november 2021 investment products
TRANSCRIPT
PowerPoint PresentationIndex
Equity Outlook ……………………………………………………………………. 2-5
Deep dive – Fearful of correction? What should one do…….……………… 10-14
Dots to Join……….……………………………………………………………….. 15-16
01
Dear Investors,
Far more money has been lost by investors trying to anticipate corrections, than lost in the
corrections themselves.
-Peter Lynch
I recently wrote an article for the Economic Times on the rising influence of retail investors in India
and across the world (read the article here). The total number of retail investors increased by an
astonishing 14.2 million in FY21. NSE alone saw retail investors share grow from 33% in 2016 to
45% in 2021. Investors are moving away from physical assets like real estate, gold and even bank
accounts towards stocks and mutual funds. Investors from Tier II and III towns are joining this trend
more than ever before. The pandemic, technological advancements and the proliferation of stock
market discussions on social media platforms have all contributed to this trend. We expect the trend
to stay and grow bigger.
The equity markets have witnessed a strong run in the past 18 months. The most frequently asked
question we get now is whether one should invest in the markets at this point or should one wait for a
correction. Corrections are part of equity markets. Corrections can be a difficult thing for investors
and sometimes drive people away from equity markets for a long time. This month's Deep Dive
section reviews historical data around corrections and what lessons may be gleaned from the data.
The section also offers a practical strategy to help long term investors take emotions out of the
decision-making even while adding to returns.
Our monthly equity and debt market outlook sections cover a wide range of topics from macro
developments, corporate results and sectoral developments. In addition, the Macroscope contains
the regular “Dots to Join” and Crossword sections.
Our Retail Research team recently released its Diwali stock picks for Samvat 2078. Our team’s
Diwali picks for Samvat 2077 delivered a return of 88.2% in the past 12 months compared to Nifty’s
return of 51.7% during the same period. The Diwali picks are available as a basket in the “Basket
Investing” section on our website and investors can buy the basket with a single click. More details
and link to the research report are in the equity outlook section.
Wishing you and your family a very happy and prosperous Diwali.
Wishing you successful investing.
Equity Outlook
Macroeconomic Review:
Domestic review:
All the broad macro economic indicators suggest that the economic recovery is gaining momentum.
GST collection in October’21 stood at Rs 1.30 lac cr, which was the second highest collection since
implementation of the tax regime in 2017. Manufacturing PMI registered a reading of 55.9 in October
while Services PMI came in at 58.4. Credit growth was flat at 6.7% yoy in September as compared to
August. A whopping 4.2 bn UPI transactions amounting to Rs 7.71 lac cr were clocked in October,
marking an all time high on both counts. CPI inflation in September softened to 4.3% compared to
5.3% in August as food prices softened. As per estimates by economists, India’s GDP is now higher
than the pre-Covid period.
Global Review:
China’s GDP growth weakened to 4.9% yoy in Q3CY21 compared to Bloomberg consensus
estimates of 5%. A slump in property sales and a power crunch impacted economic activity more
than was estimated. China’s GDP had grown 7.9% yoy in Q2CY21. The Chinese government has
eased restrictions on coal usage in an effort to battle the power crunch and has also infused liquidity
into the economy. At least 4 Chinese real estate developers had defaulted on their bond obligations
during the month. The impact of slowing Chinese real estate sector on the economy would need to
be monitored closely over the next few months and it is one of the biggest risks to global growth.
US GDP grew 2% annualized in Q3CY21 compared to consensus growth estimates of 2.8%. Growth
was sharply lower than the 6.7% growth in Q2CY21. A sharp deceleration in consumer spending and
residential investment dragged growth. Growth was also impacted by a wave of Delta variant of the
Covid-19 virus. President Joe Biden unveiled a $1.75 trillion social spending package, a smaller
proposal than the $3.5 trillion package announced earlier in the year.
US headline inflation was 5.4% yoy in September, broadly in line with expectations. Core inflation,
which is the US Fed’s preferred gauge, increased 4.0% for the 12 months, the same as in August.
Globally, inflation continues to remain high because of factors such as supply bottlenecks, surging
energy prices and labour shortages. Bank of England’s Chief Economist Huw Pill recently said that
inflation in UK could surpass 5% compared to Bank of England’s inflation target of 2%. The Bank of
England had previously said that it expected inflation to surpass 4%. Inflationary pressures remain
one of the key risks for equity markets.
Equity markets review:
Indian equity markets hit new all time highs in October before a sharp correction in the last 10 days
of the month. Equity markets have had a strong run in the past 18 months and have not had even a
10% correction during this rally. Equity market valuations appear to be on the higher side of historical
averages. Given the above, a little bit of profit booking or correction would not be surprising or
concerning.
Nifty ended the month up 0.3% while S&P BSE Midcap and S&P BSE Smallcap indices returned
0.1% and (-0.3%) respectively. Nifty PSU Bank, Nifty Auto and Nifty Media indices were the best
performing sectoral indices gaining 13.8%, 6.6% and 5.0% respectively this month. Nifty FMCG, Nifty
Pharma and Nifty Realty indices were the worst performing indices with returns of (-5.5%), (-4.1%)
and (-2.9%) respectively.
Equity Outlook
03
The best and worst performing stocks during Oct 2021 from the NSE 500 universe are shown in the
table below. PSU Banks were among the best performers in October as the banks near completion
of providing for legacy bad loans. Tata Motors surged during the month as the company unveiled a
$1 bn fund raising for its electric vehicles subsidiary.
Flows:
FPIs were net sellers of Indian equities in cash to the tune of Rs. 13,550 cr in the month of October
2021. DIIs were net buyers to the tune of Rs. 5,179 cr. (Source: NSDL, Moneycontrol.com). FIIs turned
net sellers for the first time since July 2021 with sales accelerating during the last 10 days of October
as the markets corrected from their all-time highs. DIIs have remained net buyers since March 2021.
IPO Review:
October 2021 was a muted month for IPOs with only 1 company coming out with an IPO. However,
November promises to be a month of mega IPOs from the tech sector. Nykaa and Fino Payments
Bank IPOs have already opened for subscription while the IPO dates for PolicyBazaar and PayTM
have also been announced.
The table below summarizes the IPOs which either closed or listed during Oct 2021:
Best Performing Stocks Among NSE 500 in October 2021
Large Cap Mid Cap Small Cap
Stock Name Returns Stock Name Returns Stock Name Returns
Tata Motors Ltd. 45.2% Tata Power Co. Ltd. 35.0% Network18 Media &
Investments Ltd. 48.6%
Bank of Baroda 19.3% Union Bank of India 27.4% Tata Teleservices
(Maharashtra) Ltd. 48.4%
Infotech Ltd. 15.8% Canara Bank 24.0% Tanla Platforms Ltd. 39.6%
Adani Transmission
Ltd. 15.1% Manappuram Finance Ltd. 22.9% Trident Ltd. 35.5%
ICICI Bank Ltd. 14.5% Indian Bank 22.5% Radico Khaitan Ltd 26.9%
Worst Performing Stocks NSE 500 in October 2021
Large Cap Mid Cap Small Cap
Stock Name Returns Stock Name Returns Stock Name Returns
Indus Towers Ltd. -12.0% Vodafone Idea Ltd. -19.7% Balaji Amines Ltd. -23.4%
Hindustan Unilever Ltd. -11.3% Vaibhav Global Ltd. -17.8% PNB Housing Finance
Ltd. -22.3%
Coal India Ltd. -11.2% Laurus Labs Ltd. -16.4% Solara Active Pharma
Sciences Ltd. -22.0%
Eicher Motors Ltd. -11.0% Indiamart Intermesh Ltd. -14.8% Justdial Ltd. -19.4%
HCL Technologies Ltd. -10.5% Aditya Birla Capital Ltd. -14.2% Welspun India Ltd. -18.6%
Source: NSE
on (times)
Aditya Birla Sun Life AMC Limited 2,768 1-Oct-21 712 715 0.4% 5.3 10.4
Source: NSE
Equity Outlook
Results Review: October saw several companies reporting their quarterly results. In the IT sector,
most of the companies managed to meet or marginally exceed the results expectations. The
management commentary was generally positive with a strong pipeline of deals. The results
confirmed our hypothesis of strong demand and tailwinds for the sector.
In the leveraged financials sector, large private banks reported a strong set of results aided by strong
recoveries and upgrades which kept net slippages in check. ICICI Bank reported one of the strongest
set of numbers supported by cyclical upturn in NIMs. Within private sector banks, Bandhan Bank
disappointed with high slippages and consequent provisions. Its stressed assets portfolio (GNPA +
restructured assets) is now 21% of its asset book. RBL Bank too disappointed in terms of its asset
quality. In the non-leveraged financials segment, broking companies continued to deliver strong
results.
In the staples segment, the results were generally in line with expectations. However, most company
managements highlighted high commodity prices as a headwind which would necessitate price hikes
going forward. United Spirits reported a strong beat on expectations with revenues up 14% YoY on
the back of higher realisations.
L&T’s PAT was largely in line with expectations while Maruti continued to struggle with
semiconductor shortages impacting sales and profitability. Real estate players like DLF reported
strong pre-sales during the quarter. In general, commodity inflation and margin pressures have
dampened an otherwise strong revenue growth performance across most sectors.
Our institutional equities team runs two baskets on our basket investing platform. The LargeCap
Legends is a 10-stock equal weighted basket and the Majestic Multicaps is a 15-stock equal
weighted basket. Investors can invest in these baskets with a single click on the basket investing
section of our website. In the second week of October, our institutional equities team rebalanced the
two baskets. In the LargeCap Legends basket, SBI Life Insurance was introduced in place of Infosys.
In the Majestic Multicaps basket Nuvoco, Cyient and Fine Organic were added while Endurance,
Mphasis and Sonata Software were removed.
The table below shows select “buy” and “reduce”/“sell” rated stocks as rated by HDFC Securities’
Institutional Equities (HSL IE) team. The full list of stocks rated and their target prices can be
accessed at our website.
Name Target price CMP % Upside
Gail 210 149 41.4%
Gateway Distriparks 375 280 34.0%
SBI Life 1,485 1,145 29.7%
Sudarshan Chemical 765 574 33.3%
Cyient Limited 1,330 1,066 24.8%
Recommended reading for the month:
This month’s recommended reading is an article published in The Guardian on Oct 15, 2021 titled “End to China’s
estate market boom could spell trouble for the economy (read the article here). This is the second successive
month we are recommending an article related to China and we suspect that we will see a lot more of China in this
section in the coming months.
