7%
May series breaks three months

negative trend closing with 1.7%
gains
Nifty did not fall and gradually

moved up.
Stock specific moves likely in
coming months
The April-May series was

propelled by Q4FY15 results. A
weak set of numbers for
technology stocks at the start
pushed the Nifty to test 8000
levels. However, with a stable
set of numbers from private
banking and other sectors
helped the Nifty to recover
from lower levels. At the end of
May, the Nifty ended with
monthly gains of 1.7%.
In the May series the sectoral

moves were extremely range
bound in nature, wherein the
largest positive and negative
sector moves were broadly
contained within+/-3%.
The Midcap Index closed with
gains of close to 3% while the
small cap closed with gains of
1%. Again, this suggests a
range bound market.
In the May series, what also

helped the indices to recover
was the fact that the Nifty and
Bank Nifty futures started to
trade at a discount in the early
part of series. This clearly
brought about the overly
bearish sentiment of
participants, post which the
Largest positive returns (of

over 25%) in May came in
fromStrides Arcolab , Voltas,
Jubilant Foodworks & UPL.
Largest negative returns (over
15%) in May came in
f r o m S h r i r a m Tr a n s p o r t
Finance, Jaiprakash Associate
& SAIL.
13
June 2015
Nifty expiry returns in trailing 12 months
10.0%
8.0%
6.0%
9%
4.0%
6%
4%
3%
3%
3%
3%
4%
2.0%
2%
0.0%
-1%
-3%
-4%
-2%
-4%
-2.0%
May'15
Apr'15
Mar'15
Feb'15
Jan'15
Dec
Nov
Oct
Sep
Aug
Jul
Jun
May
Apr
-4.0%
lSectoral performance in May : extremely range

IT
Oil
Mid Cap
Nifty
Small Cap
Power
Metal
4
1
% monthly return
Strong performance from other key

equity markets one of the key
reason for current decline in Nifty
-1
-2
H o w e v e r, a s t h e y e a r
progressed, the strong
performance from key EMs like
China, Brazil & Russia where
the portfolio managers were
underweight started to
perform. This forced many of
them to focus on these equity
As opined in the previous

report as well, a lot of the EM
allocation was focused on
India at the start of 2015.
14
June 2015
markets by increasing their
asset allocation to EMs like
Brazil , Russia and China. As a
result, India suffered some of
the money outflow.
China has already registered

55% surge in its equity index
whereas Brazil and Russia also
captured returns in excess of
10% dwarfing 1% return for
India.
The profit booking by

international investors was
also magnified by the fact that
most anticipated events viz.
the Union Budget and RBI rate
cuts have already panned out.
A weak Q4 earnings season
did not help this as well, which
was also the key reason for the
recent decline.
However,
we believe the
intermediate pullbacks can
continue to be seen in Indian
indices on the back of
domestic flows and short
covering in F&O segment. The
Nifty can extend its gains
towards 8650-8700 in the
coming month.
Indian equities clocked one of the weakest performance in EMs & DM in 2015
60%
50%
40%
30%
20%
10%
Sustainability above 8050/8250

likely to lead pullback towards
8650
Turkey
Thailand
Indonesia
India
US
Philipines
South Africa
8000/8200 Put strikes. The

Nifty has staged a pullback
from 8050 on December 2014,
January 2015 and May 2015.
Currently, Nifty - 2 sigma band
also suggests support for Nifty
around 8050 (visible in second
chart below).
Why positional support is placed

near 8050/8250?
The May series is starting with
the highest options base at the
UK
Brazil
Japan
Russia
Germany
France
Italy
-10%
China
0%
15
June 2015
Why is 8650 is likely target ?
Consolidation expected in Nifty

within above range
In the June series options

build-up, one of the highest
Call build up is seen at 8600
strike.
The open interest in the Nifty

has declined to the lowest level
since June 2013 with little over
1.3 crore shares. This suggests
lot of directional participants
have moved out of Nifty
futures segment. Only a
constant long addition trend in
Nifty is likely to pull Nifty out of
its current consolidation.
On May expiry, we saw smooth

rollover of positions in index
heavyweights, many of which
were higher beta and had
leverage. This leverage, going
ahead, is likely to push selling
pressure in Nifty at higher
levels.
Considering lot of key events

lined in June, Nifty might move
into consolidation in a broader
range.
Call OI
Put OI
16
June 2015
8900
8800
8700
8600
8500
8400
8300
8200
8100
8000
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
7900
OI in Million Shares
Nifty options build-up in June series
Nifty 2 sigma Band : suggesting consolidation
9700
9200
8700
8200
7700
7200
6700
Close
UBB(2)
BollMA (100) on Close
May-15
Apr-15
Mar-15
Feb-15
Jan-15
Dec-14
Nov-14
Oct-14
Sep-14
Aug-14
Jul-14
Jun-14
6200
5700
LBB(2)
Risk may arise on unfavourable outcome of events lined up in June

RBI Policy ECB Policy
review
Review
Event
Date
02 June
03 June
What to
look for
Rate cut
QE Stance
Greece IMF
Payment
OPEC
Meeting
Greece IMF
Payment
Greece IMF
Payment
US
FOMC
Greece IMF
& ECB Payment
05 June
5-Jun
12 June
16 June
17 June
19 June
Repayment Production Repayment

Repayment
Stance on
Repayment
of 307 Mln euro Reduction of 345 Mln euro of 545 Mln euro rate increase of 430 Mln euro
June promises to be a volatile

month. A lot of events
including local and global
could trigger rise in volatility.
outflows could magnify in debt

and equity.
Bank Nifty: Key component likely to
decide fate of broader markets:
Sustainability above 18000 likely to
keep bullish bias intact on declines
Occurrence of some of the

events like Greece default on
repayment or FOMC indication
towards likely date of interest
rate or the Opec meeting
decision of reducing the
production drastically could
derail the current
consolidation in Nifty and
index may slip downwards.
The banking index held its

ground during the May series
a s b e t t e r- t h a n - e x p e c t e d
results from key private
banking stocks helped the
index to outperform Nifty. For
the month, the banking index
was up over 1.5%.
Direction of INR holds key. If

INR displays a sharp
depreciation trend then
The banking index has

outperformed Nifty in the
recent leg and the Bank Nifty/
17
June 2015
Nifty price ratio has moved to
2.24, its highest level in May.
The key event for the Bank

Index remains the RBI policy
review on June 2. If there is a
rate cut from RBI then the
banking index is likely to move
towards 19000. From there on,
participation by FIIs in equity
and debt segments is likely to
decide the course for the
banking index as well.
Continued absence of FIIs from
India is likely to weaken the
INR, which will, in turn, hurt the
banking segment.
On declines, it has recovered

from 17700 since November
2014. We expect the positive
bias in the banking index to
continue till it holds the
support of 18000-18200. Call
writing, on the higher side, is
seen only at the 19000 strike. A
move above this level is likely
to push Bank Nifty towards
19500.
Bank Nifty options build-up for June series
Call OI
19500
19300
19100
18900
18700
18500
18300
18100
17900
17700
17500
OI in Millions
0.5
0.45
0.4
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
Put OI
The views expressed in the article are personal views of the author and do not necessarily
represent the views of ICICI Securities.
18
June 2015
STOCK IDEAS
Dr. Reddy's Labs: US franchisee looks promising

Company Background
Nacional de Vigilncia
Sanitria (ANVISA)- Brazil,
among others. Over the years,
along with generics the
company also established
itself in the field of discovery of
New Chemical Entities (NCEs)
but with little success.
Established in 1984, Dr Reddy's

Laboratories (DRL) is one of
India's pedigreed players
having a firm footing in the US
and other export markets with
deep rooted product and
market knowledge across
therapies. Like Cipla, DRL also
recognised the importance of
having Good Manufacturing
Practices (GMP) accreditation
in the eighties and eventually
got USFDA (US Food and Drug
Administration) approval (first
of its kind approval for a
formulation facility in India) in
1987. The company owns 22
manufacturing facilities and
four developing centres across
the globe. The facilities have
been approved by various
agencies such as the USFDA,
World Health Organization
(WHO)-Geneva, UKMHRA (UK
Medicines and Healthcare
products Regulatory Agency),
(MHRA), Therapeutic Goods
Administration (TGA)Australia, Medicines Control
Council (MCC)-South Africa,
Danish Medical Association
(DMA)-Denmark, Agncia
DRL's business can be

classified into three broad
segments: 1) Global Generics
(GG), 2) Pharmaceutical
Services and Active
Ingredients (PSAI) and 3)
Proprietary Products (PP).
Global Generics (81% of the
revenues) includes branded
and unbranded prescription
and over-the-counter (OTC)
products business. It also
includes the operations of the
biologics business. This
segment comprises
formulation sales to regulated
markets of the US, Europe and
emerging markets such as
Russia/CIS (Commonwealth of
Independent States), India and
Rest of the World (RoW).
DRL has spent around 8-9% of
the turnover on Research and
Development (R&D) in the last
four years but this figure is
19
June 2015
STOCK IDEAS
likely to touch 10-11% going
ahead. Beside Abbreviated
New Drug Application
(ANDAs) it has also filed 10
new drug applications (NDAs)
in the 505 b (2) route that are
awaiting approval.
Russia CIS becomes volatile, India

to provide more stability
Global Generics (ex US,
Europe) is likely to grow at a
steady CAGR of ~17%
between FY15-17E driven by
growth in India as the Russian
performance remains volatile.
These two markets are more or
less identical in nature
(branded generics and OTC)
with similar growth potential
and similar kinds of risks. DRL
is well versed with the
dynamics in Russia by virtue of
being an early mover. However
the recent currency volatility
and political unrest have
caused disturbances in an
otherwise safe market for the
company. For India, the growth
is expected to be largely from
launches in the oncology and
biosimilars space besides an
improvement in productivity of
the enhanced field force.
Investment Rationale
Global Generics to piggyback on
strong and sustainable US traction
Global Generics (GG) segment
is expected to grow at a CAGR
(Compounded annual growth
rate) of 17% in FY15-17E
driven by strong US traction,
which is likely to grow at a
CAGR of ~19% during the
same period. DRL has
developed a knack for
exclusivity/first-to-file (FTF)
launches on a fairly continuous
basis in the US. We expect this
trend to continue further but
the focus has now shifted to
more unique launches such as
OTC , c o m p l e x g e n e r i c s ,
controlled releases, etc. The
US traction is also likely to
nullify European slowdown.
The US pipeline includes 220
filed ANDAs including 68
pending approvals.
Portfolio realignment eminent

We envisage a fall in share of
low margin/high risk segments
such as Pharmaceutical
Services & Active Ingredients
(PSAI) and European generics
(especially Betapharm), going
ahead. Thus, growth in FY1520
June 2015
STOCK IDEAS
17E is likely to emanate from
more productive and
sustainable segments such as
the US and India. Similarly, in
terms of product offering, we
envisage more launches in the
fields of injectables, OTC,
complex/limited competition
products and biosimilars,
besides legacy generics.
FTFs. The company is

investing heavily in the R&D to
bring more and complex
generics and limited
competition products mainly
from non-oral category which
is likely to take care of
sustained US growth for the
next 2-3 years. India is showing
promising growth as well with
a recalibrated approach and
the recent acquisition (UCB's
India business) bodes well for
the future. Russia, Europe and
the PSAI segments however
continue to pose challenges
for being lumpy and volatile.
We have ascribed a target of `
3,949 based on 22x FY17E EPS
of ` 179.5 with a 'Buy'
recommendation.
US franchisee looks promising;

