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A SPECIAL PRESENTATION FOR ICAI – “BARODA BR.” Emerging Trends in INDIAN CAPITAL MARKET C. A. JAGDISH THAKKAR Past-President Vadodara Stock Exchange.

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Presentation on theme: "A SPECIAL PRESENTATION FOR ICAI – “BARODA BR.” Emerging Trends in INDIAN CAPITAL MARKET C. A. JAGDISH THAKKAR Past-President Vadodara Stock Exchange."— Presentation transcript:

1

2 A SPECIAL PRESENTATION FOR ICAI – “BARODA BR.”

3 Emerging Trends in INDIAN CAPITAL MARKET C. A. JAGDISH THAKKAR Past-President Vadodara Stock Exchange Ltd.

4 Name the most televised structure in INDIA ? Is it the RASHTRAPATI BHAWAN?

5 Or.. is it the INDIAN PARLIAMENT HOUSE?

6 Or….. is it the TAJMAHAL?

7 Or…is it the abode of LORD TIRUPATHI? NOW! you may be surprised to see the next slide…

8 It is none of these but…. The PHEROZE JEEJEEBHOY TOWERS… known as

9 MYSTERY OF “8” YEARS CYCLE 1984 – ASSASINATION OF SMT. INDIRA GANDHI 1992 – HARSHAD MEHTA’S SCAM 2000 – KETAN PAREKH’S SCAM 2008 – US SUB PRIME CRISIS AND GLOBAL MELTDOWN

10 STRANGE BUT TRUE !!! THE MYSTERY OF “26” 26 TH DECEMBER 2004……. TSUNAMI 26 TH JANUARY 2001……… EARTHQUAKE AT BHUJ 26 TH FEBRUARY 2002……. GODHRA KAND 26 TH JUNE 2007………….. GUJARAT FLOODS 26 TH JULY 2006………….. MUMBAI TRAIN BLAST 26 TH SEPTEMBER 2008…….. BLAST AT AHMEDABAD 26 TH NOVEMBER 2008………MASSACRE AT MUMBAI 26 TH MAY 2014……MR. NARENDRA MODI BECAME PM

11 WORST BEAR PHASES PERIOD PERIOD MONTHS MONTHS SENSEX FALL SENSEX FALL SEP 94 TO OCT (-41%) AUG 97 TO OCT (-40%) FEB 2000 TO SEP (-56%) JAN 08 TO MAR (-62%) DEC 010 TO DEC (-24%)

12 ITEM% RETURN SENSEX/NIFTY 27% SILVER -15% GOLD -14% GROUNDNUT OIL -16% WHO REWARDED HIGHEST IN 2014 ?

13 CURRENCY % REDUCTION USD % EURO % POUND % J.YEN % CURRENCY FLUCTUATION IN All throughout Rupee has disappointed every sector and contributed to inflation.

14 INDEX INCREASE % INCREASE SENSEX 18,83622,386+3, % NIFTY 5,6836,704+1, % CAP. GOODS 9,01812,011+2, % AUTO MOBILE 9,99413,280+3, % INF. TECH. 6,8858,789+1, % HEALTH CARE 8,00810,084+2, % TEXTILE 3,9014,905+1, % STOCK MARKET INDICES However PSU Index was down 1.9%; Consumer Durables -8% & Reality was down 17.50%.

15 COMMODITY INCREASE % INCREASE GOLD Rs. 29,950Rs. 29,200Rs % SILVER Rs.53,100Rs. 43,200Rs.-9, % GRNDNUT OIL Rs.2,090Rs.1,340Rs % CTNSEED OIL Rs.1,130Rs. 1,160Rs % SUGAR Rs. 3,400Rs.3,200Rs % WHEAT Rs. 330Rs. 350Rs % BRENT CRUDE $109$101$ % COMMODITY MARKET INDICES

16 COMPANY % INCREASE PARAG SHILP Rs Rs % DHANLILA INV Rs. 6.85Rs % PEARL AGRO Rs.12.75Rs % KELVIN FIN Rs Rs % SURBHI CHEM Rs. 5.19Rs % ECO FRN FOOD Rs Rs % KAPPAK PHARMA Rs Rs % MOST REWARDING SHARES OF