China’s housing related sectors constitute about 30% of its GDP compared to 10-20% for most developed nations.
The article argues that Chinese real estate sector now has overinvestment with a fifth of China’s housing now lie
vacant. A slowdown in Chinese construction activity will have a significant impact on its economic growth.
Equity Outlook
(Source: HSL IE)
HDFC Securities’ Retail Research team has come out with its Diwali picks for Samvat 2078. The
team’s Diwali picks for Samvat 2077 had significantly outperformed the market by returning 88.1%
during the past 12 months compared to Nifty’s 51.7% return during the same period. The table below
summarizes the picks and the target prices assigned by the Retail Research Team (read the full
report here).
(Source: HSL Retail Research)
All of the above institutional equities reports and retail research calls can be accessed on our
website.
Risks:
Taper, supply disruptions, higher energy prices and Chinese economic slowdown are near term
risks. A sticky and persistent inflation would be a bigger worry for the market. For now, most central
banks and market participants tend to view the high inflation readings as transient and likely to
subside over the next few months. However, in case the inflation readings remain elevated for
longer, the central banks could be forced to increase rates faster and higher than they would like.
This would be a key aspect to watch out for in the months to come. Chinese economic activity is
expected to slow down as defaults by multiple Chinese real estate developers would take its toll on
construction activity in China. Chinese economic activity needs to be monitored closely. Valuations in
equity markets do not provide any cushion to negative surprises.
Company Name CMP (Rs/Share) Target (Rs/share) % Upside
Bharti Airtel 686.3 810.0 18.0%
HPCL 310.5 385.0 24.0%
Adani Ports & SEZ 693.2 936.0 35.0%
Bank of Baroda 97.5 113.5 16.4%
CESC Ltd 87.2 113.0 29.6%
Cyient Ltd. 1,067.6 1,371.0 28.4%
Eris Lifesciences 817.3 966.0 18.2%
Gati Ltd. 138.5 187.0 35.0%
Indian Bank 171.8 213.5 24.3%
Mahindra & Mahindra Finance 179.3 227.0 26.6%
Network18 Media 77.2 106.0 37.3%
HDFC Sec Institutional Equities: Select “Sell/Reduce" rated stocks
Name Target price CMP % Downside
Ashok Leyland 115 142 -19.0%
IndusInd Bank 894 1,142 -21.7%
TCNS Clothing 500 750 -33.3%
Titan 1,600 2,395 -33.2%
06
India’s 10yr G-sec yield rose by 17 bps in Oct 2021
During the month of Oct 2021, the 10yr G-sec yield rose by 17 bps from 6.22% as of Sep 30, 2021 to
6.39% as of Oct 29, 2021 driven by a mix of domestic and global factors. On the domestic front, the
RBI discontinued its G-sec Acquisition Programme (G-SAP) which dented the bond market sentiment.
During H1 FY22, the RBI’s G-SAP had supported the G-sec yields at longer end of the curve (above
5yr segment). On the global front, continued rise in crude oil and commodity prices and increase in
bond yields across the geographies had put domestic bond yield under pressure.
India’s 10yr G-sec yield movement in last 3 months
Source: Financial Benchmarks India Private Limited (FBIL)
RBI’s MPC maintained status quo on policy rate and stance in Oct-21 meeting
The RBI’s monetary policy committee (MPC) kept repo rate unchanged at 4% in its Oct-21 bi-monthly
meeting. MPC also decided to continue with the accommodative stance as long as necessary to
revive and sustain growth on a durable basis, while ensuring that inflation remains within the target of
2-6%. The MPC adopted a more calibrated and patient approach towards managing surplus liquidity
and monetary policy support, recognising that there are still some downside risks to growth.
Against the broader market expectations, the RBI suspended its bond buying programme (G-SAP).
However, it committed to provide adequate liquidity in the system through various liquidity
management operations including Operation Twist (OT) and Open Market Operations (OMOs). The
total liquidity injected into the system during H1 FY22 through OMOs, including G-SAP, was Rs. 2.4
lakh crore, as against an injection of Rs. 3.1 lakh crore over the full year FY21.
RBI also provided a calendar to further increase the amount in variable rate reverse repo (VRRR)
auctions from Rs. 4 lakh cr as of Sep-21 to Rs. 6 lakh cr by first week of Dec-21. The central bank has
greater room to adjust liquidity conditions through VRRR auctions. RBI has also considered
complementing the 14-day VRRR auctions with 28-day tenure which would imply more durable
liquidity absorption.
The RBI retained its GDP growth forecast at 9.5% for FY22 while revising down its CPI inflation
forecast to 5.3% for FY22 (from 5.7% earlier) given the lower than expected food inflation momentum
and favourable base effects.
Fixed Income Outlook
India’s CPI inflation eased further in Sep-21
India’s CPI inflation moderated to 4.35% YoY in Sep-21 from 5.30% in Aug-21 led by a favourable
base and softening of food prices. This is for the 3rd consecutive month that CPI inflation has remained
below the RBI’s upper band of 6%. On a sequential (MoM) basis, CPI inflation eased to a 6-month low
of 0.18% in Sep-21 as compared to 0.25% in Aug-21 and 1.1% in Sep-20.
Core inflation (CPI excluding food and fuel) remained flat at 5.8% YoY in Sep-21 as moderation in
housing and education inflation was offset by higher health and recreation & amusement categories.
Fuel inflation stood at 13.6% YoY in Sep-21 as compared to 12.9% in Aug-21, reflecting higher LPG
and kerosene prices.
As per HDFC Bank research, CPI inflation is likely to hover in the range of 4.0-4.5% over the next two
months. From Dec-21 onwards, as the base effect wanes and purchasing power in the system
improves, inflation is expected to rise above 5%. Upside risks to inflation remain high with the rise in
crude oil prices, higher input prices and global supply disruptions.
India’s CPI inflation monthly trend
Source: Ministry of Statistics and Programme Implementation (MOSPI)
Central banks have turned hawkish globally
Globally, there was a synchronised growth slowdown and monetary policy easing since the onset of
Covid crisis. Economies are now re-opening with healthy vaccination progress and there is a broad
consensus among central banks that crisis-level monetary stimulus should be removed. Select central
banks (Russia, Brazil, Mexico, South Korea, Norway and New Zealand among others) have already
hiked rates in CY21, while other major central banks (US Fed, ECB and BoE) have prepared markets
for reduction in bond buying programme or withdrawal of accommodative monetary stimulus.
During the month of Oct-21, US 10yr bond yield rose by 7 bps from 1.49% as of Sep 30, 2021 to
1.56% as of Oct 29, 2021. US bond yields have been volatile recently driven by a rise in crude and
energy prices and inflation concerns, as US Fed prepares to wind down its bond purchase
programme. In the last few months, high inflation prints were tied to items most affected by the
shutdowns and reopening of the economy, but now there are signs that inflation is coming from a
broader set of products and services.
MARKET MACROSCOPE | INVESTMENT PRODUCTS | NOVEMBER 2021
Fixed Income Outlook
08
Source: investing.com
The last US Fed policy meeting minutes highlight the Fed members’ confirmation of tapering that
could begin before the end of CY21. The Fed members discussed a tapering path and suggested to
reduce monthly treasury purchases by $ 10 bn and MBS purchases by $ 5 bn. The Fed is currently
buying $ 80 bn of Treasuries and $ 40 bn of MBS on a monthly basis. The Fed members are
concerned over inflation with several members not seeing inflation pressures as “transitory” anymore
and noted upside risks on account of supply disruptions and labour shortages. Several members
expect to attain full employment by the next year and find an interest rate increase appropriate in
CY22.
US CPI inflation rose to 5.4% YoY in Sep-21 as compared to 5.3% in Aug-21. Energy, food and
shelter prices were the key drivers of inflation and contributed more than 50% to monthly increase in
inflation in Sep-21. Sequentially (MoM), CPI inflation rose by 0.4% in Sep-21 from 0.3% in Aug-21.
Core inflation (CPI excluding food and energy components) stood flat at 4.0% YoY and rose by 0.2%
MoM in Sep-21. Taking into account supply bottlenecks, high commodity prices, and input shortage,
US CPI is likely to remain elevated in the near to medium term.
US CPI inflation monthly trend
Source: tradingeconomics.com
Fixed Income Outlook
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Outlook
Post the RBI’s monetary policy, the G-sec yield curve has flattened i.e. the yields at the shorter end of the
curve (up to 3 years) have gone up more than the longer end. The yield curve is expected to gradually
flatten further, as liquidity surplus falls. The RBI has initiated the liquidity normalisation with an increase in
the size of VRRR auction amount and tenure. This will likely drive the yields at the shorter end of the curve
further up from the current levels. The pressure on the longer end of the yield curve is expected to be
relatively lower as government’s fiscal deficit position remains comfortable and term premium (long tenure
yield minus repo rate) is already on a higher side.
India’s G-sec Yield Curve Comparison
Source: RBI, FBIL
Improving economic recovery with a healthy pace of vaccination and rising crude and commodity prices
(imparting upside risks to inflation) have brought the tapering timelines closer. As a result, bond yields have
already risen across the globe and are expected to remain volatile in the near to medium term. Tracking the
global events, Indian bond markets are also expected to remain volatile.
We expect bond yields to gradually rise in the medium-term given the huge G-sec borrowings in FY22. We
continue to expect that RBI is unlikely to announce any reverse repo changes before the February 2022
meeting until it has further clarity on growth impulses, third wave risks, global volatility due to Fed taper and
inflation trajectory.
The G-sec yield curve continues to remain quite steep up to 5yr segment and is relatively flat thereon.
Beyond the 10yr segment, the risk-reward scenario looks unfavourable at current juncture. Hence, fixed
income investors should avoid the longer end of the curve. Steepness at the shorter end of the curve
provides lucrative opportunities to lock carry by investing up to 3yr segment with low to moderate interest
rate risk. The steepness in the curve shall compensate for any MTM losses in the near to medium term.