India growth likely to sustain
US and India together hold the
key for the Global generics
growth and for that matter
DRL's overall growth. Among
them US is the main catalyst
with a pending product
portfolio of 68 ANDAs, which
include 43 Para IVs and 13
Key Financials
FY14
FY15
FY16E
FY17E
Revenues (` crore)
13,217
14,818.9
17,291.5
19,438.4
EBITDA (` crore)
3,312.7
3,482.7
4,065.1
4,667
Net profit (` crore)
2,151.3
2,099
2,562.6
3,048.2
126.7
123.6
150.9
179.5
FY14
FY15
FY16E
FY17E
19.4
EPS (`)
Valuations Summary
PE (x)
27.5
28.2
23.1
Target PE (x)
31.2
31.9
26.2
22
EV to EBITDA (x)
14.8
13.9
11.7
9.8
5.3
4.4
3.7
RoNW (%)
P/BV (x)
23.7
19.3
19.6
19.4
RoCE (%)
19.2
18.1
20.2
21.3
21
June 2015
STOCK IDEAS
Stock Data
Market capitalisation (` crore)
59,280
Debt (FY15) (` crore)
3,635
Cash (FY15) (` crore)
3,114
Enterprise value (EV) (` crore)
59,800
52-week high/low (`)
3,808/2,250
Equity capital (` crore)
85
Face value (`)
DII holding (%)
5.44
FII holding (%)
38.86
Key Risks
plant has recently received

Form 483 from the USFDA with
9 observations.
I n c r e a s e d U S F DA s c r u t i n y
regarding cGMP Issues
Increased USFDA scrutiny
across the globe regarding
cGMP issues is a risk factor for
the company considering
~47% of sales come from US.
Its Srikakulam API (active
pharmaceutical ingredient)
Currency volatility and political

unrest in Russia
Currency volatility and political
unrest have caused
disturbances in an otherwise
safe Russian market for the
company.
(EBITDA: Earnings before interest, taxes, depreciation, and

amortization; EPS: Earnings per share; P/E: Price-to-earnings; EV:
Enterprise value; P/BV: Price-to-book value; RoNW: Return on net worth;
RoCE: Return on Capital Employed; MF: Mutual Funds; FII: Foreign
Institutional Investors)
22
June 2015
STOCK IDEAS
Torrent Pharma: Riding high on product launches across the globe

Company Background
Investment Rationale
Incorporated in 1959, Torrent

Pharmaceuticals Limited is a
mid-size generic player with a
strong presence in the
domestic and semi-regulated
markets and a growing
presence in regulated markets.
It is also present in the Indian
CRAMS (Contract Research
and Manufacturing Services)
space via supply agreement
with Danish pharma major
Novo Nordisk for the latter's
Insulin business in India.
Chronic therapies such as
cardiovascular, neurology and
diabetology are the main focus
areas for the company along
with acute therapies such as
anti-infectives and
gastrointestinal. The company
has a significant presence in
the exports market in countries
such as Brazil, Germany and
lately in the US among others.
Chronic focus, financial
discipline, successful mergers
and acquisitions (M&A) / deal
making track record, higher
return rations and higher
dividend payouts are some of
the unique selling propositions
(USPs) of Torrent Pharma.
Chronic focus, diversified portfolio,

nimble-footed approach
Torrent has remained ahead of

the curve when it comes to
strategic decision making. In
domestic formulations, it
concentrated on high-yielding
chronic therapies such as CVS
(Cardio Vascular Services) and
neuropathy when most of the
Indian players were growing in
anti-infectives (acute). It was
one of the early entrants in the
Brazilian markets. It acquired a
marketing company in
Germany in 2005. It also struck
CRAMS deal with NovoNordisk in the Indian market for
Insulin. And just when it was
witnessing slowdown in
domestic formulations, it
acquired Elder's lucrative
formulations business. US
launches such as gCymbalta
and gMicardis have
strengthened the US business
and overall financial health.
Strong margins and high
return ratios are some of the
major differentiators for
Torrent.
23
June 2015
STOCK IDEAS
Exports business remains in sweet
spot
gynaecology and to fill up the

portfolio gaps. Elder's portfolio
is also margin accretive. We
expect Indian branded
formulations to grow at a
CAGR of 21.7% in FY15-17E to
Rs. 2,398.8 crore.
Exports business (~55% of the

total turnover) is witnessing
strong traction especially from
the US. Brazil has started
showing signs of recovery with
a recalibrated approach. Other
export markets such as Europe
and rest of world (ROW) are
growing at a steady pace. In
the US the company owns a
healthy product pipeline (67
filed Abbreviated New Drug
Application (ANDAs) and 48
approvals). We expect US
sales to grow at a CAGR
(compounded annual growth
rate) of 38.9% in FY15-17E to
Rs. 1,605.2 crore on a higher
base. Similarly ROW and
European sales are likely to
grow at a CAGR of 12.8% and
5.3% respectively to Rs. 493
crore and Rs. 1,010.8 crore
during FY15-17E.
US, Brazil, India key catalysts for

future; upgrade to BUY
The US, Brazil and domestic
formulations remain the troika
for future growth based on
new product launches and
improvement in market share.
The US remains in good shape
despite the exclusivity sunset
of gCymbalta as the pipeline
remains promising which
include products such as
gAbilify. The management also
remains optimistic on Elder's
portfolio which is likely to
improve margins scenario
considerably. The Brazilian
growth is crawling back to
normal with a recalibrated
approach. Other segments
such as ROW and Europe
however remain draggers in an
otherwise high growth engine.
We have increased multiple to
20x from 18x on the back of
i m p r o v e d v i s i b i l i t y.
Accordingly, our target price
stands at Rs. 1,450 based on
20x FY17E EPS of Rs. 72.2 and
we upgrade the stock to 'Buy'
rating from 'Hold'.
Indian formulations growth steady

Despite having higher
proportion of chronic
therapies the company
remained an underachiever in
the branded formulations
space, growing at a CAGR of
17.3% between FY10-15. The
acquisition of Elder Pharma's
branded portfolio is likely to
add new therapies such as
nutraceuticals and
24
June 2015
STOCK IDEAS
Key Financials
Revenues (` crore)
EBITDA (` crore)
Net profit (` crore)
EPS (`)
FY14
FY15
FY16E
FY17E
4,184
4,653
5,689.6
6,739
952
1020
1351.4
1693.2
663.9
799
921.3
1222.2
39.2
47.2
54.4
72.2
Valuations Summary
FY14
FY15
FY16E
P/E (x)
31.3
26
22.5
17
Target P/E (x)
36.8
30.6
26.5
20
EV to EBITDA (x)
13.4
11.7
8.5
6.4
Target EV/EBITDA (x)
19.1
14.1
12.3
6.6
5.1
4.1
3.1
P/BV (x)
FY17E
RoNW (%)
34.9
32.4
29.6
30.3
RoCE (%)
28.5
19.7
26.4
30.9
Stock Data
Market capitalisation (` crore)
20,747
Debt (FY15) (` crore)
1,982
Cash (FY15) (` crore)
2,670
Enterprise value (EV) (` crore)
20,058
52-week high/low (`)
1,335/570
Equity capital (` crore)
84.6
Face value (`)
DII holding (%)
6.6
FII holding (%)
12.9
Key Risks
Increased USFDA scrutiny regarding cGMP Issues
18% of overall sales of Torrent Pharma come from US. USFDA has introduced
stringent measures regarding cGMP issues.
Frequent regulatory changes in the Brazilian market
Brazil accounts for ~13% of the turnover. This market is prone to frequent
regulatory changes thereby affecting the long term plans.
(EBITDA: Earnings before interest, taxes, depreciation, and amortization; EPS:
Earnings per share; P/E: Price-to-earnings; EV: Enterprise value; P/BV: Price-tobook value; RoNW: Return on net worth; RoCE: Return on Capital Employed; MF:
Mutual Funds; FII: Foreign Institutional Investors)
25
June 2015
FLAVOUR OF THE MONTH

Interest Rates..How do they impact you
The Reserve Bank of India (RBI) has cut the repo rate (benchmark interest
rate) thrice this calendar year by a cumulative 75 basis points (bps), taking
it to 7.25%. Consensus suggests that rates would go down even further,
thanks to easing inflation and subdued growth. This means we are headed
for a lower interest rate regime going forward. So how does it impact you
as an investor and a borrower? How can you prepare for falling interest
rates? Read on to find out.
Interest rates in simple terms
means how much return you
earn when you deposit your
money and how much you pay
as interest when you take a
loan. They seem like a double
edged sword. If they fall,
individuals and companies
who have taken loan tend to
benefit. However, retirees and
investors tend to loose as they
earn less.
Bank of India (RBI) makes these

decisions in the first place. The
RBI alters interest rates to
manage inflation-growth mix.
When the RBI increases
interest rate (tightening of
monetary policy), it is an effort
to constrict spending in an
economy or to curb inflation.
On the other hand, when the
RBI cuts interest rate
(loosening of monetary
policy), it tries to encourage
expansion and stimulate
economic growth.
The other confusion is if one

can loose money by investing
in products like bond, fixed
deposit or debt mutual funds
which are considered as riskfree and safe.
For instance, between March

2010 and October 2011, RBI
had increased repo rate 13
times consecutively, from
4.75% to 8.50%, in a response
to persistent double-digit
inflation (see the chart below).
The rate was then revised
several times, until January
2014, but stayed largely near
8%.
In all, a deeper understanding

is warranted on interest rates
and debt instruments.
Understanding why interest rates
fluctuate
Preparing for interest rate
changes requires that you first
understand why the Reserve
Thereafter, sharp fall in crude

26
June 2015

oil prices, easing inflation, etc. repo rate by 25 bps each time
p r o v i d e d w i n d o w o f in January, March and June
opportunity to cut interest 2015, in a bid to revive growth.
rates. RBI then reduced the
Trends in Repo Rate
Falling interest rates are a

mixed blessing. As a borrower,
you would love to see lower
interest rates. In addition,
lower interest rates also affect
your savings and investments.
Here's how you can make
some better choices w.r.t. to
your loans and investments in
the current scenario.
rate cut may not impact them.

