equity piks

8/8/2019 Equity Piks

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November 16, 2010Visit us at www.sharekhan.com

The Indian markets romance with foreign institutional

investors (FIIs) continues. Last month the FIIs bought

Indian equities worth a whopping $6.4 billion, the highest

in any month since they were allowed to invest in the Indian

stock market. On the back of the record foreign fund inflow

the market recaptured the 20k peak last month after nearly

two and a half years. Now with the US Federal Reserve

(Fed) announcing a second round of quantitative easing

(QE2) to spur growth in the worlds largest economy, themarket has more reason to rejoice.

After the recent stimulus package of 5 trillion (yen) in Japan,

the Fed in the USA has provided another shot in the arm

for liquidity globally. In its recent meeting, the Fed

announced a package of $600 billion to buy government

securities over the next eight months. This is good news

for the emerging markets as excess liquidity and low

interest rates mean higher flows into the emerging markets

that are perceived to carry high risk.

With its strong growth revival and relatively better growthoutlook India would attract a fair share of the foreign inflows

looking for higher returns in the emerging markets. Though

the market has run up substantially and is close to its

previous peak, our research team suggests that the

valuations are quite comfortable unlike in 2007.

But mind you, in the long run this scenario of a liquidity

surge is also fraught with risks. The large capital flows

could have several implications for our economy not all of

which would be positive. The ability of the Reserve Bank of

India and the policy makers to enable the economy to absorb

the strong inflows would be important to avoid asset

bubbles. Moreover, there is always a risk of a speculative

run-up in commodities due to the huge liquidity globally.

India is quite vulnerable on that front due to its dependence

on imports especially for its energy requirements.

Sharekhans top equity fund picks

Sharekhan Ltd

Lodha iThink Techno Campus, 10th Floor, Beta Building, Off. JVLR, Opp. Kanjurmarg Station, Kanjurmarg (East),

Mumbai 400 042, Maharashtra.

We have identified the best equity-oriented schemes

available in the market today based on the following 5

parameters: the past performance as indicated by the one,

two and three year returns, the Sharpe ratio and Information

ratio.

Sharpe indicates risk-adjusted returns, giving the returns

earned in excess of the risk-free rate for each unit of the

risk taken. The Sharpe ratio is also indicative of theconsistency of the returns as it takes into account the

volatility in the returns as measured by the standard

deviation.

Information Ratio is one of the most important tools in

active fund management. It is the ratio of active return

(the return over the index return) to active risk annualized.

A higher Information Ratio indicates better fund manger.

We have selected the schemes upon ranking on each of the

above 5 parameters and then calculated the maximum

value of each of the 5 parameters. Thereafter, we havecalculated the percentage underperformance or over

performance of each scheme (relative performance) in each

of the 5 parameters vis a vis maximum value among them.

For our final selection of schemes, we have generated a

total score for each scheme giving 60% weightage each to

the relative performance as indicated by the one, two and

three year returns, 20% weightage to the relative

performance as indicated by the Sharpe ratio and the

remaining 20% to the relative performance as indicated by

the Information ratio of the scheme.

All the returns stated below, for less than one year are

absolute and for more than one year the returns are

compunded annualised.

All the returns stated on next page, for less than one

year are absolute and for more than one year, the

returns are annualised.
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Mutual Funds Mutual Gains

2Sharekhan November 16, 2010

Conservative/ Large-cap funds

Scheme Name NAV Returns as on Oct 31, 10 (%)