MARKET MACROSCOPE | INVESTMENT PRODUCTS | NOVEMBER 2021
Fixed Income Outlook
3.30
3.80
4.30
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3M 6M 1yr 2yr 3yr 4yr 5yr 6yr 7yr 8yr 9yr 10yr 12yr 14yr 20yr 30yr 40yr
30-Sep-21 29-Oct-21
10
Introduction:
First up, if you are an investor who invests at all times and valuations and who believes that it is
impossible to either time the market or predict market peaks, you should ignore this Deep Dive.
Rather, this deep dive is an analytics for people who are staying on the sidelines because they believe
that markets have reached their peak and may be up for correction.
Does staying on the sideline work? During most times, we know it doesn’t. But we go one step further.
We have tried to figure out if staying on the sideline even works during market peaks. If we are able to
get a sense of that, it will be easier to adopt an investment strategy during current times for the
skeptical investor who assumes that markets are overvalued/have reached their peak.
Again, do remember that there is no way to judge if the markets have reached their peak. In fact, we
all know of people who have been staying on the sidelines from Nifty levels of 12,000. This analysis is
about “even if”.
Let’s consider the 3 investment options at the moment –
• Invest the corpus available for equity investments upfront. (after all, one cant predict the market)
• Invest the corpus available over say a 12-month SIP (cautious stance considering the valuations)
• Stay in liquid, wait for a correction. Invest in markets after a few months (Wait for a correction or at
least for ‘things to settle down’)
So which of the above three options should one choose?
It is impossible to predict when a correction may occur - now or say a few months down the line or if it
takes even longer. It is impossible to predict if the correction will happen from the current levels, or
from 5% higher levels or say from 10% higher levels. Waiting for a correction may itself prove to be a
costly mistake if the markets continue to rally.
But remember, this analysis is about “even if” this is the market peak. That should allow the most
cautious investor to heed the results. So we decided to review historical data around corrections and
see what lessons we could glean from history. We went back to each correction (as defined) in history
and analyzed future returns for different investment strategies around these correction points.
Methodology:
We reviewed Nifty data since inception (July’1990) and analyzed all corrections of magnitude greater
than 15%. We considered three categories of investors. Remember, all the 3 strategies are applied on
peak Nifty values.
• Investor 1- Upfront investor - Does not believe in timing the market. Invests his money upfront
• Investor 2- Systematic Investment Plan (SIP) investor - Believes that these are uncertain times
and spreads his investments from now to next 12 months
• Investor 3 – Cautious investor - Wants the markets to correct or ‘settle down’. Waits for 12
months in liquid and invests after 12 months (btw, our hypothetical investor gets this call right this
time. Real investors, most times, get this call wrong)
Deep Dive - Fearful of Correction? What should one do
MARKET MACROSCOPE | INVESTMENT PRODUCTS | NOVEMBER 2021
11
In all cases where the investor waits before investing (SIP investor and the cautious investor), we
have assumed that the investor earns a post-tax yield of 4% per annum and then invests that corpus
into equity markets. Increasing this to 6% does not materially impact our analysis.
Review of historical data
The table below summarizes all corrections of magnitude greater than 15% from 1990 onwards.
Table 1: History of market corrections
A few points emerge from the above table:
• Corrections are a part of stock market investing. We have had 13 market corrections of more than
15% in the past 31 years. In effect, on an average, a market correction of more than 15% happens
once every 2.4 years. Of course, the corrections are not evenly distributed in time.
• About 7 out of the 13 corrections lasted less than 4 months (from peak to bottom). Around 4
out of the 13 corrections lasted between 9 to 15 months while only 2 corrections lasted for more
than 15 months. Corrections tend to be very fast.
• About 6 out of the 13 corrections were of magnitude more than 30%. However, 3 out of the above 6
corrections happened in the early 1990s. In fact, in the last 20 years, only 3 corrections have been
of magnitude more than 30%- the dotcom bubble bursting in early 2000s, the global financial crises
in 2008 and the Covid meltdown in 2020.
• Out of the 13 corrections, 4 were between 20-30% while 3 others were between 15-20%.
• The decade since 2010 has been a far less volatile period than historical. We have had only 3
corrections (of magnitude greater than 15%) during the decade spaced out across 5 years. The
lower volatility of the Nifty in the last decade may have been contributed by structural changes like
reduction in the weightages of cyclical sectors like commodities, autos etc and the higher
weightage of acyclical sectors like consumer, pharma, IT etc. The lower volatility may also have
been because of the higher weightage of private sector banks and the reduction of weights of the
more cyclical public sector banks.
MARKET MACROSCOPE | INVESTMENT PRODUCTS | NOVEMBER 2021
Period Nifty Value
Deep Dive - Fearful of Correction? What should one do
12
Results:
Result 1:
An SIP investor (who invests in 12 monthly SIP installments beginning on the date of market peak)
achieves significantly better returns than the upfront investor who invests at the market peak. By
definition, the SIP investor will always outperform the upfront investor (because we have assumed that
that the upfront investor invests at the peak). However, the differential in returns is significant. The
median difference in XIRR returns over the subsequent 10-year period is 2.4%. Of course, this
assumes that the investor is correctly able to identify the market peak and then starts investing which
is very difficult to achieve.
Table 2: 10 Yr CAGR return comparison of upfront investor and SIP investor
*Note – the last period starting Jan-20 is not considered for the median calculation as the tenor is too short
Result 2:
A cautious investor who waits for 12 months after peak before investing achieves mixed results. His
returns are lower than the SIP investor in 5 out of the 13 readings. More importantly, such an
investor would have achieved lower returns in 4 out of the last 8 corrections since 2000. The median
difference in XIRR between the two investors was only 1.2%. The really meaningful better results
were achieved by the cautious investor only in 1994 and 2008 when the markets had an
extreme correction of more than 50%. This would suggest that an investor should use the SIP route
even if he expects a market correction as the incremental returns are not meaningful even while he
risks missing out on a rally.
MARKET MACROSCOPE | INVESTMENT PRODUCTS | NOVEMBER 2021
Period XIRRs Outperformance by
Median 2.40%
13
Table 3: 10 Yr CAGR return of a SIP investor v/s a cautious investor
*Note – the last period starting Jan-20 is not considered for the median calculation as the tenor is too short
Summary:
Corrections are a part of equity investment with a correction of more than 15% occurring once every
2.4 years on average. As history shows, long term investors who stay invested achieve attractive
returns.
• An SIP investor who invests over a 12-month period (beginning at the market peak) achieves
significantly better returns than an upfront investor who invests at the peak of the market. At times
of high market valuation, when an investor anticipates a market correction, it would be prudent to
invest through an SIP system rather than not investing at all.
• An SIP investor would perform broadly in line with a cautious investor (an investor who invests only
12 months after a market peak). This would suggest that SIP investment is a better strategy than
waiting for a correction. An investor who is waiting for a correction risks missing out on further
rallies. This has happened in the past few months where some investors have been waiting for a
correction from Nifty levels of 12,000 till now even as Nifty hit a high level of 18,600.
• We had also conducted an alternative analysis where the SIP investor (investing across 12 monthly
installments) begins investing 6 months before the market peaks and continues investing for 6
months after the market has peaked. The returns for this investor too were broadly in line with the
SIP investor who invests for 12 months after the market peaks. In other words, irrespective of
whether a market has peaked or whether a peak lies a few months ahead in the future, SIP
strategy is better than waiting for a correction as discussed in the paragraph above.
MARKET MACROSCOPE | INVESTMENT PRODUCTS | NOVEMBER 2021
Period XIRR Outperformance by
Investor Cautious Investor
Median 1.20%
14
For those who would like to point out a slight edge of the cautious investor return over the SIP investor
return –
The above results are for extreme market conditions when a significant market correction occurs soon
after investment. This is generally not the case as the markets have a long term upward trending bias.
We also compared waiting for a correction for 12 months vs the returns from SIP investing(spread
over 12 months) . There were 363 monthly observations spread over 30 years. In almost 71% of the
cases, SIP investing was better than waiting for a 12 month period for a correction.
• From the above results, it would seem that an investor is better off investing through the SIP route
even if he is afraid that a correction might be near. An SIP investment ensures that the investor’s
returns are far superior to investing at the peak and the investor is able to invest at values far lower
than peak values. At the same time, the investor is also able to avoid the risk of missing out on any
further rallies in the market.
• The nature, duration and extent of correction can influence results. Our analysis is based on a 12-
month SIP. An SIP of a shorter duration might be more optimum in case of shorter, swifter
corrections of the like we saw in 2004, 2006 or 2020 to name a few. Ultimately, the SIP duration
can vary but it’s the way to go in such times
MARKET MACROSCOPE | INVESTMENT PRODUCTS | NOVEMBER 2021
Deep Dive - Fearful of Correction? What should one do
Dots to Join
15
1. Silicon Price Surge: The shortage in silicon metal, sparked by a production cut in China, has sent
prices up 300% in less than 2 months. China’s production cuts are part of its efforts to reduce
power consumption. Silicon, in various forms, is used in sectors such as car parts, computer chips,
solar PV cells, glass, medical implants, deodrants etc.
2. Indonesia FMCG de-rating: Consumer staples have seen a sharp de-rating in Indonesia in the
past 5 years. Unilever Indonesia currently trades at ~20x 1-year forward P/E, at a 50% discount to
its 10-year average. Indonesian staples stocks, which in the past have traded at similar valuations
as Indian staples, are now trading at a large discount. Unilever Indonesia traded at a ~25%
premium to Hindustan Unilever over 2011-16, which has now moved to a ~66% discount. Slower
growth, market share losses and pressure on high margins have contributed to the de-rating
according to analysts.
3. Indian Urbanisation: The gap between the growth of urban population and the rural population in
India has widened over the years. In the last decade urban population is estimated to have grown
at 3.4x the growth rate of the rural population. In the coming decade, this is expected to increase
to 5x. About a third of India’s population currently lives in urban areas. In the next 15 years, almost 40% of India’s population is expected to live in urban areas.
Source – Economic Times
Source – Credit Suisse
Source – India Data Hub
4. Policy Normalization: Globally, central banks have referred rising inflation as transitory and cited
fragile growth to justify accommodative monetary policies for much of 2021. However, with
improving growth prospects and rising price concerns, central banks have either hiked interest
rates or turned hawkish in their monetary policy stance. Many advanced economies are facing
inflation above their upper bound.
5. China’s Steel Production: China’s steel production in September 2021 fell by close to 20% YoY
and around 11% MoM. This, however, is positive for Indian steel companies as it points to
.