17 COMPANY % INCREASE GITANJALI GEMS Rs Rs % ITDC Rs Rs % NCL RESRCH Rs.1,498.00Rs % WOLKHART Rs. 2,006.00Rs % HANUG TOYS Rs Rs % PLETHICO PHARMA Rs Rs % MMTC Rs Rs % WORST PERFORMING SHARES OF FROM HERO TO ZERO

18 COMPANY INCREASE ALEMBIC PHARMA Rs Rs Rs ASTRAL POLY Rs Rs Rs ATUL AUTO Rs Rs Rs ARVIND MILLS Rs Rs Rs CADILA HEALTH Rs. 738Rs Rs SYMPHONY Rs Rs Rs AIA ENGG. Rs Rs Rs BEST PERFORMING GUJARAT COMPANIES OF (TILL 3/12/14

19 PM Modi's 5 significant announcements on 15 th -Aug-14 1)Replacing Plan Panel- The Planning Commission will be replaced by a new think-tank. 2)‘Make in India’- Focus on manufacturing to minimize imports while turning India into an exporting powerhouse. 3)Jan Dhan Scheme- Banking accounts for everyone (with Rs 1-lakh insurance). 4)Model Village Scheme- Members of both Rajya- Sabha and Lok-Sabha asked to adopt a village a year. 5)Swachh Bharat plan- Clean India program rollout in October; Corporate Companies & MPs urged to help build separate toilets for girls in schools across the country.

20 ARE WE REALLY CHEAP? SECTORS TO WATCH One year Forward P/E of Sensex is just about 15% which was 24% in China, Brazil and Mexico are still cheaper than India making India little less attractive. However Earning Valuations of Indian Market is better than other Emerging Markets after NDA took over. From 1 st Jan 2014 India has rewarded 27% while Indonesia has rewarded 18% in USD terms. Sectors to Watch: Technology; Pharmaceuticals; Banking: Infrastructure as RBI kept all rates unchanged.

21 GLOBAL FACTORS THAT WOULD AFFECT STOCK MARKET  Ukraine crisis may worsen further causing geopolitical imbalance.  Weak Chinese P M I data month after month shall suppress metal prices world over.  Intellectual Property Right dispute with USA may aggravate.  Recent decision of Fed. to reduce QE 3 to 15bn. Per month may impact Equity Market.  Allocation to Indian Market by F I I is just 0.5 to 0.8 % against 1.2% in 2007

22 Three Ratios That Tell Your Bank Is Safe

23 Capital Adequacy Ratio Private sector banks*CAR (In per cent) ICICI Bank19.08 HDFC Bank15.94 Axis Bank16.97 Public sector banks*CAR (In per cent) State Bank of India (SBI) Bank of India10.76 Punjab National Bank12.28 Foreign banks*CAR (In per cent) Citibank15.11 Standard Chartered16.05 HSBC17.10

24 Non-performing Assets (NPA) Ratio Private sector banksNet NPA (In per cent) ICICI Bank0.97 HDFC Bank0.27 Axis Bank0.44 Public sector banksNet NPA (In per cent) State Bank of India (SBI) 2.57 Bank of India2.00 Punjab National Bank2.85 Foreign banksNet NPA (In per cent) Citibank1.23 Standard Chartered0.45 HSBC0.33

25 Statutory Liquidity Ratio - 1% to 22% now

26 Change in Indices (comparison of pre-budget, post-budget & latest price as on 11 th July 2014) Index Name % Change Closed at (18 Mar- 11 JUL) CNX NIFTY NSE–SMALL CAP BSE – SENSEX BSE – BSE – BSE – BSE – MIDCAP Source: Ace Equity (Accord Fintech)

27 ZERO DEBT CO. PAYING MORE THAN 150% DIV. FOR LAST 2 YRS. Compan NameYear EndDividend %Dividend %1 CRISIL Ltd OMDC Merck Ltd Glaxosmithkline Powerica Ltd Alfa Laval (India) Ltd Solvay Pharma India Ltd CMC Ltd Aeonian Investments Esab India Ltd Sonata Software Ltd IPICL GMM Pfaudler Ltd Company NameYr EndDiv. %Yr EndDiv. % Colgate-Palmolive I Ltd Hindustan Unilever Ltd Infosys Ltd Akzo Nobel India Ltd VST Industries Ltd Bajaj Corp. Ltd Cummins India Ltd Blue Dart Express Ltd GlaxoSmithKline consumer Ltd eClerx Services Ltd Source: ACE Equity (Accord Fintech)