Let's understand the impact of
a rate cut on home loan with an
example. Suppose you have
taken a home loan of Rs. 40
lakh five years back at an
interest rate of 10.50% p.a. for
a tenure of 20 years. It
translates into an EMI of Rs.
39,935 for the last five years.
Home loan borrowers to benefit
Now, let's take a look at three

different scenarios, where the
interest rate on your home loan
has been reduced by 25 bps,
50 bps and 100 bps. This will
result into lower EMIs, as
follows:
Falling interest rates benefit

borrowers the most, especially
those with floating-rate loans
such as home loans. The other
loans auto, personal, etc. are
generally fixed in nature and a
27
June 2015

Original EMI for first 5 years: `
39,935
25 bps rate
cut
50 bps rate
cut
100 bps rate

cut
Reduced EMI for the next 15 years
` 39,377
` 38,823
` 37,725
Savings per month due to lower EMI
` 558
` 1,113
` 2,210
As you can see in the above

table, with 100 bps rate cut,
you can save ` 2,210 per
month. It would be a good idea
to convert your EMI savings into an
SIP. Say for example, if you
invest ` 2,210 per month in an
equity diversified fund for the
next 15 years, you would be
able to create a corpus of `
10.52 lakh, assuming a return
of 12% p.a. This way, with
lower EMIs, you are able to
generate additional corpus
side by side, which can help
you in meeting your other

financial goals.
There is also another option of
prepaying your home loan.
You can invest your EMI
savings, say into a balanced
mutual fund, generating an
average return of 9% p.a., and
use the accumulation at the
end of every 5 years to make
part prepayment of your home
loan. With this, you can pre
close your home loan faster
than the original tenure.
Original loan tenure: 20 years
25 bps rate cut
50 bps rate cut
Total tenure in which loan can

be closed
19 years and 7
months
19 years and 2
months
18 years and 4
months
Tenure gets reduced by
5 months
10 months
20 months
Elderly need to prepare for higher

income
Senior citizens and retirees are
hit the most when there is a
rate cut. This is because they
are mainly dependent on
interest-bearing instruments
for their needs. With falling
interest rates, elderly need to
be prepared for higher income
100 bps rate cut
by looking at higher-yielding
instruments such as corporate
fixed deposits, bonds, equities,
etc.
Ty p i c a l l y, f i x e d - i n c o m e
instruments provide very low
real returns after accounting
for inflation and taxes. It is
therefore important to include
growth assets such as equity to
28
June 2015

your portfolio even when
nearing retirement or are
already retired.
you do carry an interest rate

risk. Interest rates and bond
prices are inversely related, i.e.
when interest rates fall, bond
prices increase and vice versa.
However, there is a probability
that within a tenure of your
long-term debt funds
investment, interest rates may
rise and bond prices fall. As a
result, if you wish to sell your
funds before maturity, you may
have to sell it at a lower price.
With short-term debt funds,
this risk is not as major since
interest rates are less likely to
significantly change in the
short term.
A retirement portfolio can be

divided into two parts: Income
and Growth. A part of the
portfolio, say for example, 1520% can be allocated to equity
for growth. Equity diversified
funds / large-cap funds are
best options that keep volatility
as low as possible.
Investing into debt instruments
When you invest in a debt
instrument and are ready to
wait till maturity to get back
your principal, there is no
interest rate risk as such. The
risk is really the ability of the
company or bank to pay you
back the amount. This is also
called as the credit risk.
Investing in instruments with
the backing of the government
(Public Provident Fund (PPF),
Govt. Bonds etc.) are risk free.
Investing with large scheduled
banks is also almost risk free.
Investing with companies in
the form of fixed deposits and
bonds can though be a bit risky
and therefore one needs to be
watchful of the ratings.
However, long-term debt funds

have the benefit of providing
capital gain opportunities (in a
falling interest rate scenario),
which is unlikely in short term
funds. Let's understand this
with an example: Assume
there is a bond 'X' issued at a
price of ` 1,000 at an interest
rate of 10%. When interest
rates fall in an economy, new
bonds get issued at lower
interest rates. Say, a new bond
'Y' comes at an interest rate of
8%. With this, the demand for
bond paying higher interest
rate, i.e. bond 'X' paying 10%
will go up and in turn, its price,
When you invest in long term

bonds or debt instruments and
wish to exit before maturity,
29
June 2015

e.g. to ` 1,050 from ` 1,000.
This results in a capital gain of `
50.
The
yield on 10-year
government security (G-sec) benchmark interest rate - has
fallen significantly in the past
one year. The yield was closer
to 9% this time last year, and is
currently trading at around
7.75%-8%. It presents good
time to invest in long-term debt
funds (also known as high
duration funds), such as
income and gilt funds, to grab
capital gain opportunities.
Likewise, if there is an
expectation of lowering of
interest rates in an economy,
these funds present capital
gain opportunities. The current
scenario is quite like that. But
do remember you are taking a
risk here as the capital gain is
dependent on a possibility of
rate cut.
In the past one year, these funds have managed to provide better
returns as compared to other categories, thanks to easing inflation and
a couple of rate cuts (see the chart below).
Category average returns as on June 16, 2015; All returns are annualized; Source: Crisil Fund Analyzer
30
June 2015

If you look at the historic performance as well, these funds have
delivered healthy returns in a falling interest rate scenario:
Source: CRISIL; *1 year FD rate; Note - FD rates at the start of the period; Annualised returns denoted
by average of respective CRISIL Mutual Fund Ranking category as of December 2011
However, don't guide your

investments based only on
historical performance. Your
investments should primarily
depend on your financial goals
and your risk appetite. Returns
from long term (duration)
investments is certainly not
risk-free, as discussed above.
corporate deposits are a better

option.
To put it in a nutshell, there are
basically three strategies of
debt products: Hold-to
maturity (HTM), accrual and
duration. HTM is a passive
strategy, wherein the fund
manager buys and hold highyielding debt securities till
maturity, e.g. fixed maturity
plans (FMPs). This way the
investor is not exposed to any
interest rate volatility if he
holds on to the maturity of the
fund. Bank and corporate fixed
deposits are also part of the
HTM strategy. In accrual
strategy, the focus is on
searching for corporate bonds
with higher yields - e.g. short
term funds.
Whereas in
duration strategy, the focus is
In the current scenario, short

term credit opportunities funds
also look good. These funds
take the advantage of mis
priced credit risk by investing
in the below AAA-rated papers
to earn higher accruals. These
funds provide opportunity to
lock in at higher returns with
low volatility and should be
held for more than three years
to take taxation advantage as
well. For those who have a
lower risk appetite, bank and
31
June 2015

on adjusting the duration of the
portfolio based on interest rate
outlook to maximise returns e.g. income funds, gilt funds
and dynamic bond funds.
interest rates. Moreover,

Automobile sector which is not
as capital intensive is also
impacted as more than half of
the car purchases are made by
taking loans. Overall interest
expense of non-banking and
finance BSE 500 companies
grew 2.5 times from 2010 to
2014 chipping away 25% of
EBITDA (Earnings Before
Interest, Taxes, Depreciation
and Amortization) up from
16.4% in 2010. Increasing
interest outgo reduces
p r o f i t a b i l i t y, w h i c h a l s o
impacts stock prices.
Interest rate movements and

impact on market sectors
High interest rates have an
overall negative impact on
demand, businesses and
growth. High interest rates
make it more expensive for
companies to borrow money
to finance their operations,
employees, purchases and
setting up new machineries.
This in-turn also increases the
cost of final products. High
rates also eventually
discourage consumers from
buying because of the expense
involved, which chokes off
economic activity.
Banking sector benefits from

high interest rates as their Net
Interest Margins (difference
between the interest they earn
on the money they lend and the
interest they pay to the
depositors) increases, aiding
growth in profits and the stock
prices. On the flip side, in a
weakening interest rate
scenario, the profitability of
banks take a hit as re-pricing of
deposit rates is gradual and
happens with a lag. However,
larger rate cuts can help revive
Hence, higher interest rates

have a direct impact on
company's profitability, thus
impacting their stock market
performance. Capital-intensive
old economy sectors like
Construction, Real Estate, Oil &
Gas, Power and Capital goods
are the most impacted by high
32
June 2015

credit growth in the economy
which helps the overall volume
of business. Also, rate cuts
reduces interest burden on
borrowers, thereby reducing
the risk of non-performing
assets (NPAs) for banks. So the
linkage to banking sector is
complex.
making investment decisions.

While many interest rate
sensitive sectors will benefit
with cost of capital coming
down, other concern like slow
execution, delayed demand
pickup and pricing pressures
will continue to hamper
profitability and stock
performances of some
companies.
On the positive side, sectors

like Pharma, IT and FMCG are
less influenced by interest Accordingly, we are positive
rates as they are generally debt o n a u t o , c e m e n t a n d
free. Therefore, in a high capitalgoods (cyclical recovery
i n t e r e s t r a t e s c e n a r i o , in earnings aided by lower
companies with zero or near input costs and declining
zero debts tend to outperform. interest rates will provide
Lower interest rates reduce the strong operating and financial
overall cost of doing business leverage) while we have a
in an economy aiding growth. neutral rating on IT, pharma
It also helps in improving a n d c o n s u m e r s ( r i c h
investor sentiments which is valuations amid moderation in
reflected in improving stock earnings) while being negative
prices. Hence, as the interest on metals, oil & gas and real
rates go down, rate sensitive estate.
sectors will be the ones to To sum up, by understanding
outperform. However, interest how interest rates are linked
rates are just one of the many with your personal finances
factors influencing company and investments, you can put
performance and should not the odds in your favor.
be used as sole criteria for
Please send your feedback to moneymanager@icicisecurities.com
33
June 2015
Tte--tte
Fund managers discuss market, economy & sectors
Ravi Gopalakrishnan
Soumendra Nath Lahiri,
S. Naren
Head Equities,
Canara Robeco Mutual Fund
Head of Equities,
L&T Mutual Fund
Chief Investment Officer (CIO),

ICICI Prudential Mutual Fund
ICICIdirect Money Manager conducts a panel interview with Ravi

Gopalakrishnan of Canara Robeco Mutual Fund, Soumendra Nath Lahiri of
L&T Mutual Fund and S Naren of ICICI Prudential Mutual Fund. Excerpts:
from international markets and
monsoon concerns. With that
being said, India is on a
structural economic upturn
with all the economic,
demographic and political
factors in its favour.
Q: Could you please give us an

overview of current market
scenario?
Ravi Gopalakrishnan: Indian
equity markets have been
buoyant in the last one year
post elections. However, the
last month saw sudden influx
of volatility which led to
intermittent bouts of market
correction. Concerns
regarding MAT (minimum
alternate tax), Greek woes, and
subdued corporate earnings
were key influencers for the
correction. We believe that the
impact of the steps that the
government is taking to revive
the economy will be visible by
the later part of the current
financial year. There may be
some headwinds in near term
Soumendra Nath Lahiri: In the last