6. Freight Rates: The average cost of shipping a standard large container is 2.0 - 7.0x higher YoY
across key routes. The average door-to-door shipping time for ocean freight has gone up to 70
days from 41 days a year ago. Accumulated delays, pandemic protocols and poor schedule
reliability are causing containers to remain in transit for longer, reducing the effective number of containers in active circulation.
Source: Mint
Index Performance
17
Data as on 31st October 2021. Returns less than 1 year are in absolute terms and greater than 1 year are CAGR
Source: ACE MF, BSE, NSE
Index Performance (31-October-21)
Indices 1 M 3 M 6 M 1 Y 2 Y 3 Y 5 Y 10 Y
NIFTY 50 0.3 12.1 20.8 51.8 22.0 19.4 15.4 12.7
S&P BSE SENSEX 0.3 12.8 21.6 49.7 21.6 19.9 16.3 12.8
S&P BSE 500 0.2 10.3 21.8 57.7 24.9 20.0 15.1 13.5
S&P BSE Mid-Cap 0.1 9.5 24.4 69.6 30.5 20.1 13.4 14.9
S&P BSE Small-Cap -0.4 4.5 29.1 88.0 43.7 25.4 15.6 14.9
NIFTY AUTO 6.6 12.4 17.2 45.6 15.7 8.6 2.4 11.1
NIFTY BANK 4.5 13.1 19.3 63.7 14.1 15.9 14.9 14.6
Nifty Financial Services 2.7 14.1 20.8 61.5 17.9 20.9 18.5 16.5
NIFTY FMCG -5.5 6.0 13.7 29.9 8.8 10.2 12.2 13.6
NIFTY INFRA 0.4 13.8 24.5 61.2 23.3 19.3 12.0 6.5
NIFTY IT -1.8 12.9 34.1 64.5 48.8 32.1 27.8 18.5
NIFTY MEDIA 5.0 25.1 45.1 58.3 12.1 -3.4 -5.3 6.1
NIFTY METAL -0.9 -3.6 14.8 137.4 49.2 19.1 15.7 5.8
NIFTY NEXT 50 -0.7 6.9 21.1 53.9 21.1 16.6 12.3 15.4
NIFTY PHARMA -4.1 -3.8 3.0 23.4 32.8 12.5 3.6 11.3
NIFTY PRIVATE BANK 3.8 12.3 14.8 52.3 10.4 12.4 13.0 0.0
NIFTY PSU BANK 13.8 15.7 37.5 124.1 6.2 -1.0 -2.3 -1.3
NIFTY REALTY -2.9 25.1 61.1 118.5 36.2 32.4 18.8 6.7
S&P BSE Consumer Durables 4.5 18.8 33.7 79.5 26.8 31.2 27.3 20.7
S&P BSE OIL & GAS Index -0.9 17.5 21.0 49.6 7.4 11.1 8.1 7.3
S&P BSE Power Index 4.3 27.6 34.5 93.0 29.7 19.5 10.7 4.2
S&P BSE Telecom -2.6 19.3 27.8 60.8 37.8 20.5 7.8 3.0
MARKET MACROSCOPE | INVESTMENT PRODUCTS | NOVEMBER 2021
Macro Economic Indicators
GDP Growth (%): Inflation:
Domestic Yield Movement: 10 Year US Treasury Yield Movement:
Oct-20 Jan-21 Apr-21 Jul-21 Oct-21
US Yields 0.87 1.07 1.63 1.23 1.56
Oct-20 Jan-21 Apr-21 Jul-21 Oct-21
Repo 4.00 4.00 4.00 4.00 4.00
1 Yr CD 3.80 4.03 4.13 3.98 4.18
10 Yr Gsec 5.88 5.95 6.03 6.20 6.39
Aug-20 Nov-20 Feb-21 May-21 Aug-21
IIP -7.10 -1.60 -3.20 27.60 11.90
Oct-20 Jan-21 Apr-21 Jul-21 Oct-21
Composite PMI 58.0 55.8 55.4 49.2 58.7
Sep-20 Dec-20 Mar-21 Jun-21 Sep-21
WPI 1.32 1.95 7.89 12.07 10.66
CPI 7.27 4.59 5.52 6.26 4.35
Source : Ministry of Statistics & Programme Implementation
Source : investing.com, RBI, Bloomberg
Q4
FY20
Q1
FY21
Q2
FY21
Q3
FY21
Q4
FY21
Q1
FY22
Quaterly
Source : Ministry of Statistics & Programme Implementation
18MARKET MACROSCOPE | INVESTMENT PRODUCTS | NOVEMBER 2021
7.1
20.1
-30
-20
-10
0
10
20
30
Repo Rate 10 Yr G-sec 1 Yr CD Rates (RHS)
0.87
1.56
0
1
1
1
1
1
2
2
2
FII Equity Flows (Rs cr): FII Debt Flows (Rs cr):
USD vs. INR: Gold Price (Rs/10gm):
Brent Crude (USD/Barrel):
Brent
Oct-20 Jan-21 Apr-21 Jul-21 Oct-21
$ vs. 74.11 72.95 74.08 74.42 74.88
Oct-20 Jan-21 Apr-21 Jul-21 Oct-21
Gold Price 50,710 49,074 46,743 48,423 47,927
Oct-20 Jan-21 Apr-21 Jul-21 Oct-21
FII Debt
Source : NSDL
Source :Investing.com
Oct-20 Jan-21 Apr-21 Jul-21 Oct-21
FII Equity
Source : NSDL
2,492
1,272
-8,000
-4,000
0
4,000
8,000
12,000
16,000
O ct
-2 0
N o
v- 2
Performance
Data as on 31st Oct 2021 Launch Date: 06-Apr-21, Returns less than 1 year are absolute, more than 1 year are CAGR
Stock % Stock %
Infosys 5.7% PNC Infratech 2.9%
State Bank of India 5.2% Supreme Industries 2.9%
Reliance Industries 5.1% Sun TV Network 2.9%
Saregama India 4.4% Laurus Labs 2.8%
Axis Bank 4.4% Larsen & Toubro 2.8%
Birla Corporation 4.1% Max Financial Services 2.6%
Apollo Hospitals 4.1% Mrs. Bectors Food Specialities 2.5%
Somany Ceramics 4.1% Zydus Wellness 2.4%
Atul Ltd 3.7% Thyrocare Technologies 2.2%
Jk Cement 3.4% Phoenix Mills 2.1%
Mahindra & Mahindra 3.3% Bajaj Auto 1.9%
Radico Khaitan 3.2% KEC International 1.7%
Crompton G. Consumer Elec 3.1% Cash 4.1%
MARKET MACROSCOPE | INVESTMENT PRODUCTS | NOVEMBER 2021
Large Cap, 42%
Mid Cap, 29%
Small Cap, 25%
India Horizons All-star Portfolio NIFTY LargeMidcap 250 NIFTY 500 Multicap 50:25:25
India Horizons Bellwether Portfolio
Performance
Data as on 31st Oct 2021. Launch Date: 06-April-21. Returns less than 1 year are absolute, more than 1 year are CAGR
Stock % Stock %
Infosys 5.4% Ultratech Cement 2.7%
State Bank of India 5.2% Sun TV Network 2.5%
Reliance Industries 5.1% UPL Ltd 2.5%
SBI Life Insurance Company 5.0% Thyrocare Technologies 2.5%
ITC 4.7% Bajaj Auto 2.3%
Carborundum Universal 4.4% Godrej Agrovet 1.6%
Dr. Reddy's Laboratories 4.0% KEC International 1.3%
Bata India 3.8% Huhtamaki PPL 1.3%
TCS 3.8% Cash 5.0%
1%
1%
2%
3%
3%
4%
5%
5%
5%
6%
9%
11%
13%
31%
MISCELLANEOUS
POWER
India Horizons Bellwether Portfolio Nifty 50 S&P BSE 200
22MARKET MACROSCOPE | INVESTMENT PRODUCTS | NOVEMBER 2021
CROSSWORD
Note : Solution for the above crossword will be provided in next month’s newsletter
Answers of last month’s crossword: Across
4 Premium
Across
2 The action or process of gradually writing off the initial cost of an asset.(12)
5 An individual or a corporate that provides funds in anticipation of repayment with interest in future (6)
7 A security that represents the ownership of a fraction of a corporation (5)
9 An investor who chooses the preservation of capital over the potential for a higher return is called a
risk - ________ investor (6)
10 A sum of money borrowed by one party from another (4)
13 A legal document or certificate showing ownership of an asset (5)
14 Regulatory authority of capital markets in India (acronym) (4)
15 A global, decentralized digital currency.(7)
Down
1 A mutual fund scheme that invests in debt and equity in nearly equal proportion(8)
3 A call option is __ ___ ______ when the underlying stock price is higher than the strike price.(2,3,5)
4 The amount by which the cost of a country's imports exceeds the value of its exports.(5,7)
6 Possibility of loss(4)
8 The separation of a large company into two or more smaller organizations(8)
11 A request by a policyholder for compensation of losses covered by insurance.(5)
12 Purchase of a controlling share in a company.(6)
23MARKET MACROSCOPE | INVESTMENT PRODUCTS | NOVEMBER 2021
Disclaimer
24
Investment in securities market are subject to market risks, read all the related documents carefully before investing.
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MARKET MACROSCOPE | INVESTMENT PRODUCTS | NOVEMBER 2021
Equity Outlook ……………………………………………………………………. 2-5
Deep dive – Fearful of correction? What should one do…….……………… 10-14
Dots to Join……….……………………………………………………………….. 15-16
01
Dear Investors,
Far more money has been lost by investors trying to anticipate corrections, than lost in the
corrections themselves.
-Peter Lynch
I recently wrote an article for the Economic Times on the rising influence of retail investors in India
and across the world (read the article here). The total number of retail investors increased by an
astonishing 14.2 million in FY21. NSE alone saw retail investors share grow from 33% in 2016 to
45% in 2021. Investors are moving away from physical assets like real estate, gold and even bank
accounts towards stocks and mutual funds. Investors from Tier II and III towns are joining this trend
more than ever before. The pandemic, technological advancements and the proliferation of stock
market discussions on social media platforms have all contributed to this trend. We expect the trend
to stay and grow bigger.