28 Cos. Where Profit & Div. Is Increasing By 15% For Last 5 Yrs.( ‘A’ Group) Company Name EICHER MOTORS LTD. HDFC BANK LTD. ICICI BANK LTD. POWER GRID CORP. OF INDIA LTD. YES BANK LTD. Source: ACE Equity (Accord Fintech)

29 Turnaround stock (q-o-q profit from Loss) Company NameCMPQTR EndPAT Rs. CrQTR End1 LOSS Rs. Cr Century Textiles & Industries Ltd Financial Technologies (India) Ltd Jaiprakash Power Ventures Ltd Monsanto India Ltd NHPC Ltd Peria Karamalai Tea & Produce Company Ltd Piramal Enterprises Ltd Sesa Sterlite Ltd Tata Motors Ltd The Great Eastern Shipping Company Ltd United Breweries (Holdings) Ltd Source: ACE Equity (Accord Fintech)

30 Promoters’ Holding >50% & FIIs Holding is increasing continuously for last 2 Years Company Name Promoter's Holding (%) FII’s Holding (%) FII’s Holding (%) Jagran Prakashan Ltd Aurobindo Pharma Ltd KSK Energy Ventures Ltd Cholamandalam Investment & Finance Company Ltd TVS Motor Company Ltd Nesco Ltd Ajanta Pharma Ltd Tata Sponge Iron Ltd Shilpa Medicare Ltd Ramco Systems Ltd Source: ACE Equity (Accord Fintech Pvt Ltd)

31 Source: ACE Equity (Accord Fintech Pvt. Ltd.) FIIs Holding > Promoters’ Holding (From ‘A’ Group) Company Name Promoters' Holding (%) FII's Holding (%) FII less Promoters Holdings Apollo Hospitals Enterprise Ltd Axis Bank Ltd Dr. Reddys Laboratories Ltd HDFC Bank Ltd Housing Development & Infrastructure Ltd IndusInd Bank Ltd Infosys Ltd Jain Irrigation Systems Ltd Mahindra & Mahindra Ltd Shriram Transport Finance Company Ltd Strides Arcolab Ltd Tech Mahindra Ltd UPL Ltd Yes Bank Ltd Zee Entertainment Enterprises Ltd

32 Source: ACE Equity (Accord Fintech Pvt. Ltd.) FIIs Holding Increasing from last 4 Qtrs Company Name FII's Holding (%) at FII's Holding (%) at Change of Holding Persistent Systems Ltd Ceat Ltd Page Industries Ltd PTC India Ltd Power Grid Corporation Of India Ltd PVR Ltd Hexa Tradex Ltd UPL Ltd Aurobindo Pharma Ltd Housing Development & Infrastructure Ltd SKS Microfinance Ltd Natco Pharma Ltd Arvind Ltd Finolex Cables Ltd Gillette India Ltd

33 Defense Stocks (Cos. Making Profit & Paying Div. for last 10 Yrs. & Avg. EPS for last 3 yrs. > 33 & P/E 25 cr.) Source: ACE Equity (Accord Fintech) Company Name The Jammu & Kashmir Bank Ltd. Oil India Ltd. Clariant Chemicals (India) Ltd. Bharat Electronics Ltd. Axis Bank Ltd. Bajaj Finance Ltd. State Bank Of Bikaner and Jaipur Karur Vysya Bank Ltd. Canara Bank Bharat Petroleum Corporation Ltd. JSW Steel Ltd.