12 months, with the change in
central leadership, there were
expectations that the reforms
done by the government will
trickle down fast and growth
will pick up. This in turn will
bring back earnings growth for
corporate India. However, we
have seen that the government
is carrying out reforms with the
intent to improve the situation
over the medium to long term
and not with a short term
focus. After four quarters of
34
June 2015
Tte--tte
earnings not being great, most
of the last quarter particularly,
earnings have been tepid and
lackluster. We are now in a
zone where people are
questioning if markets will
show any growth at all in the
coming year and as such there
is uncertainty about earnings
growth and the economic
growth at large. That is the
main reason, and today India is
clearly the worst performing
emerging markets. Given that
alternate markets are doing
well, one is seeing less money
coming to India and these
lesser flows are impacting
market movement in the near
term.
healthy because it ensures that

investors moderate their return
expectations. Also, investors
who are still underinvested in
equities get an opportunity to
invest in such times. We
recommend investors to invest
in equities with a medium to
long-term investment horizon
in order to create reasonable
wealth.
Q: What is in store for the market in
the medium to long term?
Ravi Gopalakrishnan: Equity
market buoyancy over the last
one year has primarily been
driven by expectation of higher
growth prospects. With India
slowly heading towards a
period of sustainable growth,
the pick-up in corporate
earnings growth is likely to
follow resulting in P/E (Price to
Earnings) expansion. We
believe that equities are likely
to remain the best asset class
from a 3 to 5 years perspective.
S. Naren: In our opinion, no

market goes up in straight line.
This rally has not seen any
correction for a long period of
time. Given the fact that
earnings did not pick up, we
believe that the correction was
logical. Even in the 2002-07
bull market, there were many
corrections throughout the
phase; while, this is just the
first correction of the current
phase.
Soumendra Nath Lahiri: In the

near term, you are seeing
weakness in the markets.
However, the process of
reforms and the structural
changes the government is
pushing through, should
ensure that investment cycle
While we saw a bout of

volatility over the last 2-3
months, these corrections are
35
June 2015
Tte--tte
picks up over medium to long
term and rising urban incomes
will aid urban consumption.
We have seen headwinds for
rural consumption in form of
lower MSPs and not so great
monsoons and this should
improve over time. Overall we
expect earnings growth to
come back into the system in
the second half of the current
fiscal year.
term, we see volatility due to

international news flows and
possibility of weak monsoons
as key risks. We believe that
the success of the bailout talks
between Greece & ECB
(European Central Bank) and
US FED (Federal Reserve)
monetary policy will determine
market direction in the near
term. On domestic front the
progress of monsoon and
further clarity on passage of
Goods & Services Tax (GST)
and Land Acquisition Bill are
likely drivers of market.
S. Naren: Markets are likely to

be volatile till the first interest
rate hike in the US is digested.
We continue to believe that
correction is an opportunity to
invest. This phase does not
affect the long-term
compelling case for Indian
equities with a moderated
return expectation.
Soumendra Nath Lahiri: I believe

one of the key risks at this point
of time is the pace of global
flows and the impact on the
domestic markets. Secondly,
the direction of global interest
rates and yields and their
impact on flows in India need
to be watched. The sharp
correction witnessed in a few
commodities which have
proven to be beneficial - if it
starts reversing could be
another risk.
We believe, 2015 is the year for

investing in equities with a
horizon of three years and
more. From here, the key
drivers for the markets could
be a reasonably good
monsoon, declining crude
prices and deleveraging of
infrastructure sector.
S. Naren: If the US does raise

interest rates this year due to a
strong economy, it could result
in near-term volatility in global
markets. However, in the longterm, a strong US economy is
Q: What are the key risks to

markets one should be watchful
about?
Ravi Gopalakrishnan: In the near
36
June 2015
Tte--tte
favourable for global as well as
domestic markets.
p r o v i d i n g s u p p o r t . Fo r
instance inflation has declined
due to a combination of base
effect and lower food prices.
The fiscal and current account
deficits have been contained to
an extent and the current
account deficit has narrowed
to quite an extent. The notable
fall in commodity prices has
helped us tremendously,
foreign exchange (forex)
reserves are at an all time high
and our currency has been
stable for the longest time
period in the recent past
relative to other emerging
market currencies. Other data
too have shown dramatic
improvement. For instance, tax
collections excise duty,
central tax and service tax seem to be picking up and are
suggestive that growth could
be coming back.
Q: What do the recent macro

economic data suggest about our
economy?
Ravi Gopalakrishnan: The last one
year saw macroeconomic
fundamentals like inflation,
current account deficit (CAD)
etc. slowly stabilizing and
growth picking up. Though
concerns regarding crude oil
price and Rupee depreciation
persist, the driver for India's
growth particularly is its
domestic and vibrant
economy, which in light of the
new Government's focus on
structural reforms, should be
able to weather most of the
negative news. We think that
India is all set for a 'secular
macro economy led recovery'
over the next three-five years
and equity markets are likely to
reflect the buoyancy in the
economy.
S. N a r e n : T h e e c o n o m i c
expansion is slowly taking
root. If one looks at the
economic data, we are in the
early stages of an economic
recovery. The current account
deficit is under control,
wholesale inflation is negative,
and interest rate cut cycle has
only just begun. Towards the
end of the year, more rate cuts
Soumendra Nath Lahiri: In terms

of the macro data, we haven't
seen any major improvement
in the economic growth.
Having said that, growth
seems to have stabilized
around 5.5% in the old data
series. Key parameters are
37
June 2015
Tte--tte
may be needed for economic
expansion. So there is a huge
scope for the long-term
investor as the economy
expands and gross domestic
product (GDP) growth
recovers. A lower oil price and
lower CAD bodes well and
saves considerable amounts
for the government.
have outperformed clearly that

number has come down quite
c o n s i d e r a b l y. A g g r e g a t e
revenue growth has been the
worst in the last 22 quarters.
We are seeing earnings
downgrades happen. We think
earnings will revive but with a
lag and if the pace of reforms
pick up, the slowdown will
abate in the second half of the
fiscal year. We expect earnings
growth in the current fiscal to
be 12-14% and profit growth in
the second half will be much
better than the previous year.
Q: What are your key takeaways

from the fourth quarter earnings?
What is the road ahead for
corporate earnings?
Ravi Gopalakrishnan: The
4QFY15 earning season was
disappointing due to lackluster
earnings and a fairly weak
outlook by many companies.
While we believe that the
slowdown could persist in the
near term there are good
chances that corporate
performance could improve
from the second half of Fy16
on the back of the high
operating and financial
leverage of Indian companies.
S. Naren: We believe that

corporate performance is likely
to pick up only after December
2015 quarter. We believe that a
revival of the capital
expenditure (capex) cycle or
the de-leveraging of
infrastructure and real estate
sectors would support
earnings growth.
There
doesn't seem to be visibility on
these two sectors getting de
leveraged for the next 3-6
months. However, earnings
should not worry a long-term
investor with an investment
mind set of 3-5 years.
Soumendra Nath Lahiri: Fourth

quarter earnings numbers
were a bit of disappointment
and significantly below
expectations. We have had
more negatives than positives.
If one were to look at the
number of companies which
Q: Where do you think interest

rates will be one year from now?
38
June 2015
Tte--tte
Ravi Gopalakrishnan: While there
are upside risks to inflation
from global commodity prices
and expected weak
monsoons, the government's
commitment to keep food
inflation under control and
tight control on expenditure,
may give enough comfort to
the Reserve Bank of India (RBI)
to continue with its
accommodative stance. We
believe that the interest rates
could go down by 50 basis
points (bps) in the next one
year.
revival of economy, we expect

c ons um er s pending will
increase which in turn will give
a boost to Consumer
Discretionary sectors like auto,
auto ancillary etc. Additionally,
implementation of GST is likely
to boost consumption
demand.
With the focus on lowering the
NPLs (non-performing loans)
in the banking system and the
likely revival in the economy
due to lower interest rates we
expect the BFSI (Banking,
financial services and
insurance) sector to offer
attractive investment
opportunities.
S. Naren: With below normal

prediction for monsoon, and
potential rate hike in the US, it
was difficult for the RBI to be
more aggressive. However, we
believe that the economy
needs further rate cuts, which
have to happen after the
monsoons and the US rate hike
decision. Therefore, in the
fourth quarter of this financial
year, there could be need for
much more rate cuts, because
in the current high interest rate
environment, growth may not
pick up.
We are also positive on the

Infrastructure space;
particularly in the areas of
building materials, railways,
water and roads sector as we
believe these are the likely
target areas for the
government in the medium to
long term.
Soumendra Nath Lahiri: The
sectors which we expect to do
well this year are will be the
ones which are the
beneficiaries of the reforms
and initiatives undertaken by
the government. The thrust on
Q: Which sectors are likely to do

well over the next 3-5 years?
Ravi Gopalakrishnan: With the
39
June 2015
Tte--tte
manufacturing particularly
focus on domestic
manufacturing should aid
infrastructure sectors like
defence, railways, roads etc.
The government's focus on
sanitation and affordable
housing should boost related
sectors such as building
products particularly cement
and tiles. The improving farm
yield should ensure that farm
products and agri products will
do well. These are the areas I
expect growth will be better
than aggregate numbers.
"No, I don't want to?

Ravi Gopalakrishnan: Our
investment philosophy is
based on our belief that it's
'Companies and not Stocks'
that create value. Hence, we
follow a bottom-up approach
to investing with a top-down
overlay. We're a highly process
driven investment house.
While selecting individual
securities, we apply the BMV
model whose three corner
stones are: Business,
Management and Valuation.
That is to say, we aim to identify
companies having strong and
sustainable businesses,
headed by good quality
management, and available at
reasonable valuations.
S. Naren: We believe that a

cyclical revival will eventually
happen and therefore,
investors should gradually
invest for the cyclical revival in
the economy. Consequently,
cyclical sectors like financial
and infrastructure are likely to
do well in the long-term. Also,
given the fact that rupee has
appreciated substantially,
technology sector which has
been hurt by this rupee
movement is likely to benefit,
since we believe that rupee is
not likely to continuously
appreciate against Euro.
Soumendra Nath Lahiri: We focus

on 3Ps philosophy, process
and people. Our investment
philosophy revolves around
our belief that we can deliver
outperformance in the long run
using fundamentals driven
investment approach (GEM).
Our bottom-up investment
approach backed by strong in
house research and robust risk
management practices play an
important role. Moreover, like I
said earlier we do not believe in
trying to be in the top quartile
Q: How do you generate investment

ideas? What makes you say, Yes, I
want to invest in this company" or
40
June 2015
Tte--tte
quarter on quarter or year on
year. Instead we focus on
maintaining consistency in
performance. We believe that if
we maintain consistency- i.e.
say be in the top 2 quartiles
consistently across time
periods, that would ultimately
help us deliver top quartile
performance in the long term.
S e c o n d l y, w e h a v e a n
experienced team of research
analysts, traders and portfolio
managers who contribute in a
major way as they bring
different perspectives which
help us debate investment
ideas in a much constructive
and effective way. And last but
not the least; we have strong
investment and risk
management processes in
place which help us maintain
necessary discipline which is
very critical for delivering
superior results.
are overweight, and why

analysts have put 'BUY' for that
particular stock.
In both the scenarios, we try to
make a case to move out of a
set of stocks, which have done
well, to stocks which have
done badly. In the next part, we
try to find out why people are
negative on that stock, meet
the management of the
company and do our own
internal research. But that is
not enough; when we are
using value investing, we
figure out whether that stock
can improve from the current
s i t u a t i o n . We m e e t t h e
companies and sector analysts
among all the brokerages.
After going through all the
annual reports, participating in
conference calls, we look at
where the stock is placed in a
cycle and then decide whether
the stock should be bought or
not.
S. Naren: In the first part, we

look at the stocks which have
performed badly. We also
figure out why institutional
investors are underinvested
and why external analysts
have degraded that particular
stock - this is the starting point
for us. Similarly, we also look at
stocks which have done well
and why institutional investors
So it's a combination of cycles,

sector, industry and company
valuations - all these factors are
considered before including
the stock in the portfolio. A
c o m b i n a t i o n o f
underinvestment and
valuations gives us the best
value investment.
41
June 2015
Tte--tte
Q: What is your advice for investors
at this point in terms of their overall
portfolio and asset allocation?
Often investors make the

mistake of trying to time the
market and as a result end up
entering the markets at higher
levels and sometimes stop
their SIPs or exit when markets
decline.
Ravi Gopalakrishnan: In the