The equity markets have witnessed a strong run in the past 18 months. The most frequently asked
question we get now is whether one should invest in the markets at this point or should one wait for a
correction. Corrections are part of equity markets. Corrections can be a difficult thing for investors
and sometimes drive people away from equity markets for a long time. This month's Deep Dive
section reviews historical data around corrections and what lessons may be gleaned from the data.
The section also offers a practical strategy to help long term investors take emotions out of the
decision-making even while adding to returns.
Our monthly equity and debt market outlook sections cover a wide range of topics from macro
developments, corporate results and sectoral developments. In addition, the Macroscope contains
the regular “Dots to Join” and Crossword sections.
Our Retail Research team recently released its Diwali stock picks for Samvat 2078. Our team’s
Diwali picks for Samvat 2077 delivered a return of 88.2% in the past 12 months compared to Nifty’s
return of 51.7% during the same period. The Diwali picks are available as a basket in the “Basket
Investing” section on our website and investors can buy the basket with a single click. More details
and link to the research report are in the equity outlook section.
Wishing you and your family a very happy and prosperous Diwali.
Wishing you successful investing.
Equity Outlook
Macroeconomic Review:
Domestic review:
All the broad macro economic indicators suggest that the economic recovery is gaining momentum.
GST collection in October’21 stood at Rs 1.30 lac cr, which was the second highest collection since
implementation of the tax regime in 2017. Manufacturing PMI registered a reading of 55.9 in October
while Services PMI came in at 58.4. Credit growth was flat at 6.7% yoy in September as compared to
August. A whopping 4.2 bn UPI transactions amounting to Rs 7.71 lac cr were clocked in October,
marking an all time high on both counts. CPI inflation in September softened to 4.3% compared to
5.3% in August as food prices softened. As per estimates by economists, India’s GDP is now higher
than the pre-Covid period.
Global Review:
China’s GDP growth weakened to 4.9% yoy in Q3CY21 compared to Bloomberg consensus
estimates of 5%. A slump in property sales and a power crunch impacted economic activity more
than was estimated. China’s GDP had grown 7.9% yoy in Q2CY21. The Chinese government has
eased restrictions on coal usage in an effort to battle the power crunch and has also infused liquidity
into the economy. At least 4 Chinese real estate developers had defaulted on their bond obligations
during the month. The impact of slowing Chinese real estate sector on the economy would need to
be monitored closely over the next few months and it is one of the biggest risks to global growth.
US GDP grew 2% annualized in Q3CY21 compared to consensus growth estimates of 2.8%. Growth
was sharply lower than the 6.7% growth in Q2CY21. A sharp deceleration in consumer spending and
residential investment dragged growth. Growth was also impacted by a wave of Delta variant of the
Covid-19 virus. President Joe Biden unveiled a $1.75 trillion social spending package, a smaller
proposal than the $3.5 trillion package announced earlier in the year.
US headline inflation was 5.4% yoy in September, broadly in line with expectations. Core inflation,
which is the US Fed’s preferred gauge, increased 4.0% for the 12 months, the same as in August.
Globally, inflation continues to remain high because of factors such as supply bottlenecks, surging
energy prices and labour shortages. Bank of England’s Chief Economist Huw Pill recently said that
inflation in UK could surpass 5% compared to Bank of England’s inflation target of 2%. The Bank of
England had previously said that it expected inflation to surpass 4%. Inflationary pressures remain
one of the key risks for equity markets.
Equity markets review:
Indian equity markets hit new all time highs in October before a sharp correction in the last 10 days
of the month. Equity markets have had a strong run in the past 18 months and have not had even a
10% correction during this rally. Equity market valuations appear to be on the higher side of historical
averages. Given the above, a little bit of profit booking or correction would not be surprising or
concerning.
Nifty ended the month up 0.3% while S&P BSE Midcap and S&P BSE Smallcap indices returned
0.1% and (-0.3%) respectively. Nifty PSU Bank, Nifty Auto and Nifty Media indices were the best
performing sectoral indices gaining 13.8%, 6.6% and 5.0% respectively this month. Nifty FMCG, Nifty
Pharma and Nifty Realty indices were the worst performing indices with returns of (-5.5%), (-4.1%)
and (-2.9%) respectively.
Equity Outlook
03
The best and worst performing stocks during Oct 2021 from the NSE 500 universe are shown in the
table below. PSU Banks were among the best performers in October as the banks near completion
of providing for legacy bad loans. Tata Motors surged during the month as the company unveiled a
$1 bn fund raising for its electric vehicles subsidiary.
Flows:
FPIs were net sellers of Indian equities in cash to the tune of Rs. 13,550 cr in the month of October
2021. DIIs were net buyers to the tune of Rs. 5,179 cr. (Source: NSDL, Moneycontrol.com). FIIs turned
net sellers for the first time since July 2021 with sales accelerating during the last 10 days of October
as the markets corrected from their all-time highs. DIIs have remained net buyers since March 2021.
IPO Review:
October 2021 was a muted month for IPOs with only 1 company coming out with an IPO. However,
November promises to be a month of mega IPOs from the tech sector. Nykaa and Fino Payments
Bank IPOs have already opened for subscription while the IPO dates for PolicyBazaar and PayTM
have also been announced.
The table below summarizes the IPOs which either closed or listed during Oct 2021:
Best Performing Stocks Among NSE 500 in October 2021
Large Cap Mid Cap Small Cap
Stock Name Returns Stock Name Returns Stock Name Returns
Tata Motors Ltd. 45.2% Tata Power Co. Ltd. 35.0% Network18 Media &
Investments Ltd. 48.6%
Bank of Baroda 19.3% Union Bank of India 27.4% Tata Teleservices
(Maharashtra) Ltd. 48.4%
Infotech Ltd. 15.8% Canara Bank 24.0% Tanla Platforms Ltd. 39.6%
Adani Transmission
Ltd. 15.1% Manappuram Finance Ltd. 22.9% Trident Ltd. 35.5%
ICICI Bank Ltd. 14.5% Indian Bank 22.5% Radico Khaitan Ltd 26.9%
Worst Performing Stocks NSE 500 in October 2021
Large Cap Mid Cap Small Cap
Stock Name Returns Stock Name Returns Stock Name Returns
Indus Towers Ltd. -12.0% Vodafone Idea Ltd. -19.7% Balaji Amines Ltd. -23.4%
Hindustan Unilever Ltd. -11.3% Vaibhav Global Ltd. -17.8% PNB Housing Finance
Ltd. -22.3%
Coal India Ltd. -11.2% Laurus Labs Ltd. -16.4% Solara Active Pharma
Sciences Ltd. -22.0%
Eicher Motors Ltd. -11.0% Indiamart Intermesh Ltd. -14.8% Justdial Ltd. -19.4%
HCL Technologies Ltd. -10.5% Aditya Birla Capital Ltd. -14.2% Welspun India Ltd. -18.6%
Source: NSE
on (times)
Aditya Birla Sun Life AMC Limited 2,768 1-Oct-21 712 715 0.4% 5.3 10.4
Source: NSE
Equity Outlook
Results Review: October saw several companies reporting their quarterly results. In the IT sector,
most of the companies managed to meet or marginally exceed the results expectations. The
management commentary was generally positive with a strong pipeline of deals. The results
confirmed our hypothesis of strong demand and tailwinds for the sector.
In the leveraged financials sector, large private banks reported a strong set of results aided by strong
recoveries and upgrades which kept net slippages in check. ICICI Bank reported one of the strongest
set of numbers supported by cyclical upturn in NIMs. Within private sector banks, Bandhan Bank
disappointed with high slippages and consequent provisions. Its stressed assets portfolio (GNPA +
restructured assets) is now 21% of its asset book. RBL Bank too disappointed in terms of its asset
quality. In the non-leveraged financials segment, broking companies continued to deliver strong
results.
In the staples segment, the results were generally in line with expectations. However, most company
managements highlighted high commodity prices as a headwind which would necessitate price hikes
going forward. United Spirits reported a strong beat on expectations with revenues up 14% YoY on
the back of higher realisations.
L&T’s PAT was largely in line with expectations while Maruti continued to struggle with
semiconductor shortages impacting sales and profitability. Real estate players like DLF reported
strong pre-sales during the quarter. In general, commodity inflation and margin pressures have
dampened an otherwise strong revenue growth performance across most sectors.
Our institutional equities team runs two baskets on our basket investing platform. The LargeCap
Legends is a 10-stock equal weighted basket and the Majestic Multicaps is a 15-stock equal
weighted basket. Investors can invest in these baskets with a single click on the basket investing
section of our website. In the second week of October, our institutional equities team rebalanced the
two baskets. In the LargeCap Legends basket, SBI Life Insurance was introduced in place of Infosys.
In the Majestic Multicaps basket Nuvoco, Cyient and Fine Organic were added while Endurance,
Mphasis and Sonata Software were removed.
The table below shows select “buy” and “reduce”/“sell” rated stocks as rated by HDFC Securities’
Institutional Equities (HSL IE) team. The full list of stocks rated and their target prices can be
accessed at our website.
Name Target price CMP % Upside
Gail 210 149 41.4%
Gateway Distriparks 375 280 34.0%
SBI Life 1,485 1,145 29.7%
Sudarshan Chemical 765 574 33.3%
Cyient Limited 1,330 1,066 24.8%
Recommended reading for the month:
This month’s recommended reading is an article published in The Guardian on Oct 15, 2021 titled “End to China’s
estate market boom could spell trouble for the economy (read the article here). This is the second successive
month we are recommending an article related to China and we suspect that we will see a lot more of China in this
section in the coming months.
China’s housing related sectors constitute about 30% of its GDP compared to 10-20% for most developed nations.
The article argues that Chinese real estate sector now has overinvestment with a fifth of China’s housing now lie
vacant. A slowdown in Chinese construction activity will have a significant impact on its economic growth.
Equity Outlook
(Source: HSL IE)
HDFC Securities’ Retail Research team has come out with its Diwali picks for Samvat 2078. The
team’s Diwali picks for Samvat 2077 had significantly outperformed the market by returning 88.1%
during the past 12 months compared to Nifty’s 51.7% return during the same period. The table below
summarizes the picks and the target prices assigned by the Retail Research Team (read the full
report here).
(Source: HSL Retail Research)
All of the above institutional equities reports and retail research calls can be accessed on our
website.
