Basket

ReviewAPRIL 2021

Baskets offer a single-click option for investors to start

and grow a professionally curated and diversified

portfolio to create long term wealth. The 21-odd

baskets available on our platform span a broad range of

strategies and themes. Each basket contains multiple

stocks/ETFs, mitigating company-specific risks.

Here’s a quick update on the top three hits and misses

from our baskets. Finally, refer to our ‘Baskets at a

glance’ table in this report to see churn, risk and

performance data for all our 21 baskets at one go.

Happy investing!

Basket Review

DISCOVER BASKET INVESTING

Top 3 Outperforming Packs

L&T Pack

• L&T pack has outperformed all the other packs in past six months. It has risen 58.4% compared to benchmark return of 37.6% in past six months.

• Three technology companies in this pack: L&T Infotech, L&T Technology services and Mindtree have done exceptionally well.

• During the Covid outbreak phase, many corporates were forced to adopt new technologies and digitise their processes. Many used IT solutions to cut costs and improve margins. L&T groups’ IT companies are benefitting from large contract wins in digital and cloud segments.

• L&T Finance holdings - Tight credit conditions accentuated by the challenges in the NBFC sector led to continued underperformance of L&T Finance.

• L&T - the parent company has performed quite well off late on back of swelling order book.

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Top 3 Outperforming Packs

Banking Pack

• This basket has top 5 banks as per market capitalization in equal weightage. It has been a second-best performer amongst baskets offered and has generated return of 53.4% vsbenchmark return of 28.2% for the period under review.

• COVID-led business disruption and the loss of livelihoods had hit credit growth severely. Banking stocks were underperforming on back of fears of rising non-performing assets till the previous review in November.

• Banks have been able to manage quality of book remarkably well. Large banks are poised to show robust growth in operating profit aided by lower cost to income ratio while their net profit is expected surge on back of lower provisioning.

• Investors have been anticipating improvement in earnings and have lapped up banking stocks – making them one of the top performing sectors in the last six months.

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Top 3 Outperforming Packs

Double Earnings Pack

• This pack consist of 10 large, midcap and small-cap companies that can potentially double their earnings in three years (FY19 to FY22).

• Coronavirus pandemic has dented the macroeconomic environment and affected businesses across the board.

• However, these companies have shown remarkable ability to bounce back vigorously from the setback and deliver superior earnings growth.

• Some of the constituents like APL Apollo and IFB industries achieved their potential early and hence we booked profits and replaced them with new contenders like Ratnamani Metals and Hindustan Petro.

• This is the third best performing basket with return of 49% Vs 30% from its benchmark

• These companies are on track to double their earnings over the chosen period on an average and we continue to have faith in them.

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Underperforming Baskets

Pharma Tracker Pack

• This basket has leading 10 pharmaceuticals and life sciences companies.

• After stellar performance of the last year, these stocks have hardly generated any return. This has been the worst performing basket with 5% return Vs 37% return from its benchmark.

• Second wave of Covid 19 cases have highlighted the prospects of these companies and investors are flocking back to this sector.

• These companies are likely to show strong earnings growth and fundamentals are catching up with the stock prices.

Underperforming Baskets

ICICI Pack

• ICICI Pack has all the listed companies of ICICI group in equal weight age

• ICICI bank had a stellar run in the past six months and its outperformance contributed towards returns from this basket.

• Other three constituents namely ICICI securities and two insurance companies ICICI prudential life insurance and ICICI Lombard underperformed the markets. Disruption in business due to Covid 19 pandemic and subsequent loss of lives and livelihood may lead to slower growth and hence investors turned cautious on insurance companies in the past six months.

• Discount brokers are grabbing the incremental market share and putting pressure on margins of full-service brokers like ICICI securities. This has led to a derating of valuations of the ICICI securities till march 2021.

• This has been second worst performer amongst the baskets offered with returns of 7.7% Vs 28.2% from its benchmark.

Underperforming Baskets

All weather Investing pack

• All Weather Investing is a basket of ETFs that offers you exposure to three asset classes -Equity, Gold, & Debt.

• Rally in equity markets after the crash in March 2020– means a diversified basket with an allocation to other defensive asset classes will not be able to match the returns of the pure Equity index.

• It is designed as a stable basket - which will ensure that neither your investment ship will sink, nor the investment flight will soar to scary heights. It outperformed the equity Index massively between January to March 2020 period, was successful in protecting the capital and grow it steadily while equity indices collapsed.

• This basket had 25% allocation to Gold at beginning of this fiscal, which was bumped up to 40% on its June 2020 review. Underperformance from the shiny metal in last year has hurt the performance of this basket. Liquid funds returns have also moderated to 4% during the last six months, where about 23% of funds were allocated.