growth phase of an economy,
equities usually deliver faster
earnings growth and therefore
offer attractive investment
opportunities. The current
improving macroeconomic
scenario and declining interest
rate provide twin support to
businesses driving their
growth. We believe, equities
are likely to be the best asset
class from a 3-5 year
investment horizon. Investors
wanting to participate in the
India's growth story may
maintain overweight equities
in their portfolios.
S. Naren: The approach for

existing investors is to follow
the asset allocation principle in
their portfolio depending on
their risk profile. Following this
principle would have indicated
the investor to remain invested
even in 2013 when there was
tremendous pessimism in the
equity market as well as now, in
the current market correction.
This is a good long-term
strategy and helps avoid the
tendency to redeem at market
bottoms and invest at market
tops.
Soumendra Nath Lahiri I believe

that investors should have a
well-constructed and
diversified portfolio with
investments spread across
asset classes. Do not try to
time the market but invest
systematically through
systematic investment plans
(SIPs). Longer term investors
pay an average price for units
over time and this helps beat
volatility. Stay invested in the
markets and do not worry
about short term volatility.
We recommend defensive
equity investing with products
in the balanced advantage and
dynamic asset allocation
category like ICICI Prudential
Balanced Advantage Fund &
ICICI Prudential Dynamic Plan
as suitable ways to ride the
volatility. These funds invest in
equities when markets are
cheap and book profits when
markets are rising, thus limiting
risk and aiming to provide
42
June 2015
Tte--tte
good returns. Investor should
consider investing in such
funds with an aim to benefit out
of volatility.
long term potential of equity

markets could view this
correction as a good entry
point. India is on a structural
economic upturn and long
term investors may adopt a
staggered approach to
investing to even out the
market volatility as well as
participate in the India's growth
story.
Q: Would you like to share anything

else with our readers?
Ravi Gopalakrishnan: Most retail
investors have stayed away
from equities during the past
rally and with the markets at
record highs may find
investing a daunting task.
Investors who have missed the
bus and who are positive of the
The views expressed in the interview

are personal views of the authors and
do not necessarily represent the
views of ICICI Securities.
L&T Disclaimer: This article contains general information about the market
and is being circulated for information purposes only and not for solicitation
of business or trading purposes. L&T Investment Management and the
content providers of this article shall not be liable for any errors in the content
or for any actions taken in reliance thereon. The recipient should note that the
views expressed above are solely the views of the Fund Manager and it
should not be construed as a recommendation to buy or sell any securities.
The recipient of this document should rely on their investigations and take
their own professional advice. This article must not be reproduced or
circulated without prior permission. Recipient of this article/ information
should understand that statements made herein regarding future prospects
may not be realized. He/ She should also understand that any reference to the
securities/ sectors in the document is only for illustration purpose and are
NOT stock recommendations from the author or L&T Investment
Management Limited, the asset management company of L&T Mutual Fund
or any of its associates.
Risk Factors: Mutual funds investments are subject to market risks, read all scheme
related documents carefully.
CLO1861
43
June 2015
ASK OUR PLANNER
Taxation of mutual fund SIPs

Q: In the past two years, I have
bought several mutual fund units
through an SIP. If I sell these, how
can I classify the capital
gains(short term or long term) for
tax purposes?
- Ashish Goyal
treatment will be different. The

period for classifying capital
gains into long-term and short
term will be 3 years here. And,
the taxation rate will be
different. Long-term capital
gains i.e. capital gains on
installments which have
completed 3 years, will be
taxed 20% after indexation.
Short-term capital gains i.e.
capital gains on installments
which have not completed 3
years will be added to your
annual income and taxed at the
applicable rate.
A: For tax purpose, all SIP

investments are treated
individually i.e. each
installment will be considered
as a separate investment to
calculate the duration for
capital gain. Let's take two
examples one each of equity
fund and debt fund to
understand this. First, let's
assume you have invested in
an equity fund through SIP for
12 months. Now at the end of
12 months, if you redeem the
entire investment, then capital
gain arising from the first
installment, which is more than
a year old, is treated as longterm capital gain and will be
exempt from tax. However,
capital gain from SIPs made in
the last 11 months will be
classified as short-term, as
they are less than 1 year and
will be taxed at 15%.
This logic of treating every

installment as a separate
investment will be applicable
even for calculation of 3-year
l o c k- i n p e r i o d f o r S I P
investments into ELSS (Equity
Linked Savings Scheme) i.e.
every installment has to
complete a period of 3 years
before you can withdraw.
Q: I retired last month and want to
give a certain sum from my
retirement benefits as an interestfree loan /gift to my wife, who is a
homemaker without any source of
income. If my wife invests that
money in a bank fixed deposit (FD)
and earns monthly interest from the
Now let's assume you have

invested in a debt fund, the tax
44
June 2015
ASK OUR PLANNER

same, will the interest from FD be
clubbed with my income?
- Arun K
equity mutual funds and

redeemed after a year, then
any long-term capital gain from
the transaction will be exempt
from tax in your hands. Further,
the capital gain can be reinvested to generate income,
which will be added to your
wife's income.
A: If you give the sum as loan,

then the income from FD need
not be clubbed with your
income. However, your wife
has to return the sum at a later
date and if this is given with an
interest, the interest has to be
shown as income from other
sources. According to the
Income Tax Act, if a loan is
extended to one's spouse, and
an asset is acquired by such
means, then the income
derived from such asset does
not qualify for clubbing of
income. A reasonable interest
should be paid back in such a
scenario and such repayment
needs to be shown as interest
from other sources in the
income filing of the husband.
Q: I am planning to quit my job of 4

years and start a business. I will be
withdrawing the entire money from
my Employees' Provident Fund
(EPF) account. Will there be any tax
deduction / will I have to pay any
tax on the amount to be received? If
yes, how much?
- Deepesh Bhatia
A: If you have not completed 5
years of continuous service
(while calculating the period of
continuous service of five
years, the previous
employment, if any, can also
be included, provided the
balance from the previous EPF
account is transferred to the
new EPF account), then the
entire amount withdrawn from
your EPF account will be added
to your income in the financial
year you withdraw the amount.
And, you will have to pay tax
on the total income according
to the prevalent slabs.
However, if you give the sum

as gift, then the income from
FD will be clubbed with your
income. If such income from
FD is re-invested and income is
generated out of that, then
such income from reinvestment will be considered
as your wife's income and
added to her income.
However, if the gift amount is
invested into say, equity or
45
June 2015
ASK OUR PLANNER

Until May 31, 2015, there was
no TDS on EPF withdrawal.
However, from June 1, 2015,
there will be tax deducted at
source (TDS) applicable on any
withdrawal from your EPF
account beyond a sum of
Rs.30,000 before completion
of 5 years of continuous
service. The applicable TDS
rate will be based on whether
you have quoted your PAN or
not at the time of withdrawal. If
you have quoted your PAN,
then TDS will be 10.30% on the
withdrawal amount, else it will
be at the maximum marginal
rate of 30.90%.
withdrawn from PF) falls under

the 20% or 30% slab. On
theother hand, if you have
completed 5 years of
continuous service, there is no
tax applicable on the
withdrawal amount.
Q: My father has invested Rs 3 lakh
in the Post Office Monthly Income
Scheme (POMIS) jointly with me as
the first holder. What will be the tax
implication for me and how can I
show this in my return?
- Sumit Jain
A: Under POMIS, the interest
on the invested amount is
credited to the first unit holder.
So, even though your father
has invested the money, the
interest on Rs. 3 lakh will be
credited to you and will be
taxable in your hands. In the
income-tax return form, you
should include this amount
under the head 'Income from
other sources'.
However, if you have PAN and

your income (including the
amount being withdrawn from
EPF) is less than the taxable
limit, then you can quote your
PAN and submit Form 15G/15H
(Form 15H is for individuals
whose age is 60 years or
above) and TDS will not be
applicable.
If your father's income is less

than the taxable limit, then
ideally the amount should be
invested in the scheme with
him as the first holder, to
reduce the tax outgo.
It is important to note that even

if tax has been deducted at
10.30%, you have to pay the
balance tax, if your income
(including the amount being
Do you also have similar queries to ask our experts? Write to

us at: moneymanager@icicisecuritis.com.
46
June 2015
MUTUAL FUND ANALYSIS
Investing in large-cap equity funds

Fund Manager: Mahesh Patil
Mr. Mahesh Patil is managing
the fund since 2005. Prior to
joining Birla Sun Life Asset
Management Company (AMC)
he has worked with reputed
financial services firms. Mr.
Patil is B.E (Electrical), MMS in
Finance and Chartered
Financial Accountant from
ICFAI Hyderabad.
Birla Sun Life Frontline

Equity Fund
Fund Objective:
An open-end growth scheme
with the objective of long term
growth of capital, through a
portfolio with a target
allocation of 100% equity by
aiming at being as diversified
across various industries and
or sectors as its chosen
benchmark index, BSE 200.
Performance:
The fund has delivered 13.2%
1-year return and 24.8% 3y e a r, s u r p a s s i n g t h e
benchmark index returns. If
compared with the
benchmark, it has just one
annual under performance
(2003) in 7 years. Its
particularly good record at
containing downside in the
falling markets of 2008 and
2011 has ensured a smoother
ride for investors too.
Key Information:
NAV as on June 09, 2015 (`)
156.7
Inception Date
August 30, 2002
Fund Manager
Mahesh Patil
Minimum Investment (`)

Lumpsum
SIP
5000
0
Expense Ratio (%)

Exit Load
Benchmark
2.13
1% on or before 1Y,
Nil on or after 1Y
S&P BSE 200
Last declared Quarterly

AAUM(` cr)
9208
Product Label:
This product is suitable for
investors who are seeking*:
Long term capital growth
Investments in equity and
equity related securities,
diversified across various
industries in line with the
benchmark index, S&P BSE
200
High risk
Calendar Year-wise Performance

2014
2013
2012
2011
NAV as on Dec 31 (`)
157.0
108.5
99.3
73.0
94.7
Return (%)
44.7
9.3
36.1
-22.9
18.7
Benchmark (%)
35.5
4.4
31.0
-27.0
16.2
Net Assets (` Cr)
7886
3756
3020
2806
2720
(Brown)
47
2010
June 2015

Our View:
The portfolio is well diversified
with no single stock
accounting for more than 5%
of the total assets under
management. The fund
manager intends to invest in
the leaders of the sectors. The
fund manager takes active
cash call if he is not convinced
by the fundamentals of the
market. The fund provides a
portfolio, which is diversified
across sectors. A portfolio
diversified across sectors with
investments into frontline
stocks within the sector and
managed by an experienced
fund manager make Birla
S u n l i f e Fr o n t l i n e E q u i t y
fundsuitable for core portfolio
holding.
14.8
9.6
24.8
13.2
6.8
0.2
10
0
-2.2
Return%
20
17.8
Performance vs. Benchmark

30
-10
6 Month
1 Year
Fund
3 Year
5 Year
Benchmark
Portfolio:
The fund has consistently
invested 70-80 per cent of its
portfolio in large-cap stocks
and the rest 20-25 per cent in
midcaps. The fund does not
invest in small caps. It has
usually been overweight in
large-caps compared to its
peers. This fund attempts to
target the same sector weights
in its portfolio, as is found in its
benchmark - BSE 200. The fund
manager may also pick
promising companies that are
not from the index, but are
potential entrants into it.
Top 10 Holdings
Asset Type
HDFC Bank Ltd.
Domestic Equities
6.6
ICICI Bank Ltd.
Domestic Equities
4.3
Axis Bank Ltd.
Domestic Equities
3.8
Reliance Industries Ltd.
Domestic Equities
3.6
Infosys Ltd.
Domestic Equities
3.6
Larsen & Toubro Ltd.
Domestic Equities
3.5
Domestic Mutual Funds Units
2.9
Domestic Equities
2.9
Birla SL FRF-Short Term Plan(G)-Direct Plan