3 Months 1 Year 2 Years

Birla Sun Life Frontline 93.88 10.84 30.61 51.84Equity Fund - Plan A

Franklin India Bluechip 222.74 10.52 32.92 49.15

Principal Large Cap 30.77 11.89 32.85 59.28

DSP BlackRock Top 100 Eq 104.94 11.54 26.31 43.86

Tata Pure Equity 107.29 9.44 32.20 50.17

Indices

BSE Sensex 20032.34 12.11 26.10 43.20

Aggressive Funds

Mid-cap Category



IDFC Premier Equity 35.32 10.64 52.58 67.70Fund - Plan A

HDFC Mid-Cap Oppo 16.72 13.37 53.41 63.03

Sundaram Select Midcap 169.99 15.24 44.79 66.76

Birla Sun Life Mid Cap-Plan A 123.81 11.09 34.35 65.60

UTI Mid Cap Fund 34.99 8.60 43.54 60.31

Indices

BSE MID CAP 8302.56 12.08 38.17 61.29

Multi-cap Category



Reliance RSF - Equity 34.18 12.73 39.29 58.75

HDFC Equity Fund 300.72 14.41 44.01 65.33

Reliance Equity Oppo 38.48 11.78 55.27 69.17

HDFC Top 200 225.77 13.30 36.03 56.57

Templeton India Growth 132.40 14.36 41.49 57.23

Indices

BSE 500 8036.88 11.54 30.94 50.21

Thematic/Emerging trend funds



Fidelity India Special 20.12 11.72 37.94 51.46Situations

Birla Sun Life India GenNext 25.94 11.71 45.06 45.61

Tata Service Industries 27.13 10.33 24.04 54.31

UTI India Lifestyle 12.31 10.11 33.33 41.50

SBI Magnum COMMA 26.64 10.86 30.81 47.81

Indices

BSE Sensex 20032.34 12.11 26.10 43.20

Risk-return analysis

The charts on the following pages give you a snapshot of how the

mutual funds have performed on the risk-return parameters in

the past. We have used the bubble analysis method to measure

their performances on three parameters viz risk, return and fund

size. The risk is measured by standard deviation, which measures

the average deviation of the returns generated by a scheme

from its mean returns. We have tried to explain the same with

the help of a diagram, which is divided into four quadrants, with

each quadrant containing funds of a particular risk-return profile.

The size of the bubble indicates the size of the fund.

The funds in the high-risk high returns quadrant follow a veryaggressive approach and deliver high absolute returns compared

to its peers albeit at a higher risk.

The funds in the low-risk high returns quadrant outperform thepeer group on the risk-adjusted returns basis as they deliver

higher returns compared to its peers without exposing the

portfolio to very high risk.

The funds in the low-risk low returns quadrant are not veryaggressive and provide lower absolute returns, taking lower risks.

The funds in the high-risk low returns quadrant underperformthe peers on the risk adjusted returns basis as they adopt a

high-risk strategy but the returns fail to compensate the risktaken by the fund.

For all schemes, risk is measured in terms of two years volatility,

while returns are measured as two years monthly rolling returns

as on October 31, 2010.

Every individual has a different investment requirement, which depends on his financial goals and risk-taking capacities. We at

Sharekhan first understand the individuals investment objectives and risk-taking capacity, and then recommend a suitable portfolio.

So, we suggest that you get in touch with our Mutual Fund Advisor before investing in the best funds.

Balanced funds



Reliance RSF - Balanced 24.14 10.68 37.09 52.42

HDFC Balanced 57.09 9.65 38.73 49.47

HDFC Prudence 222.05 9.72 38.87 57.06

Birla Sun Life 95 323.00 7.77 28.98 48.55

DSP BlackRock Balanced 69.81 9.72 28.45 40.04

Indices

Crisil Balanced Fund Index 3631.93 8.16 19.78 31.87

Tax planning funds



ICICI Prudential Taxplan 150.27 10.84 41.51 61.07

Religare Tax Plan 18.88 11.19 39.15 58.86

Fidelity Tax Advantage 23.59 11.41 43.02 55.71

HDFC Taxsaver 252.02 12.86 42.26 59.66

HDFC Long Term Advantage 148.70 14.49 41.49 53.20

Indices

CNX500 4972.95 11.12 29.15 49.64


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Birla Sun Life India GenNext Fund

Birla Sun Life Infrastructure Fund -

Plan A

Fidelity India Special Situations Fund

ICICI Prudential Infrastructure Fund

Kotak Lifestyle Fund

Reliance Media &

Entet Fund

SBI Magnum COMMA Fund

Sundaram Rural

India Fund

Tata Service Industries Fund

UTI India Lifestyle Fund

DSP BlackRock Equity Fund

Fidelity India Growth Fund

HDFC Core & Satellite Fund

HDFC Equity Fund

HDFC Top 200

Reliance Equity

Opportunities Fund

Reliance Growth

Reliance RSF - Equity

Tata Capital Builder Fund

Templeton India Growth Fund

Tata Pure Equity Fund

Sundaram India Leadership Fund

Reliance Equity Advantage Fund

Principal Large Cap Fund

Kotak 30

HSBC Equity Fund

Franklin India Bluechip

DSP BlackRock Top 100 Equity Fund

Birla Sun Life Top 100 Fund

Birla Sun Life Frontline Equity Fund -

Plan A

Thematic/Emerging Trend Funds

Risk-Return matrix

==Average Rolling Returns====>

==Std.

