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India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Soft economic data points coming out of western economies (weak PMI readings breaching the
critical level of 50 globally, discouraging consumer confidence retesting the 2008 lows and stressed
housing sector) coupled with the perplexing sovereign debt crisis in the peripheral Euro zone has
once again raised the odds of a double dip recession in the troubled western economies
ƒ Indian markets have corrected by more than 20% in CY11 and are trading below 14x FY12E EPS of |
1165
ƒ We expect more of a time based correction. We expect the Indian markets to oscillate in a broad
trading range till the time reasonable clarity emerges from various local and global macro
headwinds
ƒ We believe that any sharp cuts should be bought into from a three to five years perspective. Buying
is recommended in our large cap, midcap and diversified model portfolio depending on risk return
appetite as choppy markets provide an opportunity to accumulate fundamentally sound stocks
ƒ Given the global macro headwinds along with domestic uncertainty, a good investments strategy to
adopt would be staggered accumulation of portfolio of stocks through SIP
ƒ Our analysis shows that when investments are made whenever the markets are below 18 x TTM
(current valuation), there is a good probability of making handsome returns in the next three years
z Global investors have reduced their exposure to emerging markets due to rising risk aversion
z Developed markets have remained outperformers despite being the epicentre of the current
global financial crises
z Post revision of earnings to 4% and 5% for FY12 and FY13E, respectively, we expect the Sensex EPS to
grow by 7% and 16% in FY12E and FY13E, respectively
z There may be further downgrades as globally exposed sectors like IT and metals & mining contribute
12% and 16% to the overall Sensex earnings for FY12E
How to play equities in 2011? – The SIP way…
ƒ We believe the rest of CY11 will be a volatile due to news emerging from the western world. Also,
the markets will react sharply to any surprise coming from within the country on the
political/economic front. In such a scenario, we stick to our previous strategy of buying equities
systematically in a staggered manner. We would, thus, recommend following our model portfolio
investment approach
ƒ Don’t time …rather accumulate quality
ƒ We expect more of a time based correction and expect the markets to oscillate in a broad trading
range till the time reasonable clarity emerges from the various local and global macro headwinds
ƒ In case of a negative outlier event, the markets may fall further in the wake of panic selling.
However, we do not expect the markets to sustain at such levels. In such an environment, timing
the markets would be extremely difficult. We believe that any sharp cuts should be bought into
from a three to five years perspective. Buying is recommended in large caps and selective quality
midcaps
Name of the company
Largecap Midcap Diversified
Largecap Stocks
Auto 7 - 4.9
Maruti Suzuki 3 - 2.1
Tata Motors 4 - 2.8
Bank 24 - 16.8
HDFC 8 - 5.6
HDFC Bank 8 - 5.6
SBI 8 - 5.6
Capital Goods 8 - 5.6
L & T 8 5.6
Cement 3 - 2.1
ACC 3 - 2.1
FMCG 9 - 6.3
Asian Paints 3 - 2.1
ITC 6 - 4.2
Metals 12 - 8.4
Coal India 6 - 4.2
Hindalco 3 - 2.1
Tata Steel 3 - 2.1
Oil and Gas 13 - 9.1
Gail India 3 - 2.1
ONGC 4 - 2.8
Reliance 6 - 4.2
Pharma 4 - 2.8
Lupin 4 - 2.8
Power 3 - 2.1
NTPC 3 - 2.1
IT 14 - 9.8
Infosys 6 - 4.2
TCS 8 - 5.6
Telecom 3 - 2.1
Bharti Airtel 3 - 2.1
Midcap Stocks
Auto - 8 2.4
Exide Ind. - 8 2.4
Aviation - 6 1.8
Jet Airways - 6 1.8
Bank - 20 6.0
Federal Bank - 8 2.4
Oriental Bank of Comm - 6 1.8
Yes Bank - 6 1.8
Construction - 6 1.8
JP Associate - 6 1.8
FMCG - 6 1.8
Dabur India - 6 1.8
Oil and Gas - 6 1.8
GSPL - 6 1.8
Pharma - 14 4.2
Biocon - 6 1.8
Glenmark - 8 2.4
Power - 8 2.4
PTC - 8 2.4
Realty - 6 1.8
Oberoi - 6 1.8
Retail - 6 1.8
Shoppers Stop - 6 1.8
IT - 6 1.8
Mahindra Satyam - 6 1.8
Media - 8 2.4
Dish TV - 8 2.4
Total 100 100 100