34 Source: ACE Equity (Accord Fintech ) * Selling by no. of shares MFs Buying in July 2014* Company NameJuly-14Jun-14 Change Ashok Leyland Ltd IDFC Ltd Axis Bank Ltd Bharti Airtel Ltd The Indian Hotels Company Ltd Texmaco Rail & Engineering Ltd Dish TV India Ltd SJVN Ltd KSK Energy Ventures Ltd Jagran Prakashan Ltd Steel Authority Of India Ltd Power Grid Corporation Of India Ltd DCB Bank Ltd

35 Source: ACE Equity (Accord Fintech ) * Selling by no. of shares MFs Selling in July 2014* Company NameJuly-14Jun-14 Change Allahabad Bank GVK Power & Infrastructure Ltd Union Bank Of India Idea Cellular Ltd Jaiprakash Associates Ltd Ballarpur Industries Ltd Power Grid Corporation Of India Ltd TV18 Broadcast Ltd Rural Electrification Corporation Ltd IDFC Ltd s Exide Industries Ltd The Federal Bank Ltd Texmaco Rail & Engineering Ltd

36 Portfolio: Rakesh Jhunjhunwala Company Name Holding (%) Harmony Capital Services Ltd Geometric Ltd Viceroy Hotels Ltd Aptech Ltd Rallis India Ltd NCC Ltd.9.65 JVL Agro Industries Ltd.9.57 Geojit BNP Paribas Financial Services Ltd Bilcare Ltd.7.37

37 Portfolio: Rakesh Jhunjhunwala Company Name Holding (%) Titan Company Ltd.6.81 VIP Industries Ltd.6.70 Kesoram Industries Ltd.6.38 Ion Exchange (India) Ltd.6.02 Autoline Industries Ltd.5.93 CRISIL Ltd.5.64 Escorts Ltd.5.47

38 Top 10 Picks by

39 Source: ACE Equity (Accord Fintech) FII Month Net Purchase/Sales Equity (Rs. Crores) Total (+) Crs. DII Month Net Purchase/Sales Equity (Rs. Crores) Total(-)42049 Crs. FII S V S DII A CTIVITY (DEC-2013 TO NOV-2014)

40 COUNTRY PRICE (IN RS./LTR) VENEZUELA1.74 SAUDI ARABIA6.96 LIBYA7.83 BAHARAIN11.31 KUWAIT12.18 INDIA67.00 BELGIUM SWEDEN DENMARK ITALY NORWAY143.00

41 Inflation – How it affects us YearFamily Size Expense in Rs/Month , , , ,000 A 0 is added to our monthly expenses after each 20 Yrs.

42 YearINR/USDYearINR/USD Falling Rupee Mystery! Around 1750's when the British came to India the exchange rate was around 1 Rupee = 2.8 pounds. By the time they left India in 1947, it was 1 pound = 5 rupees. The biggest change in the rupee-dollar equation happened between 28 th June & 4 th July 1991 when the rupee depreciated by 24%, when Dr. Manmohan Singh was the finance minister.

43 Step 1: Identify your financial goals Step 2: Identify your risk profile Step 3: Identify asset allocation Step 4: Invest regularly 'How Buffet Does It?' Buffet says: If you are NOT holding stock for at least 10 years don’t waste more than 10 minutes to consider it!! However he still gave 4 steps for Indians!!

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45 10 Financial Resolutions ‘You Must’ Make This Year 1. I will prepare a budget for the year I will rebalance my portfolio & book profit 3. I will resist the temptation to make quick profits 4. I will invest in equities systematically 5. I will repay high cost loans 6. I will review my insurance 7. I will not wait till the last moment to file I T Retn. 8. I will prepare my retirement plan 9. I will read the fine print before I sign on any docs. 10. I will follow ALL the above 9 resolutions

46 Nine GOLDEN RULES Of Investment 1. Look out for the companies that have made buyback from the open market 2. Promoters acquiring stake through creeping acquisition route 3. Cheap is not always cheap- Don't be misled by EPS / PE Ratio 4. Dividends' don't lie 5. Prefer Companies having top-line growth over bottom-line 6. Higher tax outgo is a good sign 7. Look for domestic driven companies whose product cannot be easily imported 8. Prefer companies with low debts and strong cash flows 9. Look away for a while and recharge yourself

47 BUY OR SELL? FOLLOW THE PATH OF LEGENDS 1.BENJAMIN GRAHAM : Even the intelligent investors is likely to need considerable will power from following the mad crowd 2.WARREN BUFFET : Focus on fundamentally strong and undervalue companies trading below its Intrinsic value. 3.PETER LYNCH : Invest in what you know….if you stay Half Alert you can pick the performers right from your office or home 4. JOHN TEMPLETON : The maximum pessimism the best time to buy and time maximum optimism is the best time to sell. 5. JOHN BOGLE : If you have trouble imagining a 20% loss in the Stock Market, you should not be in stocks. 6. THOMAS ROWE : Investing in growth stocks with quality management and generating superior earnings compared with inflation.