Risks:
Taper, supply disruptions, higher energy prices and Chinese economic slowdown are near term
risks. A sticky and persistent inflation would be a bigger worry for the market. For now, most central
banks and market participants tend to view the high inflation readings as transient and likely to
subside over the next few months. However, in case the inflation readings remain elevated for
longer, the central banks could be forced to increase rates faster and higher than they would like.
This would be a key aspect to watch out for in the months to come. Chinese economic activity is
expected to slow down as defaults by multiple Chinese real estate developers would take its toll on
construction activity in China. Chinese economic activity needs to be monitored closely. Valuations in
equity markets do not provide any cushion to negative surprises.
Company Name CMP (Rs/Share) Target (Rs/share) % Upside
Bharti Airtel 686.3 810.0 18.0%
HPCL 310.5 385.0 24.0%
Adani Ports & SEZ 693.2 936.0 35.0%
Bank of Baroda 97.5 113.5 16.4%
CESC Ltd 87.2 113.0 29.6%
Cyient Ltd. 1,067.6 1,371.0 28.4%
Eris Lifesciences 817.3 966.0 18.2%
Gati Ltd. 138.5 187.0 35.0%
Indian Bank 171.8 213.5 24.3%
Mahindra & Mahindra Finance 179.3 227.0 26.6%
Network18 Media 77.2 106.0 37.3%
HDFC Sec Institutional Equities: Select “Sell/Reduce" rated stocks
Name Target price CMP % Downside
Ashok Leyland 115 142 -19.0%
IndusInd Bank 894 1,142 -21.7%
TCNS Clothing 500 750 -33.3%
Titan 1,600 2,395 -33.2%
06
India’s 10yr G-sec yield rose by 17 bps in Oct 2021
During the month of Oct 2021, the 10yr G-sec yield rose by 17 bps from 6.22% as of Sep 30, 2021 to
6.39% as of Oct 29, 2021 driven by a mix of domestic and global factors. On the domestic front, the
RBI discontinued its G-sec Acquisition Programme (G-SAP) which dented the bond market sentiment.
During H1 FY22, the RBI’s G-SAP had supported the G-sec yields at longer end of the curve (above
5yr segment). On the global front, continued rise in crude oil and commodity prices and increase in
bond yields across the geographies had put domestic bond yield under pressure.
India’s 10yr G-sec yield movement in last 3 months
Source: Financial Benchmarks India Private Limited (FBIL)
RBI’s MPC maintained status quo on policy rate and stance in Oct-21 meeting
The RBI’s monetary policy committee (MPC) kept repo rate unchanged at 4% in its Oct-21 bi-monthly
meeting. MPC also decided to continue with the accommodative stance as long as necessary to
revive and sustain growth on a durable basis, while ensuring that inflation remains within the target of
2-6%. The MPC adopted a more calibrated and patient approach towards managing surplus liquidity
and monetary policy support, recognising that there are still some downside risks to growth.
Against the broader market expectations, the RBI suspended its bond buying programme (G-SAP).
However, it committed to provide adequate liquidity in the system through various liquidity
management operations including Operation Twist (OT) and Open Market Operations (OMOs). The
total liquidity injected into the system during H1 FY22 through OMOs, including G-SAP, was Rs. 2.4
lakh crore, as against an injection of Rs. 3.1 lakh crore over the full year FY21.
RBI also provided a calendar to further increase the amount in variable rate reverse repo (VRRR)
auctions from Rs. 4 lakh cr as of Sep-21 to Rs. 6 lakh cr by first week of Dec-21. The central bank has
greater room to adjust liquidity conditions through VRRR auctions. RBI has also considered
complementing the 14-day VRRR auctions with 28-day tenure which would imply more durable
liquidity absorption.
The RBI retained its GDP growth forecast at 9.5% for FY22 while revising down its CPI inflation
forecast to 5.3% for FY22 (from 5.7% earlier) given the lower than expected food inflation momentum
and favourable base effects.
Fixed Income Outlook
India’s CPI inflation eased further in Sep-21
India’s CPI inflation moderated to 4.35% YoY in Sep-21 from 5.30% in Aug-21 led by a favourable
base and softening of food prices. This is for the 3rd consecutive month that CPI inflation has remained
below the RBI’s upper band of 6%. On a sequential (MoM) basis, CPI inflation eased to a 6-month low
of 0.18% in Sep-21 as compared to 0.25% in Aug-21 and 1.1% in Sep-20.
Core inflation (CPI excluding food and fuel) remained flat at 5.8% YoY in Sep-21 as moderation in
housing and education inflation was offset by higher health and recreation & amusement categories.
Fuel inflation stood at 13.6% YoY in Sep-21 as compared to 12.9% in Aug-21, reflecting higher LPG
and kerosene prices.
As per HDFC Bank research, CPI inflation is likely to hover in the range of 4.0-4.5% over the next two
months. From Dec-21 onwards, as the base effect wanes and purchasing power in the system
improves, inflation is expected to rise above 5%. Upside risks to inflation remain high with the rise in
crude oil prices, higher input prices and global supply disruptions.
India’s CPI inflation monthly trend
Source: Ministry of Statistics and Programme Implementation (MOSPI)
Central banks have turned hawkish globally
Globally, there was a synchronised growth slowdown and monetary policy easing since the onset of
Covid crisis. Economies are now re-opening with healthy vaccination progress and there is a broad
consensus among central banks that crisis-level monetary stimulus should be removed. Select central
banks (Russia, Brazil, Mexico, South Korea, Norway and New Zealand among others) have already
hiked rates in CY21, while other major central banks (US Fed, ECB and BoE) have prepared markets
for reduction in bond buying programme or withdrawal of accommodative monetary stimulus.
During the month of Oct-21, US 10yr bond yield rose by 7 bps from 1.49% as of Sep 30, 2021 to
1.56% as of Oct 29, 2021. US bond yields have been volatile recently driven by a rise in crude and
energy prices and inflation concerns, as US Fed prepares to wind down its bond purchase
programme. In the last few months, high inflation prints were tied to items most affected by the
shutdowns and reopening of the economy, but now there are signs that inflation is coming from a
broader set of products and services.
MARKET MACROSCOPE | INVESTMENT PRODUCTS | NOVEMBER 2021
Fixed Income Outlook
08
Source: investing.com
The last US Fed policy meeting minutes highlight the Fed members’ confirmation of tapering that
could begin before the end of CY21. The Fed members discussed a tapering path and suggested to
reduce monthly treasury purchases by $ 10 bn and MBS purchases by $ 5 bn. The Fed is currently
buying $ 80 bn of Treasuries and $ 40 bn of MBS on a monthly basis. The Fed members are
concerned over inflation with several members not seeing inflation pressures as “transitory” anymore
and noted upside risks on account of supply disruptions and labour shortages. Several members
expect to attain full employment by the next year and find an interest rate increase appropriate in
CY22.
US CPI inflation rose to 5.4% YoY in Sep-21 as compared to 5.3% in Aug-21. Energy, food and
shelter prices were the key drivers of inflation and contributed more than 50% to monthly increase in
inflation in Sep-21. Sequentially (MoM), CPI inflation rose by 0.4% in Sep-21 from 0.3% in Aug-21.
Core inflation (CPI excluding food and energy components) stood flat at 4.0% YoY and rose by 0.2%
MoM in Sep-21. Taking into account supply bottlenecks, high commodity prices, and input shortage,
US CPI is likely to remain elevated in the near to medium term.
US CPI inflation monthly trend
Source: tradingeconomics.com
Fixed Income Outlook
2.6
4.2
0.0
0.2
0.4
0.6
0.8
1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
09
Outlook
Post the RBI’s monetary policy, the G-sec yield curve has flattened i.e. the yields at the shorter end of the
curve (up to 3 years) have gone up more than the longer end. The yield curve is expected to gradually
flatten further, as liquidity surplus falls. The RBI has initiated the liquidity normalisation with an increase in
the size of VRRR auction amount and tenure. This will likely drive the yields at the shorter end of the curve
further up from the current levels. The pressure on the longer end of the yield curve is expected to be
relatively lower as government’s fiscal deficit position remains comfortable and term premium (long tenure
yield minus repo rate) is already on a higher side.
India’s G-sec Yield Curve Comparison
Source: RBI, FBIL
Improving economic recovery with a healthy pace of vaccination and rising crude and commodity prices
(imparting upside risks to inflation) have brought the tapering timelines closer. As a result, bond yields have
already risen across the globe and are expected to remain volatile in the near to medium term. Tracking the
global events, Indian bond markets are also expected to remain volatile.
We expect bond yields to gradually rise in the medium-term given the huge G-sec borrowings in FY22. We
continue to expect that RBI is unlikely to announce any reverse repo changes before the February 2022
meeting until it has further clarity on growth impulses, third wave risks, global volatility due to Fed taper and
inflation trajectory.
The G-sec yield curve continues to remain quite steep up to 5yr segment and is relatively flat thereon.
Beyond the 10yr segment, the risk-reward scenario looks unfavourable at current juncture. Hence, fixed
income investors should avoid the longer end of the curve. Steepness at the shorter end of the curve
provides lucrative opportunities to lock carry by investing up to 3yr segment with low to moderate interest
rate risk. The steepness in the curve shall compensate for any MTM losses in the near to medium term.
MARKET MACROSCOPE | INVESTMENT PRODUCTS | NOVEMBER 2021
Fixed Income Outlook
3.30
3.80
4.30
4.80
5.30
5.80
6.30
6.80
7.30
3M 6M 1yr 2yr 3yr 4yr 5yr 6yr 7yr 8yr 9yr 10yr 12yr 14yr 20yr 30yr 40yr
30-Sep-21 29-Oct-21
10
Introduction:
First up, if you are an investor who invests at all times and valuations and who believes that it is
impossible to either time the market or predict market peaks, you should ignore this Deep Dive.
Rather, this deep dive is an analytics for people who are staying on the sidelines because they believe
that markets have reached their peak and may be up for correction.
Does staying on the sideline work? During most times, we know it doesn’t. But we go one step further.
We have tried to figure out if staying on the sideline even works during market peaks. If we are able to
get a sense of that, it will be easier to adopt an investment strategy during current times for the
skeptical investor who assumes that markets are overvalued/have reached their peak.
Again, do remember that there is no way to judge if the markets have reached their peak. In fact, we
all know of people who have been staying on the sidelines from Nifty levels of 12,000. This analysis is
about “even if”.