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Soft economic data points coming out of western economies (weak PMI readings breaching the
critical level of 50 globally, discouraging consumer confidence retesting the 2008 lows and stressed
housing sector) coupled with the perplexing sovereign debt crisis in the peripheral Euro zone has
once again raised the odds of a double dip recession in the troubled western economies
ƒ Indian markets have corrected by more than 20% in CY11 and are trading below 14x FY12E EPS of |
1165
ƒ We expect more of a time based correction. We expect the Indian markets to oscillate in a broad
trading range till the time reasonable clarity emerges from various local and global macro
headwinds
ƒ We believe that any sharp cuts should be bought into from a three to five years perspective. Buying
is recommended in our large cap, midcap and diversified model portfolio depending on risk return
appetite as choppy markets provide an opportunity to accumulate fundamentally sound stocks
ƒ Given the global macro headwinds along with domestic uncertainty, a good investments strategy to
adopt would be staggered accumulation of portfolio of stocks through SIP
ƒ Our analysis shows that when investments are made whenever the markets are below 18 x TTM
(current valuation), there is a good probability of making handsome returns in the next three years
z Global investors have reduced their exposure to emerging markets due to rising risk aversion
z Developed markets have remained outperformers despite being the epicentre of the current
global financial crises
z Post revision of earnings to 4% and 5% for FY12 and FY13E, respectively, we expect the Sensex EPS to
grow by 7% and 16% in FY12E and FY13E, respectively
z There may be further downgrades as globally exposed sectors like IT and metals & mining contribute
12% and 16% to the overall Sensex earnings for FY12E
How to play equities in 2011? – The SIP way…
ƒ We believe the rest of CY11 will be a volatile due to news emerging from the western world. Also,
the markets will react sharply to any surprise coming from within the country on the
political/economic front. In such a scenario, we stick to our previous strategy of buying equities
systematically in a staggered manner. We would, thus, recommend following our model portfolio
investment approach
ƒ Don’t time …rather accumulate quality
ƒ We expect more of a time based correction and expect the markets to oscillate in a broad trading
range till the time reasonable clarity emerges from the various local and global macro headwinds
ƒ In case of a negative outlier event, the markets may fall further in the wake of panic selling.
However, we do not expect the markets to sustain at such levels. In such an environment, timing
the markets would be extremely difficult. We believe that any sharp cuts should be bought into
from a three to five years perspective. Buying is recommended in large caps and selective quality
midcaps
Name of the company
Largecap Midcap Diversified
Largecap Stocks
Auto 7 - 4.9
Maruti Suzuki 3 - 2.1
Tata Motors 4 - 2.8
Bank 24 - 16.8
HDFC 8 - 5.6
HDFC Bank 8 - 5.6
SBI 8 - 5.6
Capital Goods 8 - 5.6
L & T 8 5.6
Cement 3 - 2.1
ACC 3 - 2.1
FMCG 9 - 6.3
Asian Paints 3 - 2.1
ITC 6 - 4.2
Metals 12 - 8.4
Coal India 6 - 4.2
Hindalco 3 - 2.1
Tata Steel 3 - 2.1
Oil and Gas 13 - 9.1
Gail India 3 - 2.1
ONGC 4 - 2.8
Reliance 6 - 4.2
Pharma 4 - 2.8
Lupin 4 - 2.8
Power 3 - 2.1
NTPC 3 - 2.1
IT 14 - 9.8
Infosys 6 - 4.2
TCS 8 - 5.6
Telecom 3 - 2.1
Bharti Airtel 3 - 2.1
Midcap Stocks
Auto - 8 2.4
Exide Ind. - 8 2.4
Aviation - 6 1.8
Jet Airways - 6 1.8
Bank - 20 6.0
Federal Bank - 8 2.4
Oriental Bank of Comm - 6 1.8
Yes Bank - 6 1.8
Construction - 6 1.8
JP Associate - 6 1.8
FMCG - 6 1.8
Dabur India - 6 1.8
Oil and Gas - 6 1.8
GSPL - 6 1.8
Pharma - 14 4.2
Biocon - 6 1.8
Glenmark - 8 2.4
Power - 8 2.4
PTC - 8 2.4
Realty - 6 1.8
Oberoi - 6 1.8
Retail - 6 1.8
Shoppers Stop - 6 1.8
IT - 6 1.8
Mahindra Satyam - 6 1.8
Media - 8 2.4
Dish TV - 8 2.4
Total 100 100 100
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