ITC Ltd.
Sun Pharmaceutical Industries Ltd.
Domestic Equities
2.6
Tata Motors Ltd.
Domestic Equities
2.5
48
June 2015

Risk Parameters
Portfolio Attributes
Standard Deviation (%)
14.08
Total Stocks
79.0
Beta
0.96
Top 10 Holdings (%)
36.4
Sharpe ratio
0.04
Fund P/E Ratio
24.7
R Squared
0.96
Benchmark P/E Ratio
Alpha (%)
5.49
Fund P/BV Ratio
5.6
Asset Allocation
Equity
92.8
Debt
0.1
Cash
7.1
Last Three Years Performance

Fund Name
31-Mar-14
31-Mar-15
31-Mar-13
31-Mar-14
40.94
31.93
22.71
17.19
Birla Sun Life Frontline Equity Fund

Benchmark
31-Mar-12
31-Mar-13
13.96
6.03
Performance of all the schemes managed by the fund manager

31-Mar-14 31-Mar-13 31-Mar-12
31-Mar-15 31-Mar-14 31-Mar-13
Fund Name
Birla SL Pure Value Fund(G)
69.93
31.52
S&P BSE 200
31.93
17.19
5.23
6.03
Birla SL Infrastructure Fund(G)
54.64
21.37
-2.62
CNX Nifty Index
26.65
17.98
7.31
Birla SL LT Advantage Fund(G)
48.64
25.51
7.41
S&P BSE 200
31.93
17.19
6.03
Birla SL Top 100 Fund(G)
41.21
25.58
9.94
CNX Nifty Index
26.65
17.98
7.31
Birla SL Frontline Equity Fund(G)
40.94
22.71
13.96
S&P BSE 200
31.93
17.19
6.03
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
(Blue) Investors understand that
their principal will be at low risk
(Yellow) Investors understand that

their principal will be at meduim risk
(Brown) Investors understand

that their principal will be at high
risk
Data as on June 09, 2015; Portfolio details as on May-2015

Source: ACE MF, ICICIdirect Research
49
June 2015

Top 10 Sectors
Asset Type
Bank - Private
Domestic Equities
21.5
IT - Software
Domestic Equities
10.7
Pharmaceuticals & Drugs
Domestic Equities
8.0
Refineries
Domestic Equities
4.2
Engineering - Construction
Domestic Equities
4.1
Finance - Housing
Domestic Equities
3.1
Finance - NBFC
Domestic Equities
3.0
Auto Ancillary
Domestic Equities
3.0
Cigarettes/Tobacco
Domestic Equities
2.9
TV Broadcasting & Software Production
Domestic Equities
2.8
600
408.8
300
227
249
180
59.5
60
500
61.2
1000
471.9
1500
1059.8
1426.4
SIP Performance (Value if invested ` 5000 per month (in'000))
0
1Yr
3Yrs
Total Investment Fund Value
5Yrs
Benchmark Value
10Yrs
Dividend History
Whats In
Cipla Ltd.
0.1
Nov-07-2014
12
Whats Out
Apr-21-2014
12
Shree Cement Ltd.
0.4
Dec-02-2013
10
Tata Steel Ltd.
0.2
Apr-15-2013
10
Cairn India Ltd.
0.2
Nov-12-2012
Date
Apr-27-2015
50
Dividend (%)
17.5
June 2015

Fund Managers: Manish Gunwani
ICICI Prudential Focused Bluechip

Equity Fund
Mr. Manish Gunwani is a Fund

manager at ICICI prudential
AMC. He joined the firm in
2010, prior to which he was
working at Vicisoft
Technologies. Mr. Gunwani
holds PGDM from IIM,
Bangalore and B.Tech from IIT,
Madras.
Fund Objective:
To generate long-term capital
appreciation and income
distribution to unit holders
from a portfolio that is invested
in equity and equity related
securities of about 20
companies belonging to the
large cap domain and the
balance in debt securities and
money market instruments.
Performance:
The fund has delivered 11% 1
year return and 21.7% 3-year
annualized return,
outperforming the benchmark
index. Besides calendar year
performances, even the yearto-date (YTD) and 1- and 2-year
returns are ahead of the
category average.
Key Information:
28.2
Inception Date
May 23, 2008
Fund Manager
Manish Gunwani

Lumpsum
5000
SIP
Expense Ratio (%)
CNX Nifty Index

8642
Product Label:
This product is suitable for investors
seeking*:
2012
2011
20.3
18.4
14.5
17.4
Return (%)
41.1
10.2
26.8
-16.4
27.1
Benchmark (%)
31.4
6.8
27.7
-24.6
18.0
8387
4849
4366
3532
1658
10
0
-10
1 Year
Fund
51
15.1
20
9.9
21.7
30
16.5
6 Month
2010
Net Assets (` Cr)
11
Long term capital growth

Focussed large cap equity
fund that aims for growth by
investing in companies in the
large cap category
High risk
(Brown)
2013
28.6
Return%
2014
NAV as on Dec 31 (`)
4.8

AAUM(` cr)
-1.9
Benchmark
1% on or before 1Y,
NIL after 1Y
-3.8
Exit Load
2.13
3 Year
Benchmark
June 2015
5 Year

Portfolio:
The fund's investment
universe is restricted to only
Top 100 Nifty stocks and within
that, some of the stocks have
been held since inception. The
portfolio doesn't undergo any
radical changes every now and
then. The limited universe and
tight portfolio with low amount
of churning are the marks of
this portfolio. Though when
opportunity presents itself
movements are swift.
Our View:
Focused blue-chip the fund
earlier used to be a
concentrated largecap fund as
its nomenclature signifies. But
with the increase in corpus, the
fund has become a diversified
p o r t f o l i o . H o w e v e r, t h e
performance of the fund has
been consistent despite rise in
corpus. Buy and Hold
approach of the fund manager
with a long term capital
appreciation is the feature of
this fund.
Asset Type
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
8.1
8.1
5.6
4.8
3.4
3.4
3.3
3.3
3.2
3.2
Asset Type
Top 10 Holdings
HDFC Bank Ltd.
ICICI Bank Ltd.
Infosys Ltd.
Axis Bank Ltd.
State Bank Of India
Tech Mahindra Ltd.
HCL Technologies Ltd.
Wipro Ltd.
Bajaj Finserv Ltd.
Top 10 Setors
Bank - Private
IT - Software
Bank - Public
Automobiles - Passenger Cars
Refineries
Finance - Investment
Automobiles-Trucks/Lcv
Power Generation/Distribution
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
22.9
15.4
5.2
4.9
4.6
4.5
3.2
3.1
3.1
2.9
Whats In
Whats Out
Hero MotoCorp Ltd.
0.7
GAIL (India) Ltd.
Lupin Ltd.
0.8
IDFC Ltd.
0.1
Sundaram Finance Ltd.
0.2
52
%
0
June 2015
100
398.8
300
219.8
58.6
60
200
60.3
180
300
239.9
400
451.9
SIP Performance (Value if invested ` 5000 per month (in'000))

500
0
1Yr
3Yrs
Total Investment
5Yrs
Fund Value
Risk Parameters
Beta
Sharpe ratio
R Squared
Alpha (%)
Total Stocks
Top 10 Holdings (%)
Fund P/E Ratio
Benchmark P/E Ratio
Fund P/BV Ratio
14.21
0.91
0.03
0.93
3.46
Dividend History
Date
58.0
46.3
21.9
6.3
Asset Allocation
Dividend (%)
Jan-19-2015
Jan-27-2014
Jan-28-2013
Jan-27-2011
10Yrs
Benchmark Value
22.5
14.5
10
7.5
Equity
Debt
Cash
95.9
0.0
4.1

31-Mar-14
31-Mar-15
Fund Name
ICICI Prudential Focused Bluechip Equity Fund 36.29
Benchmark
26.65
31-Mar-13
31-Mar-14
22.55
17.98
31-Mar-12
31-Mar-13
8.28
7.31

31-Mar-14
31-Mar-15
59.01
Fund Name
ICICI Pru R.I.G.H.T Fund(G)
31-Mar-13
31-Mar-14
32.20
31-Mar-12
31-Mar-13
12.31
CNX Nifty Index
26.65
17.98
ICICI Pru Equity Saving Fund-1-Reg(G)
53.63
--
CNX 100
29.14
--
ICICI Pru Focused BlueChip Eq Fund-Reg(G) 36.29
22.55
8.28
CNX Nifty Index
17.98
7.31
26.65
7.31


risk

53
June 2015

SBI Blue Chip Fund
Fund Objective:
The objective of the scheme
would be to provide investors
with opportunities for long
term growth in capital through
an active management of
investments in a diversified
basket of equitystocks of
companies whose market
capitalization is atleast equal to
or more than the least market
capitalised stock of BSE 100
Index.
Fund Managers: Sohini Andani

Ms Sohini Andani is fund
manager at SBI Mutual Fund
and managing the fund since
2010. She is a B.Com (H) and
C.A. Prior to joining SBI Mutual
Fund she has worked with ING
Investment Management, ASK
Raymond James & Associates,
LKP Shares & Securities,
Advani Share Broker, CRISIL,
and K R Choksey Shares &
Securities.
Key Information:
27.2
Inception Date
January 20, 2006
Fund Manager
Sohini Andani
Performance:
This fund put up a middle of the
road performance in the first
four years of its existence with
returns from 2007 to 2010 just
about keeping pace with the
benchmark and lagging the
category. But with the fund
altering both its investment
strategy and stock selection
process from 2011, the
improvement in performance
has been dramatic. The fund
has convincingly beaten both
benchmark and category in the
last three years. Its 3-year
annualized return stands at
26.4% outperforming the

Lumpsum
5000
SIP
1000
Expense Ratio (%)

Exit Load
Benchmark
2.33
1% on or before 1Y,
Nil after 1Y
S&P BSE 100

AAUM(` cr)
2041
This product is suitable for

investors seeking*:
Long term investment
Investment in equity shares

of companies whose market
capitalization is atleast equal
to or more than the least
market capitalized stock of
BSE 100 index to provide
long term capital growth
opportunities.
High risk
(Brown)
54
June 2015

headline benchmark (16.9%
return) and 1-year annualized
return stands at 22.3% vis-vis benchmark return of 3.8%.
and upto 4 per cent on a stock.

These constraints impose both
sector and stock discipline on
the fund which helps to reduce
risk. In practice, the fund has
maintained about 70 per cent
exposure to large-cap stocks
and rest in mid-caps in the last
one year. The fund has kept
away from small-caps.