Let’s consider the 3 investment options at the moment –
• Invest the corpus available for equity investments upfront. (after all, one cant predict the market)
• Invest the corpus available over say a 12-month SIP (cautious stance considering the valuations)
• Stay in liquid, wait for a correction. Invest in markets after a few months (Wait for a correction or at
least for ‘things to settle down’)
So which of the above three options should one choose?
It is impossible to predict when a correction may occur - now or say a few months down the line or if it
takes even longer. It is impossible to predict if the correction will happen from the current levels, or
from 5% higher levels or say from 10% higher levels. Waiting for a correction may itself prove to be a
costly mistake if the markets continue to rally.
But remember, this analysis is about “even if” this is the market peak. That should allow the most
cautious investor to heed the results. So we decided to review historical data around corrections and
see what lessons we could glean from history. We went back to each correction (as defined) in history
and analyzed future returns for different investment strategies around these correction points.
Methodology:
We reviewed Nifty data since inception (July’1990) and analyzed all corrections of magnitude greater
than 15%. We considered three categories of investors. Remember, all the 3 strategies are applied on
peak Nifty values.
• Investor 1- Upfront investor - Does not believe in timing the market. Invests his money upfront
• Investor 2- Systematic Investment Plan (SIP) investor - Believes that these are uncertain times
and spreads his investments from now to next 12 months
• Investor 3 – Cautious investor - Wants the markets to correct or ‘settle down’. Waits for 12
months in liquid and invests after 12 months (btw, our hypothetical investor gets this call right this
time. Real investors, most times, get this call wrong)
Deep Dive - Fearful of Correction? What should one do
MARKET MACROSCOPE | INVESTMENT PRODUCTS | NOVEMBER 2021
11
In all cases where the investor waits before investing (SIP investor and the cautious investor), we
have assumed that the investor earns a post-tax yield of 4% per annum and then invests that corpus
into equity markets. Increasing this to 6% does not materially impact our analysis.
Review of historical data
The table below summarizes all corrections of magnitude greater than 15% from 1990 onwards.
Table 1: History of market corrections
A few points emerge from the above table:
• Corrections are a part of stock market investing. We have had 13 market corrections of more than
15% in the past 31 years. In effect, on an average, a market correction of more than 15% happens
once every 2.4 years. Of course, the corrections are not evenly distributed in time.
• About 7 out of the 13 corrections lasted less than 4 months (from peak to bottom). Around 4
out of the 13 corrections lasted between 9 to 15 months while only 2 corrections lasted for more
than 15 months. Corrections tend to be very fast.
• About 6 out of the 13 corrections were of magnitude more than 30%. However, 3 out of the above 6
corrections happened in the early 1990s. In fact, in the last 20 years, only 3 corrections have been
of magnitude more than 30%- the dotcom bubble bursting in early 2000s, the global financial crises
in 2008 and the Covid meltdown in 2020.
• Out of the 13 corrections, 4 were between 20-30% while 3 others were between 15-20%.
• The decade since 2010 has been a far less volatile period than historical. We have had only 3
corrections (of magnitude greater than 15%) during the decade spaced out across 5 years. The
lower volatility of the Nifty in the last decade may have been contributed by structural changes like
reduction in the weightages of cyclical sectors like commodities, autos etc and the higher
weightage of acyclical sectors like consumer, pharma, IT etc. The lower volatility may also have
been because of the higher weightage of private sector banks and the reduction of weights of the
more cyclical public sector banks.
MARKET MACROSCOPE | INVESTMENT PRODUCTS | NOVEMBER 2021
Period Nifty Value
Deep Dive - Fearful of Correction? What should one do
12
Results:
Result 1:
An SIP investor (who invests in 12 monthly SIP installments beginning on the date of market peak)
achieves significantly better returns than the upfront investor who invests at the market peak. By
definition, the SIP investor will always outperform the upfront investor (because we have assumed that
that the upfront investor invests at the peak). However, the differential in returns is significant. The
median difference in XIRR returns over the subsequent 10-year period is 2.4%. Of course, this
assumes that the investor is correctly able to identify the market peak and then starts investing which
is very difficult to achieve.
Table 2: 10 Yr CAGR return comparison of upfront investor and SIP investor
*Note – the last period starting Jan-20 is not considered for the median calculation as the tenor is too short
Result 2:
A cautious investor who waits for 12 months after peak before investing achieves mixed results. His
returns are lower than the SIP investor in 5 out of the 13 readings. More importantly, such an
investor would have achieved lower returns in 4 out of the last 8 corrections since 2000. The median
difference in XIRR between the two investors was only 1.2%. The really meaningful better results
were achieved by the cautious investor only in 1994 and 2008 when the markets had an
extreme correction of more than 50%. This would suggest that an investor should use the SIP route
even if he expects a market correction as the incremental returns are not meaningful even while he
risks missing out on a rally.
MARKET MACROSCOPE | INVESTMENT PRODUCTS | NOVEMBER 2021
Period XIRRs Outperformance by
Median 2.40%
13
Table 3: 10 Yr CAGR return of a SIP investor v/s a cautious investor
*Note – the last period starting Jan-20 is not considered for the median calculation as the tenor is too short
Summary:
Corrections are a part of equity investment with a correction of more than 15% occurring once every
2.4 years on average. As history shows, long term investors who stay invested achieve attractive
returns.
• An SIP investor who invests over a 12-month period (beginning at the market peak) achieves
significantly better returns than an upfront investor who invests at the peak of the market. At times
of high market valuation, when an investor anticipates a market correction, it would be prudent to
invest through an SIP system rather than not investing at all.
• An SIP investor would perform broadly in line with a cautious investor (an investor who invests only
12 months after a market peak). This would suggest that SIP investment is a better strategy than
waiting for a correction. An investor who is waiting for a correction risks missing out on further
rallies. This has happened in the past few months where some investors have been waiting for a
correction from Nifty levels of 12,000 till now even as Nifty hit a high level of 18,600.
• We had also conducted an alternative analysis where the SIP investor (investing across 12 monthly
installments) begins investing 6 months before the market peaks and continues investing for 6
months after the market has peaked. The returns for this investor too were broadly in line with the
SIP investor who invests for 12 months after the market peaks. In other words, irrespective of
whether a market has peaked or whether a peak lies a few months ahead in the future, SIP
strategy is better than waiting for a correction as discussed in the paragraph above.
MARKET MACROSCOPE | INVESTMENT PRODUCTS | NOVEMBER 2021
Period XIRR Outperformance by
Investor Cautious Investor
Median 1.20%
14
For those who would like to point out a slight edge of the cautious investor return over the SIP investor
return –
The above results are for extreme market conditions when a significant market correction occurs soon
after investment. This is generally not the case as the markets have a long term upward trending bias.
We also compared waiting for a correction for 12 months vs the returns from SIP investing(spread
over 12 months) . There were 363 monthly observations spread over 30 years. In almost 71% of the
cases, SIP investing was better than waiting for a 12 month period for a correction.
• From the above results, it would seem that an investor is better off investing through the SIP route
even if he is afraid that a correction might be near. An SIP investment ensures that the investor’s
returns are far superior to investing at the peak and the investor is able to invest at values far lower
than peak values. At the same time, the investor is also able to avoid the risk of missing out on any
further rallies in the market.
• The nature, duration and extent of correction can influence results. Our analysis is based on a 12-
month SIP. An SIP of a shorter duration might be more optimum in case of shorter, swifter
corrections of the like we saw in 2004, 2006 or 2020 to name a few. Ultimately, the SIP duration
can vary but it’s the way to go in such times
MARKET MACROSCOPE | INVESTMENT PRODUCTS | NOVEMBER 2021
Deep Dive - Fearful of Correction? What should one do
Dots to Join
15
1. Silicon Price Surge: The shortage in silicon metal, sparked by a production cut in China, has sent
prices up 300% in less than 2 months. China’s production cuts are part of its efforts to reduce
power consumption. Silicon, in various forms, is used in sectors such as car parts, computer chips,
solar PV cells, glass, medical implants, deodrants etc.
2. Indonesia FMCG de-rating: Consumer staples have seen a sharp de-rating in Indonesia in the
past 5 years. Unilever Indonesia currently trades at ~20x 1-year forward P/E, at a 50% discount to
its 10-year average. Indonesian staples stocks, which in the past have traded at similar valuations
as Indian staples, are now trading at a large discount. Unilever Indonesia traded at a ~25%
premium to Hindustan Unilever over 2011-16, which has now moved to a ~66% discount. Slower
growth, market share losses and pressure on high margins have contributed to the de-rating
according to analysts.
3. Indian Urbanisation: The gap between the growth of urban population and the rural population in
India has widened over the years. In the last decade urban population is estimated to have grown
at 3.4x the growth rate of the rural population. In the coming decade, this is expected to increase
to 5x. About a third of India’s population currently lives in urban areas. In the next 15 years, almost 40% of India’s population is expected to live in urban areas.
Source – Economic Times
Source – Credit Suisse
Source – India Data Hub
4. Policy Normalization: Globally, central banks have referred rising inflation as transitory and cited
fragile growth to justify accommodative monetary policies for much of 2021. However, with
improving growth prospects and rising price concerns, central banks have either hiked interest
rates or turned hawkish in their monetary policy stance. Many advanced economies are facing
inflation above their upper bound.
5. China’s Steel Production: China’s steel production in September 2021 fell by close to 20% YoY
and around 11% MoM. This, however, is positive for Indian steel companies as it points to
.
6. Freight Rates: The average cost of shipping a standard large container is 2.0 - 7.0x higher YoY
across key routes. The average door-to-door shipping time for ocean freight has gone up to 70
days from 41 days a year ago. Accumulated delays, pandemic protocols and poor schedule
reliability are causing containers to remain in transit for longer, reducing the effective number of containers in active circulation.