• This is the third worst performing basket with 8% gain Vs 28.2% from its benchmark for six month period under review.

Market Outlook

There may be too many moving parts across the globe to predict if we’re at the start of a new bull cycle, but Indian companies are at levels never seen before. Net debt-to-equity levels are at lowest levels in modern history. Cash flow from operations as a percentage of profits after taxes at highest levels since 2003 and at double the levels of FY08. Corporate profits as a percentage of GDP are at the lowest level compared to anytime this century. Interest cover and interest as a percentage of sales at best level in this century. Corporate India has used the Covid-19 pandemic to optimise cost structures and strengthen balance sheets.

Rising inflation and interest rate pose a serious risk to equities worldwide. Ample liquidity by central banks is helping market valuations sustain at never before all time high levels. New age companies and start-ups are in demand whereas value stocks are gradually finding favour with investors. While stock specific moves continue, we will remain cautious on interest rates and inflation trends and longevity of covid pandemic.

The second wave of the Covid-19 pandemic has impacted India’s economic recovery. Localised lockdowns, such as the one announced in Maharashtra, may impact growth in the April-June quarter. The situation is concerning because of the high contribution of important states like Maharashtra and Karnataka to India’s GDP. In the services sector, business is already starting to see a slowdown.

We have a positive stance on the Indian capex cycle (public as well as private) which could mean that industrials, infrastructure (roads, railways, cement, metals), Chemicals, Pharmaceuticals & healthcare, Banking & financials, and IT could remain in favour.

Baskets – Ready Reckoner

Basket Name Churn Category Risk - Category Benchmark

6 Month

Basket

Returns

6 Month

Benchmark

Returns

1 Year

Basket

Returns

1 Year

Benchmark

Returns

3 Year

Basket

Returns

3 Year

Benchmark

Returns

L&T Pack Very Low Aggressive NIMI150 58.43 37.65 133.74 100.05 85.29 49.84

Banking Pack Very Low Aggressive NIFTY100 53.45 28.25 69.87 69.59 17.33 25.89

Double Earning Pack Medium Aggressive NIFTY500 49.21 30.14 123.47 75.99 57.26 23.38

Fallen Angels Medium Aggressive NIMI150 45.89 32.99 107.67 89.68 107.67 89.68

Bajaj Pack Very Low Aggressive NIFTY100 36.58 28.25 97.03 69.59 6.73 26.02

Platinum ETF Very Low Moderate NIFTY100 32.14 28.25 68.77 69.59 24.20 25.63

HDFC Pack Very Low Moderate NIFTY100 31.14 28.25 55.04 69.59 17.89 28.26

Wonder Women Medium Moderate NIFTY500 28.54 30.14 69.81 75.99 27.81 34.15

Smart Beta Low Moderate NIFTY100 27.10 28.25 45.00 46.87 45.00 46.87

Dividend Aristocrats Very Low Moderate NIFTY100 25.98 28.25 72.85 69.59 74.37 38.94

Hrithik Pack Very Low Aggressive NIFTY100 23.07 28.25 63.36 69.59 26.61 22.94

Insurance & AMC Pack Very Low Moderate NIFTY100 20.25 28.25 42.10 69.59 -2.99 25.89

Defensive Stocks Medium Moderate NIFTY100 17.53 28.25 62.21 76.19 62.21 76.19

Shubh Aarambh Medium Moderate NIFTY100 16.82 28.25 50.39 69.59 46.91 37.07

Quality Smart Beta Very Low Moderate NIFTY100 16.22 28.25 45.79 69.59 45.54 38.94

SuperPack 2021 Very Low Moderate NIFTY100 15.80 10.25 15.80 10.25 15.80 10.25

Rising Rural Demand Medium Aggressive NIFTY500 15.63 30.14 52.31 75.99 29.11 40.75

Low Risk Smart Beta Medium Moderate NIFTY100 15.09 28.25 41.46 69.59 40.96 38.94

All Weather Investing Medium Moderate NIFTY100 8.00 28.25 25.13 69.59 30.82 24.63

ICICI Pack Very Low Moderate NIFTY100 7.77 28.25 43.06 69.59 21.32 28.26

Pharma Tracker Medium Aggressive NIMI150 5.66 37.65 77.00 100.05 73.89 52.60

*Value as on 31st March 2021 Explanation of Churn categories:VERY LOW churn - Basket constituents are changed once a year.LOW churn - Basket constituents are changed once in 6 months.MEDIUM churn - Basket constituents are changed once a quarter.

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D i sc l a imer

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