2014
2013
2012
2011
NAV as on Dec 31 (`) 26.3
17.8
16.6
12.0
15.8
Return (%)
7.6
38.2
-24.2
11.9
47.9
2010
Benchmark (%)
32.3
5.9
30.0
-25.7
15.7
Net Assets (` Cr)
1371
753
747
693
949
14.9
Our View:
SBI Blue - chip Fund has
become one of the most
consistent performing funds in
the recent years. The fund runs
a fairly diversified portfolio not
limiting to large-cap. It has a
sizeable mid-cap allocation.
The fund has maintained about
70% exposure to large-cap
stocks and rest in mid caps in
the last one year. Flexible
invest option with consistency
in fund's performance makes it
an ideal portfolio fund.
9.4
26.4
3.8
4.4
10
0
-3.4
Return%
20
16.9
23.3

30
-10
6 Month
1 Year
Fund
3 Year
5 Year
Benchmark
Portfolio:
The fund is predominantly a
large - cap fund with the
flexibility to invest upto 20 per
cent of its assets in mid-cap
stocks. The fund also restricts
risk by monitoring tracking
error. The fund can take upto 8
percent additional weight in a
sector against its benchmark
Top 10 Holdings
Asset Type
CBLO
Cash & Cash Equivalents
11.2
HDFC Bank Ltd.
Domestic Equities
6.1
Maruti Suzuki India Ltd.
Domestic Equities
5.3
Sun Pharmaceutical Industries Ltd.
Domestic Equities
5.0
Domestic Equities
3.8
Tata Consultancy Services Ltd.
Domestic Equities
2.9
Motherson Sumi Systems Ltd.
Domestic Equities
2.9
Larsen & Toubro Ltd.
Domestic Equities
2.8
Strides Arcolab Ltd.
Domestic Equities
2.8
Mahindra & Mahindra Financial Services Ltd.
Domestic Equities
2.7
55
June 2015

Top 10 Setors
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Domestic Equities
Total Stocks
Top 10 Holdings (%)
Fund P/E Ratio
Benchmark P/E Ratio
Fund P/BV Ratio
13.17
0.86
0.08
0.90
3.52
Dividend History
Date
12.0
11.1
6.8
5.3
5.0
5.0
3.0
2.9
2.9
2.8
Risk Parameters
Beta
Sharpe ratio
R Squared
Alpha (%)
Asset Type
Bank - Private
IT - Software
Automobiles - Passenger Cars
Refineries
Finance - NBFC
Cement & Construction Materials
Bearings
Auto Ancillary
Asset Allocation
Dividend (%)
Mar-21-2014
Nov-04-2010
Nov-30-2007
Equity
Debt
Cash
18
15
20
Whats Out
Lupin Ltd.
0.3
Tech Mahindra Ltd.
1.3
55.0
45.3
29.2
7.3
82.2
0.0
17.8

Fund Name
31-Mar-14
31-Mar-15
31-Mar-13
31-Mar-14
48.30
28.32
18.49
18.11
SBI Blue Chip Fund

Benchmark
31-Mar-12
31-Mar-13
17.19
6.84

Fund Name
SBI Magnum MidCap Fund-Reg(G)
31-Mar-14
31-Mar-15
64.11
31-Mar-13
31-Mar-14
41.86
31-Mar-12
31-Mar-13
12.97
S&P BSE Mid-Cap
49.55
15.32
-3.22
SBI BlueChip Fund-Reg(G)
48.30
18.49
17.19
S&P BSE 100
28.32
18.11
6.84


risk

56
June 2015
MUTUAL FUND TOP PICKS

Mutual Fund Top Picks
Wth over thousand of mutual fund schemes available in the market,
selecting the right ones may become too complex. To make it easy
for you, we present our research teams top recommendations,
across equity and debt categories
Equity
Category
Top Picks
Largecaps
Axis Equity Fund

Birla Sunlife Frontline equity Fund
ICICI Pru Focussed Bluechip Equity Fund
UTI Opportunities Fund
Midcaps
HDFC Midcap Opportunities Fund

ICICI Prudential Value Discovery Fund
Franklin India Smaller Companies Fund
SBI Magnum Global Fund
Diversified
Franklin India Prima Plus

ICICI Prudential Dynamic Plan
Reliance Equity Opportunities
ELSS
Axis Long Term Equity

ICICI Prudential Tax Plan
Franklin India Tax shield
Sector - Banking
ICICI Prudential Banking

Reliance Banking
UTI Banking
57
June 2015
MUTUAL FUND TOP PICKS

Debt
Category
Top Picks
Liquid Funds
HDFC Cash Mgmnt Saving Plan

ICIC Pru Liquid Plan
Reliance Liquid Treasury Plan
Ultra Short Term
Birla Sunlife Savings Fund

Franklin India Ultra Short Term Bond
Fund
ICICI Pru Flexible Income Plan
Short Term
Birla Sunlife Short Term Fund

HDFC Short Term Opportunities Fund
ICICI Pru Short Term Plan
Credit Opportunities
Fund
Birla Sunlife Medium Term Plan

Franklin India Short term Plan
ICICI Prudential Regular Savings
Income Funds
ICICI Prudential Dynamic Bond Fund

Birla Sun Life Income Plus - Regular Plan
IDFC Dynamic Bond Fund
Gilts Funds
ICICI Pru Gilt Inv. PF Plan

Birla Sunlife Gilt Plus
MIP
(Aggressive)
Birla Sunlife Savings 5

ICICI Prudential MIP 25
DSP Blackrock MIP
58
June 2015
EQUITY MODEL PORTFOLIO

Our indicative large-cap equity model portfolio (Quality-21) has
continued to deliver an impressive return of 78.8% (inclusive of
dividends) till date (as on June 8, 2015) since its inception (June
21, 2011) vis--vis the benchmark index (S&P BSE Sensex) return
of 51.8% during the same period, out-performance of 27%. This
validates our thesis of selecting companies with sound business
fundamentals that forms the core theme of our portfolio. Our
Consistent-15 mid-cap portfolio also continues to outperform,
delivering 110.3% (inclusive of dividends) till date (as on June 8,
2015) vis--vis the benchmark index (CNX Midcap) return of
64.2%, out-performance of 46.1%. Our consistent out
performance demonstrates our superior stock picking ability as
markets in H2FY15 aligned to our view of favourable risk-reward,
good franchisee vs. reward-at-any-risk businesses. Some key
performers of our portfolio are Lupin, Sun Pharmaceuticals, Axis
Bank, TCS and Shree Cement delivering ~160-330% returns
since inception.
We have always suggested the systematic investment plan (SIP)
mode of investment and still find a lot of merit in it as the
preferred mode of deployment given the market conditions and
volatility associated since the inception of the portfolio. It has
outperformed other portfolios, thus, reinforcing our belief in a
plan of investment. However, now we are also advising clients to
look at lump sum investments at any possible dips.
The last few months saw a paradigm shift in the global energy
industry as crude prices declined to a historic five-year low to $58
(down ~40% since June 2014). Intense competition among oil
producing nations for market share (OPEC (Organization of the
Petroleum Exporting Countries) vs. non-OPEC) and ramp-up in
US shale resources led to this slump in global commodity aided
further by languishing global growth prospects. While world
economies adjust to this new normal, India, which fulfils ~80% of
its oil demand through imports, could be a major beneficiary of
this benign oil scenario. Thus, domestic equities attracted strong
foreign institutional investor (FII) flows ($16 billion+ during Cy14,
highest ever) helped by a stable, reformist central government.
Consequently, sectors geared towards a pick-up in domestic
economy like consumer discretionary, banks, auto and cement
outperformed the benchmark index. On the other hand,
59
June 2015

defensives saw profit booking as CNX IT and FMCG indices
underperformed by ~13% each during 2014 on moderating
valuations and changing investor preference.
Thus, we rebalanced our portfolio in December 2014, to capture
the essence of a broader economic revival, growing urbanisation
and benefits of crude declines. Accordingly, thus add stocks like
CARE (economy), Voltas (consumerisation) and Heidelberg
Cement (value buying) while we feel Tata Steel, ONGC are well
placed to be added to large-cap portfolio.
Though we have a tilt towards higher beta that could generate
substantial returns given their respective market dominance, we
have not deviated from our core focus on holding good brands.
We exit DCB (74% returns), JK Cement (71%) to book
profitssince potential upside appears limited, hereafter, and
remove Tata Global Beverages and Oberoi Realty as companyspecific headwinds could likely persist in the medium term.
Our conviction in domestic recovery is visible in terms of relative
weightage of sector vis--vis the index. We remain overweight
on the consumer discretionary (auto, consumer), financials
(private sector banks in particular), and the infra space (cement,
infra and power). This has been primarily triggered by hopes of a
rate cut by the Reserve Bank of India (RBI) on the back of
moderating inflation and possibility of decisive action in the
infrastructure and real economy space by the new government.
We are also overweight on telecom, media owing to reducing
concerns & better earnings growth.
We have turned underweight on oil & gas as we have chosen to
replace Reliance with ONGC, which has better risk-reward
(muted return of investment (RoI) from unrelated investments
could impact the former while the latter has lessening regulatory
challenges). We continue to remain underweight on pure play
defensives (IT, FMCG) as secular earnings coupled with sector
rotation could de-rate valuations and offer limited upside. We
remain equal weight on pharmaceuticals, metals (global generic
opportunity, stock specific play).
On individual names, we are strongly overweight on companies
like L&T and UltraTech in the infrastructure space while we prefer
HDFC & SBI in financials.
60
June 2015

Name of the company
Largecap
(%)
Largecap Stocks
Consumer Discretionary
United Spirits
Tata Motors DVR
Bajaj Auto
Titan
BFSI
HDFC
HDFC Bank
SBI
Axis Bank
Power, Infrastructure & Cement
L&T
UltraTech Cement
FMCG
ITC
Metals & Mining
Tata Steel
Oil and Gas
ONGC
Gail
Pharma
Lupin
Sun Pharma
IT
Infosys
TCS
Wipro
Telecom
Bharti Airtel
Media
Zee Entertainment
Largecap share in diversified
Model Portfolio
Midcap
(%)
Diversified
(%)
12
4
4
2
2
30
8
7
8
7
15
8
7
8
8
4
4
8
6
2
5
2
3
13
5
5
3
3
3
2
2
100
61
8.4
2.8
2.8
1.4
1.4
21
5.6
4.9
5.6
4.9
10.5
5.6
4.9
5.6
5.6
2.8
2.8
5.6
4.2
1.4
3.5
1.4
2.1
9.1
3.5
3.5
2.1
2.1
2.1
1.4
1.4
70
June 2015

Name of the company
Largecap
(%)
Midcap Stocks
Consumer Discretionary
Bosch
Cox & Kings Ltd
Arvind
Voltas
IT
Info Edge
BFSI
CARE
IndusInd Bank
FMCG
Kansai Nerolac
Pharma
Natco Pharma
Media
PVR
Capital Goods
Cummins
Realty/Infrasturcture/Cement
Heidelberg Cement
Container Corporation of India
Shree Cement
Midcap share in diversified
Total of all three portfolios
Model Portfolio
Midcap
(%)
Diversified
(%)
34
6
6
6
8
6
6
14
6
8
8
8
6
6
8
8
6
6
18
6
6
6
100
100
10.2
1.8
1.8
1.8
2.4
1.8
1.8
4.2
1.8
2.4
2.4
2.4
1.8
1.8
2.4
2.4
1.8
1.8
5.4
1.8
1.8
1.8
30
100
Content source: ICICIdirect.com Research

ICICI Securities has received an investment banking mandate from Government of India for
disinvestment in ONGC. This report is prepared based on publicly available information.
ICICI Securities Limited has received a mandate from SBI.
This report is prepared based on publicly available information.
62
June 2015