Dev.====>

HIGHER RISK

LOWER RETURNS

HIGHER RISK

HIGHER RETURNS

LOWER RISK

LOWER RETURNS

LOWER RISK

HIGHER RETURNS

Equity Diversified/Conservative Funds

Risk-Return matrix


==Std.

Dev.====>

HIGHER RISK

LOWER RETURNS

HIGHER RISK

HIGHER RETURNS

LOWER RISK

LOWER RETURNSLOWER RISK

HIGHER RETURNS

Multicap Funds

Risk-Return matrix

==Std.

Dev.====>

HIGHER RISK

LOWER RETURNS

HIGHER RISK

HIGHER RETURNS

LOWER RISKLOWER RETURNS

LOWER RISK

HIGHER RETURNS



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HSBC Tax Saver Equity Fund

Religare Tax Plan

Reliance Tax Saver (ELSS) Fund

HDFC TaxsaverHDFC Long Term

Advantage Fund

Franklin India Taxshield

ICICI Prudential Taxplan

DSP BlackRock Tax Saver Fund

Fidelity Tax Advantage Fund

Sundaram Taxsaver

Birla Sun Life 95Birla Sun Life 95

DSP BlackRock Balanced Fund

Canara Robeco Balance

HDFC Balanced Fund

Reliance RSF - Balanced

SBI Magnum

Balanced Fund

Sundaram Balanced Fund

Tata Balanced Fund

UTI Balanced Fund

HDFC Prudence Fund

Disclaimer

This document has been prepared by Sharekhan Ltd.(SHAREKHAN) This Document is subject to changes without prior notice and is intended only for the person or entity to which it is addressed to and may contain

confidential and/or privileged material and is not for any type of circulation. Any review, retransmission, or any other use is prohibited. Kindly note that this document does not constitute an offer or solicitation for

the purchase or sale of any financial instrument or as an official confirmation of any transaction.

Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. SHAREKHAN will not treat recipients as customers by virtue of their receiving this report.

The information contained herein is from publicly available data or other sources believed to be reliable. While we would endeavour to update the information herein on reasonable basis, SHAREKHAN, its subsidiaries

and associated companies, their directors and employees (SHAREKHAN and affiliates) are under no obligation to update or keep the information current. Also, there may be regulatory, compliance, or other reasonsthat may prevent SHAREKHAN and affiliates from doing so. We do not represent that information contained herein is accurate or complete and it should not be relied upon as such. This document is prepared for assistance

only and is not intended to be and must not alone betaken as the basis for an investment decision. The user assumes the entire risk of any use made of this information. Each recipient of this document should make

such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult

its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. We do not undertake to advise you as to any change of our

views. Affiliates of Sharekhan may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report.

This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication,

availability or use would be contrary to law, regulation or which would subject SHAREKHAN and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may

not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.

SHAREKHAN & affiliates may have used the information set forth herein before publication and may have positions in, may from time to time purchase or sell or may be materially interested in any of the securities mentioned

or related securities. SHAREKHAN may from time to time solicit from, or perform investment banking, or other services for, any company mentioned herein. Without limiting any of the foregoing, in no event shall

SHAREKHAN, any of its affiliates or any third party involved in, or related to, computing or compiling the information have any liability for any damages of any kind. Any comments or statements made herein are those

of the analyst and do not necessarily reflect those of SHAREKHAN.

Tax Planning Funds

Risk-Return matrix


==Std.

Dev.====>

HIGHER RISK

LOWER RETURNS

HIGHER RISK

HIGHER RETURNS

LOWER RISK

LOWER RETURNS

LOWER RISK

HIGHER RETURNS

Balanced Funds

Risk-Return matrix


==Std.

Dev.====>

HIGHER RISK

LOWER RETURNS

HIGHER RISK

HIGHER RETURNS

LOWER RISK

LOWER RETURNS

LOWER RISK

HIGHER RETURNS

Disclaimer: Mutual fund investments are subject to market risk. Please read the offer document carefully before investing.Past performance may or may not be sustained in the future.

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