Source: Mint
Index Performance
17
Data as on 31st October 2021. Returns less than 1 year are in absolute terms and greater than 1 year are CAGR
Source: ACE MF, BSE, NSE
Index Performance (31-October-21)
Indices 1 M 3 M 6 M 1 Y 2 Y 3 Y 5 Y 10 Y
NIFTY 50 0.3 12.1 20.8 51.8 22.0 19.4 15.4 12.7
S&P BSE SENSEX 0.3 12.8 21.6 49.7 21.6 19.9 16.3 12.8
S&P BSE 500 0.2 10.3 21.8 57.7 24.9 20.0 15.1 13.5
S&P BSE Mid-Cap 0.1 9.5 24.4 69.6 30.5 20.1 13.4 14.9
S&P BSE Small-Cap -0.4 4.5 29.1 88.0 43.7 25.4 15.6 14.9
NIFTY AUTO 6.6 12.4 17.2 45.6 15.7 8.6 2.4 11.1
NIFTY BANK 4.5 13.1 19.3 63.7 14.1 15.9 14.9 14.6
Nifty Financial Services 2.7 14.1 20.8 61.5 17.9 20.9 18.5 16.5
NIFTY FMCG -5.5 6.0 13.7 29.9 8.8 10.2 12.2 13.6
NIFTY INFRA 0.4 13.8 24.5 61.2 23.3 19.3 12.0 6.5
NIFTY IT -1.8 12.9 34.1 64.5 48.8 32.1 27.8 18.5
NIFTY MEDIA 5.0 25.1 45.1 58.3 12.1 -3.4 -5.3 6.1
NIFTY METAL -0.9 -3.6 14.8 137.4 49.2 19.1 15.7 5.8
NIFTY NEXT 50 -0.7 6.9 21.1 53.9 21.1 16.6 12.3 15.4
NIFTY PHARMA -4.1 -3.8 3.0 23.4 32.8 12.5 3.6 11.3
NIFTY PRIVATE BANK 3.8 12.3 14.8 52.3 10.4 12.4 13.0 0.0
NIFTY PSU BANK 13.8 15.7 37.5 124.1 6.2 -1.0 -2.3 -1.3
NIFTY REALTY -2.9 25.1 61.1 118.5 36.2 32.4 18.8 6.7
S&P BSE Consumer Durables 4.5 18.8 33.7 79.5 26.8 31.2 27.3 20.7
S&P BSE OIL & GAS Index -0.9 17.5 21.0 49.6 7.4 11.1 8.1 7.3
S&P BSE Power Index 4.3 27.6 34.5 93.0 29.7 19.5 10.7 4.2
S&P BSE Telecom -2.6 19.3 27.8 60.8 37.8 20.5 7.8 3.0
MARKET MACROSCOPE | INVESTMENT PRODUCTS | NOVEMBER 2021
Macro Economic Indicators
GDP Growth (%): Inflation:
Domestic Yield Movement: 10 Year US Treasury Yield Movement:
Oct-20 Jan-21 Apr-21 Jul-21 Oct-21
US Yields 0.87 1.07 1.63 1.23 1.56
Oct-20 Jan-21 Apr-21 Jul-21 Oct-21
Repo 4.00 4.00 4.00 4.00 4.00
1 Yr CD 3.80 4.03 4.13 3.98 4.18
10 Yr Gsec 5.88 5.95 6.03 6.20 6.39
Aug-20 Nov-20 Feb-21 May-21 Aug-21
IIP -7.10 -1.60 -3.20 27.60 11.90
Oct-20 Jan-21 Apr-21 Jul-21 Oct-21
Composite PMI 58.0 55.8 55.4 49.2 58.7
Sep-20 Dec-20 Mar-21 Jun-21 Sep-21
WPI 1.32 1.95 7.89 12.07 10.66
CPI 7.27 4.59 5.52 6.26 4.35
Source : Ministry of Statistics & Programme Implementation
Source : investing.com, RBI, Bloomberg
Q4
FY20
Q1
FY21
Q2
FY21
Q3
FY21
Q4
FY21
Q1
FY22
Quaterly
Source : Ministry of Statistics & Programme Implementation
18MARKET MACROSCOPE | INVESTMENT PRODUCTS | NOVEMBER 2021
7.1
20.1
-30
-20
-10
0
10
20
30
Repo Rate 10 Yr G-sec 1 Yr CD Rates (RHS)
0.87
1.56
0
1
1
1
1
1
2
2
2
FII Equity Flows (Rs cr): FII Debt Flows (Rs cr):
USD vs. INR: Gold Price (Rs/10gm):
Brent Crude (USD/Barrel):
Brent
Oct-20 Jan-21 Apr-21 Jul-21 Oct-21
$ vs. 74.11 72.95 74.08 74.42 74.88
Oct-20 Jan-21 Apr-21 Jul-21 Oct-21
Gold Price 50,710 49,074 46,743 48,423 47,927
Oct-20 Jan-21 Apr-21 Jul-21 Oct-21
FII Debt
Source : NSDL
Source :Investing.com
Oct-20 Jan-21 Apr-21 Jul-21 Oct-21
FII Equity
Source : NSDL
2,492
1,272
-8,000
-4,000
0
4,000
8,000
12,000
16,000
O ct
-2 0
N o
v- 2
Performance
Data as on 31st Oct 2021 Launch Date: 06-Apr-21, Returns less than 1 year are absolute, more than 1 year are CAGR
Stock % Stock %
Infosys 5.7% PNC Infratech 2.9%
State Bank of India 5.2% Supreme Industries 2.9%
Reliance Industries 5.1% Sun TV Network 2.9%
Saregama India 4.4% Laurus Labs 2.8%
Axis Bank 4.4% Larsen & Toubro 2.8%
Birla Corporation 4.1% Max Financial Services 2.6%
Apollo Hospitals 4.1% Mrs. Bectors Food Specialities 2.5%
Somany Ceramics 4.1% Zydus Wellness 2.4%
Atul Ltd 3.7% Thyrocare Technologies 2.2%
Jk Cement 3.4% Phoenix Mills 2.1%
Mahindra & Mahindra 3.3% Bajaj Auto 1.9%
Radico Khaitan 3.2% KEC International 1.7%
Crompton G. Consumer Elec 3.1% Cash 4.1%
MARKET MACROSCOPE | INVESTMENT PRODUCTS | NOVEMBER 2021
Large Cap, 42%
Mid Cap, 29%
Small Cap, 25%
India Horizons All-star Portfolio NIFTY LargeMidcap 250 NIFTY 500 Multicap 50:25:25
India Horizons Bellwether Portfolio
Performance
Data as on 31st Oct 2021. Launch Date: 06-April-21. Returns less than 1 year are absolute, more than 1 year are CAGR
Stock % Stock %
Infosys 5.4% Ultratech Cement 2.7%
State Bank of India 5.2% Sun TV Network 2.5%
Reliance Industries 5.1% UPL Ltd 2.5%
SBI Life Insurance Company 5.0% Thyrocare Technologies 2.5%
ITC 4.7% Bajaj Auto 2.3%
Carborundum Universal 4.4% Godrej Agrovet 1.6%
Dr. Reddy's Laboratories 4.0% KEC International 1.3%
Bata India 3.8% Huhtamaki PPL 1.3%
TCS 3.8% Cash 5.0%
1%
1%
2%
3%
3%
4%
5%
5%
5%
6%
9%
11%
13%
31%
MISCELLANEOUS
POWER
India Horizons Bellwether Portfolio Nifty 50 S&P BSE 200
22MARKET MACROSCOPE | INVESTMENT PRODUCTS | NOVEMBER 2021
CROSSWORD
Note : Solution for the above crossword will be provided in next month’s newsletter
Answers of last month’s crossword: Across
4 Premium
Across
2 The action or process of gradually writing off the initial cost of an asset.(12)
5 An individual or a corporate that provides funds in anticipation of repayment with interest in future (6)
7 A security that represents the ownership of a fraction of a corporation (5)
9 An investor who chooses the preservation of capital over the potential for a higher return is called a
risk - ________ investor (6)
10 A sum of money borrowed by one party from another (4)
13 A legal document or certificate showing ownership of an asset (5)
14 Regulatory authority of capital markets in India (acronym) (4)
15 A global, decentralized digital currency.(7)
Down
1 A mutual fund scheme that invests in debt and equity in nearly equal proportion(8)
3 A call option is __ ___ ______ when the underlying stock price is higher than the strike price.(2,3,5)
4 The amount by which the cost of a country's imports exceeds the value of its exports.(5,7)
6 Possibility of loss(4)
8 The separation of a large company into two or more smaller organizations(8)
11 A request by a policyholder for compensation of losses covered by insurance.(5)
12 Purchase of a controlling share in a company.(6)
23MARKET MACROSCOPE | INVESTMENT PRODUCTS | NOVEMBER 2021
Disclaimer
24
Investment in securities market are subject to market risks, read all the related documents carefully before investing.
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Information herein is believed to be reliable however HDFC Securities Ltd. does not warrant its completeness or accuracy. Although HDFC Securities Ltd. tries to ensure that all information and materials in relation to the products, services, facilities, offerings or otherwise provided as part of its website or through any other source of communication, is correct at the time of inclusion on the communication, it does not guarantee the accuracy of the information.
Use of this presentation /note is at the sole risk of the user / client. The data and information provided on the website or in any presentation / note is not professional advice and should not be relied upon as such. HDFC Securities Ltd. may at any time edit, alter and or remove any information in whole or in part that may be available and that it shall not be held responsible for all or any actions that may subsequently result into any loss, damage and or liability. Nothing contained herein is to be construed as a recommendation to use any product or process, and HDFC Securities Ltd. makes no representation or warranty, express or implied that, the use thereof will not infringe any patent, or otherwise
HDFC Securities Ltd. would have an exclusive discretion to decide the clients who would be entitled to its investing services. HDFC Securities Ltd. also reserves the right to decide on the criteria based on which clients would be chosen to participate in these services. HDFC Securities Ltd. is incorporated under the regulatory laws of India and hence adheres to the same laws for entering into or executing an agreement with the client
This note does not purport to contain all the information that the recipient may require. Recipients should not construe any of the contents herein as advice relating to business, financial, legal, taxation, or investment matters and are advised to consult their own business, financial, legal, taxation and other advisors concerning the company.
This note does not constitute an offer for sale, or an invitation to subscribe for, or purchase equity shares or other assets or securities of the company and the information contained herein shall not form the basis of any contract. It is also not meant to be or to constitute any offer for any transaction.
As a distributor, HDFC Securities Ltd. does not assume any responsibility or liability arising from the sale of any product and the investor's contract for purchase/sale is directly with the product provider. HDFC Securities Ltd. may earn a distribution fee from the product provider on completion of sale of such products. To reiterate, HDFC Securities Ltd. only acts as a Distributor. There is no element of advisory involved.
MARKET MACROSCOPE | INVESTMENT PRODUCTS | NOVEMBER 2021