Performance* so far Since inception
125
110.3
100
89.2
78.8
75
%
64.2
53.7
51.8
50
25
0
Portfolio
Benchmark
*Returns (in %) as on June 8, 2015

Large-cap Portfolio Benchmark: BSE Sensex; Mid-cap Portfolio
Benchmark: CNX Midcap; Diversified Portfolio Benchmark: Combination
of BSE Sensex and CNX Midcap
Value of ` 1,00,000 invested via SIP at the end of every month
8,500,000
6,406,871
7,193,110
4,900,000
7,275,320
4,900,000
6,154,695
4,500,000
6,609,576
5,500,000
4,900,000
6,500,000
8,821,622
7,500,000
3,500,000
Investment
Value of Investment in Portfolio
Value if invested in Benchmark
Start date of SIP: June 30, 2011; *Value as on June 8, 2015
63
June 2015
QUIZ TIME
1. Effective June 1, 2015, there is TDS (tax deducted at source)

applicable if you withdraw a sum beyond Rs.______ from your EPF
(Employees' provident fund) account before completion of 5 years of
continuous service.
2. (In continuation to first question) If you have quoted your PAN, then
TDS will be ______% on the withdrawal amount, else it will be at the
maximum marginal rate of ______%.
3. Under the Joint POMIS (Post Office Monthly Income Scheme),
interest earned on the invested amount is credited to the ______ unit
holder.
4. Each installment of mutual fund SIP (Systematic investment plan) is
treated individually for tax purpose.True / False
5. If you withdraw money from your EPF (Employees' provident fund)
account after 5 years of continuous service, there is no tax
applicable. True / False
Note: All the answers are in the stories that have appeared in this edition
of ICICIdirect Money Manager. You may send in your answers at:
moneymanager@icicisecurities.com
The answers will be published in our next edition. The names of the
earliest all correct entries will be published too. So jog your grey cells
and be quick to send in your entries.
Correct answers for the May 2015 quiz are:
As per the draft guidelines of gold monetisation scheme, minimum gold
deposit is proposed at ______ gms.
A: 30 gms
The new service tax rate of 14% will come into effect from ______.
A: June 1
You can extend your PPF account in a block of 5 years without making
any further contributions. True / False
A: True
In FY14, India imported ~US$ ______ billion worth of crude oil out of
total imports of US$ 450 billion.
A: ~US$ 165 billion
When you extend your PPF account in blocks, you can make
withdrawals from the account only upto ______% of the account
balance that was available at the beginning of the extended period.
A: 60%
64
June 2015
MONTHLY TRENDS
WPI INFLATION (FOOD)
7.0
5.73
6.0
5.0
(%)
4.0
3.80
3.0
2.0
1.0
0.0
Apr-15
May-15
(The figures are in %)
CRUDE OIL
62.0
61.0
$ per barrel
60.0
60.30
59.63
59.0
58.0
57.0
56.0
55.0
30-Apr
4-May
8-May
12-May
16-May
20-May
24-May
28-May
NYMEX crude oil prices ($/barrel)
FII & DII INVESTMENTS

18000
13000
8000
3,157.61
3000
2,460.80
-2000 30-Apr
4-May
8-May
12-May
16-May
20-May
24-May
790.40
170.32
28-May
-7000
FII
DII
(Foreign institutional investors (FIIs) and domestic institutional

investors (DII) net equity investment ( ` in crore)
65
June 2015
MONTHLY TRENDS
VOLATILITY INDEX (VIX)
VIX is a key measure of market expectations of near term volatility.
When the markets are highly volatile, the VIX tends to rise.
25.0
20.0
17.23
16.66
15.0
10.0
30-Apr
4-May
8-May
12-May
16-May
20-May
24-May
28-May
VIX
DOMESTIC INDICES
BSE Sensex
28500
28000
27828.44
27500
27000
27011.31
3.03%
26500
26000
25500
30-Apr
4-May
8-May
12-May
16-May
20-May
24-May
28-May
NSE Nifty
8500
8433.65
8400
8300
8200
8181.50
8100
3.08%
8000
7900
7800
30-Apr
4-May
8-May
12-May
66
16-May
20-May
24-May
28-May
June 2015
MONTHLY TRENDS
GLOBAL INDICES
Dow Jones
18600
18300
18010.68
18000
17840.52
17700
0.95%
17400
30-Apr
4-May
8-May
12-May
16-May
20-May
24-May
28-May
NASDAQ
5200
2.60%
5100
5,070.03
5000
4,941.42
4900
4800
30-Apr
4-May
8-May
12-May
16-May
20-May
24-May
28-May
EXCHANGE RATES
USD-INR
64.2
64.0
USD / INR
63.8
63.6
63.73
63.52
63.4
0.34%
63.2
63.0
62.8
30-Apr
4-May
8-May
12-May
16-May
67
20-May
24-May
28-May
June 2015
MONTHLY TRENDS
POUND-INR
102.0
101.0
100.0
/ INR
99.0
98.0
97.50
97.0
97.44
96.0
0.06%
95.0
94.0
93.0
30-Apr
4-May
8-May
12-May
16-May
20-May
24-May
28-May
EURO-INR
75.0
73.0
71.28
/ INR
71.0
70.02
69.0
1.76%
67.0
65.0
30-Apr
4-May
8-May
12-May
16-May
20-May
24-May
28-May
BULLION
GOLD
$ per Ounce
1250
1,183.85
1,189.75
1175
1100
30-Apr
4-May
8-May
12-May
16-May
20-May
24-May
28-May
(The prices are in $ per ounce).
SILVER
$ per Ounce
19.0
17.0
16.70
16.12
15.0
30-Apr
4-May
8-May
12-May
16-May
20-May
24-May
28-May
(The prices are in $ per ounce).

(Source for all indicators: Bloomberg, Reuters)
68
June 2015
Premium Education Programmes Schedule

ICICIdirect Centre for Financial Learning (ICFL) imparts quality education on
financial markets to beginners and amateurs, student, housewives, working
professionals and self employed. ICFL's broad objective is to make participant
feel confident to start investing in stock market.
Here is the list of our programmes scheduled for the month of June, 2015.
Schedule for Beginners' programme on Futures and Options (F&O) Trading
Sr.
No
City
Pune
For More Information & Registration call:
Dates
20 and 21 June 2015
Kusmakar on 7875442311
Mumbai
13 and 14 June 2015
Vidhu on 9619716146
Bangalore
27 and 28 June 2015
Subrata on 9620001478
Chennai
20 and 21 June 2015
Rajat S on 9742273109
Kolkata
27 and 28 June 2015
Sumit Sarkar on 8017516187
Thane
6 and 7 June 2015
Vidhu on 9619716146
Chandigarh
20 and 21 June 2015
Vishal on 07838290143, Harneet on 09582158693
Nagpur
20 and 21 June 2015
New Delhi
20 and 21 June 2015
Sr.
No
City
Dates
10
Jaipur
21st June 2015
Vishal on 07838290143
11
Surat
7th June 2015
Yogesh Panchal on 7964501147
12
Ahmedabad
21st June 2015
13
Gujarat
14th June 2015
Schedule for Fast-Track Programme on Futures & Options (F&O)
Schedule for Technical Analysis Programme
Sr.
No
City
14
Bangalore
20 and 21 June 2015
Dates
15
Chennai
27 and 28 June 2015
Rajat S on 9742273109
16
Kolkata
6 and 7 June 2015
17
Mumbai
20 and 21 June 2015
Vidhu on 9619716146
18
Mumbai
27 and 28 June 2015
Manish on 8451057943
19
New Delhi
13 and 14 June 2015 Vishal on 07838290143, Harneet on 09582158693

Schedule for Foundation Programme on Stock Investing
Sr.
No
City
20
Chennai
20 and 21 June 2015
Rajat S on 9742273109
21
Kolkata
13 and 14 June 2015
Dates
69
June 2015
22
Mumbai
27 and 28 June 2015
Vidhu on 9619716146
23
Mumbai
13 and 14 June 2015
Manish on 8451057943
24
New Delhi
6 and 7 June 2015
25
New Delhi
26
Pune
13 and 14 June 2015

27
Pune
27 and 28 June 2015
28
Thane
13 and 14 June 2015
Vidhu on 9619716146
Schedule for Advanced Derivatives Trading Strategies Programme
Sr.
No
City
29
New Delhi
Dates

Schedule for Fast-track Programme on Stock Investing
30
Ahmedabad
14th June 2015
31
Ahmedabad
21st June 2015
32
Amritsar
21st June 2015
Vishal on 07838290143
33
Ghazibad
14th June 2015
34
Guwahati
21st June 2015
35
Kochi
13th June 2015
36
Surat
21st June 2015
37
Vadodara
21st June 2015
Schedule for Fast-track Programme on Technical Analysis
Sr.
No
City
Dates
38
Dehradun
14th June 2015
Harneet on 09582158693
Schedule for Techno Derivatives Programme
Sr.
No
City
Dates
39
New Delhi
6th June 2015

Contact us
Email:
Send us an email at learning@icicisecurities.com
Please mention the name, date and venue of the programme you have
attended or wish to attend, for faster resolution of your queries.
SMS:
SMS EDU to 5676766 for more details
70
June 2015
held in January 2015.
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7

Investments into debt

India has seen long periods of high interest rates on deposits.

Abhishake Mathur, CFA

Sameer Chavan, CWM, Pankaj Pandey

Azeem Ahmad, Nithyakumar VP CFPCM, Nitin Kunte, Sachin Jain,

ICICIdirect Money Manager

ICICIdirect Money Manager

NPS becomes more attractive

All I-T refunds to be put directly in bank accounts: CBDT

ICICIdirect Money Manager

EQUITY MARKET ROUND-UP

Poor monsoon prediction, downward revision of

amortization) declined 11.3%

The month continued to be

ICICIdirect Money Manager

EQUITY MARKET ROUND-UP

(US Federal Reserve) minutes

The benchmark 10-year

EQUITY MARKET ROUND-UP

(IMD) has lowered its forecast

Foreign institutional investors

DEBT MARKET ROUND-UP

Time to lock in higher interest rates

ICICIdirect Money Manager

Debt markets witnessed selling

DEBT MARKET ROUND-UP

CPI inflation remains well below RBI projections

Source: Bloomberg, ICICIdirect.com Research

ICICIdirect Money Manager

DEBT MARKET ROUND-UP

WPI remains in negative territory

Source: Bloomberg, ICICIdirect.com Research

banking system rates

Structurally, the current rate

The markets ignored the old

Might of bulls to be tested at upper

The markets would approach

benchmarks would extend the

However, in the event of failure

BSE Sensex Monthly Candlestick Chart

The index respected its earmarked

52 week EMA @ 26848

Source: Bloomberg, ICICIdirect.com Research

After falling for three consecutive months,

May series breaks three months

Nifty did not fall and gradually

The April-May series was

In the May series the sectoral

In the May series, what also

ICICIdirect Money Manager

Largest positive returns (of

lSectoral performance in May : extremely range

Strong performance from other key

As opined in the previous

China has already registered

The profit booking by

Sustainability above 8050/8250

8000/8200 Put strikes. The

Why positional support is placed

Consolidation expected in Nifty

In the June series options

The open interest in the Nifty

On May expiry, we saw smooth