48 Saving Schemes Post Office Recurring Deposit Tenure5 Years Interest Rate8.00% p.a. (comp. qtrly) Min. AmountRs. 10 Max. AmountNo limit Tax Benefit on InvestmentNo benefit Tax on InterestFully Taxable Available atPost Office

49 Public Provident Fund Tenure15 Years Interest Rate8.00% p.a.(comp.yearly) Min. AmountRs. 500 Max. AmountRs. 1,50,000 p.a. Tax Benefit on InvestmentAvailable u/s 80C Tax on InterestTax Free Available atPost Office & Banks Saving Schemes

50 Kisan Vikas Patra (KVP) Reintro… Tenure8 Year- 7 months Interest Rate8% p.a. (Compounded) Min. AmountRs. 1,000 Max. AmountRs. No Limit Tax Benefit on InvestmentNo benefit (gets double) Tax on InterestFully Taxable Available atPost Office & Banks Saving Schemes

51 Bank’s Fixed Deposits Tenure3 to 5 Years Interest Rate8.5% to 9.50% (comp. qtrly) Min. AmountRs. 1,000 Max. AmountNo Limit Tax Benefit on InvestmentNo Tax on InterestFully Taxable Available atBanks Saving Schemes

52 Bank’s Liquid Fixed Deposits Tenure15 Days to 30 days Interest Rate 2.75% to 3.00 % Min. AmountRs Max. AmountNo Limit Tax Benefit on InvestmentNo Benefit Tax on InterestFully Taxable Available atBanks Saving Schemes

53 National Savings Certificate Tenure6 Years Interest Rate8% (comp. half-yrly) Min. AmountRs. 1,000 Max. AmountNo Limit Tax Benefit on InvestmentBenefit up to Rs.1.50 L(80- C) Tax on InterestFully Taxable Available atSpecified Banks Saving Schemes

54 Post Office Monthly Income Scheme Tenure 6 Years Interest Rate 8% p.a.(paid monthly) Min. Amount Rs Max. Amount Rs. 3.0 Lakh (single a/c) Rs. 6.0 Lakh (Joint A/c) Tax Benefit on Investment No Benefit Tax on Interest Fully Taxable Available at Post Office Saving Schemes

55 Post Office Time Deposits Tenure1, 2, 3, & 5 Years Interest Rate 6.25% to 8.00 %(comp. qtrly) Min. AmountRs. 200 Max. AmountNo Limit Tax Benefit on InvestmentNo Benefit Tax on InterestFully Taxable Available atPost Office Saving Schemes

56 WILL CURRENT SCENARIO SHALL ALLOW TO RELAX LIKE THIS? OR ?

57 HEART BEATS LOST? OR ?

58 SHALL KEEP YOU TENSED ? OR ?

59 MAY CHEER THE CAPITAL MARKET ? THE ANSWER IS IN TIME CAPSULE- NO ONE KNOWS!!!

60 “ACCHE DIN AANE WALE HAIN!!!” BUT ALL SAID AND DONE

61 Conclusion In short the investors have to adhere to the teaching of Shrimad-Bhagvad Geeta, which says: o SATYAM(Truth), which is the ethical component of investment; Choose right stock-right time. o SHIVAM(Welfare), which should be the economic objective of investment; Invest to Gain long term. o SUNDARAM(Beauty), which should be aesthetical outlook for investment. Follow the “Honest Stock”.

62 !!!BEST OF LUCK!!! !!!BEST OF LUCK!!! TO ALL STUDY CIRCLE MEMBERS…

63 PowerPoint by: C.A. JAGDISH THAKKAR


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