Monthly Issue - Money Manager

95 January 2015
The World Bank in its recent

report has predicted that India
is set to become the fastestgrowing economy in the world
by 2017. We continue to
witness rise in investor
confidence and improved
macro-economic indicators.
Over the medium-term, the
growth is expected to rise
steadily to 7 per cent as
reforms begin to yield results.
Growth impacts in many ways.
Anup Bagchi
There is a real increase in
MD & CEO
ICICI Securities Ltd.
income as per-capita income
goes up. Government is able
to collect more taxes and therefore their spending goes up.
There is an improvement in infrastructure and overall well
being. The other impact is on the investors who invest into
the growth of the economy through stock markets. Stock
markets or equity markets reflect the wealth generated by
companies and directly grows with the growth in the
economy. Investors in equity enjoy the benefits of growth of
businesses they invest into and the overall growth of the
economy. Therefore investing into the stock markets can
give a multiplier effect to one's wealth in such times.
How do these changes impact you? As you start the new
year, it is a good idea to sit with your family and have a
discussion on your life goals. These goals should translate

into where you should be investing. Long-term goals, like
retirement, can be covered through investments through a
larger investment into equity and a smaller investment into
other assets like fixed deposits or gold. Your medium to
short-term goals should be covered through a more
conservative allocation into equity. As you go through the
process of having a clear investment plan, you can get to
really understand how much you should be investing in
different asset classes. It is also a good idea to find the
surplus assets you have, after covering your key life goals.
Given the expected growth in the markets, you could
choose to invest these surplus assets based on your risk
appetite, with a larger portion into equity.
Having an understanding of your overall exposure to equity,
in a structured way, can give you a good indication how
markets could impact growth in your personal wealth.
Given that the value of equity fluctuates, knowing your
exposure into equity will also give a good indication on the
risk you carry.
As we move ahead to a new year, I wish that the year brings
you closer to your life goals and dreams. Our message
remains the same - 'Keep investing and stay invested for
your life goals'. Through this magazine and our website
www.icicidirect.com we want to make an earnest attempt to
partner with you in setting and achieving your financial
goals. Do walk into any of your Neighbourhood Financial
Superstore and talk to us.
ICICIdirect Money Manager
January 2015
The year gone by saw a definite revival in investor sentiment. As

we enter the New Year, there is growing optimism that this could
be an attractive year, especially for financial assets.
The equity market seems to have shifted into a higher growth
trajectory, the debt market is waiting for a boost from further
softening of interest rates, and a further rate cut will boost other
sectors like real estate.
With each asset class facing its own ups and downs, how should
you position your investment portfolio for the year 2015? Our
cover story looks into each asset class and the factors that are
likely to impact them, along with the best investment advice for
the year ahead from some of the leading fund managers in the
industry.
Further, in order to give you a 'big picture' of markets in particular,
we bring to you the fundamental, technical and derivatives
market outlook 2015, from our internal team of research experts.
Our research team also presents the performance review of
different categories of mutual funds, along with the outlook for
near future.
I would also like to draw your attention to our Guest Column by
Rohit Salhotra, MD & CEO, ICICI Home Finance Company, who
provides us with the key developments of real estate sector in the
year 2014 and the outlook for 2015. So read on, stay updated and
involved. Do write in with your feedback at moneymanager@
icicisecurities.com and share your thoughts.
Team ICICIdirect Money Manager wishes you a happy and
prosperous New Year.
Your magazine is now also available on www.magzter.com, a
digital newsstand.
Editor & Publisher
Abhishake Mathur, CFA
Coordinating Editor
Yogita Khatri
Editorial Board
Sameer Chavan, CWM, Pankaj Pandey
Editorial Team
Azeem Ahmad, Nithyakumar VP CFPCM, Nitin Kunte, Sachin Jain,

Sheetal Ashar
January 2015
MD Desk...................................................................................................1
Editorial.....................................................................................................2
Contents....................................................................................................3
News........................................................................................................4
Fundamental Market Outlook 2015
By Pankaj Pandey, Head - Research, ICICIdirect....................................5
Technical Outlook 2015
Dharmesh Shah, Head - Technical Research, ICICIdirect shares his
views on markets, currency, gold and Brent crude for 2015..............11
Derivatives Market Outlook 2015
By Amit Gupta, Head - Derivatives, ICICIdirect...................................28
Top Stock Ideas for 2015.......................................................................... 33
Flavour of the Month: Investment Outlook 2015
Here we bring to you several fund managers' views on how they see
2015 panning out for major asset classes and their advice for retail
investors. Read on................................................................................53
Guest Column: Real Estate Outlook 2015
By Rohit Salhotra, MD & CEO, ICICI Home Finance Company Ltd......65
Mutual Funds Review 2014 and Preview 2015.............................................69
Mutual Fund Top Picks
Here we present our research team's top mutual fund
recommendations, across equity and debt categories...................74
Ask Our Planner
Your personal finance queries answered.........................................76
Updated Equity Model Portfolio..................................................................80
Quiz Time.................................................................................................85
Yearly Trends........................................................................................... 86
Premium Education Programmes Schedule.................................................90
January 2015
Equity savings scheme could be tweaked to make it more attractive

The government's Rajiv Gandhi Equity Savings Scheme (RGESS), aiming to draw retail
investors into the equity market through tax exemptions, could be changed in the coming
Budget for 2015-16. According to sources, the government might reduce the lock-in for
the scheme from the existing three years to one year, to draw investors. Currently, the
scheme offers a fixed lock-in for the first year and flexible lock-in for the next two years.
Additionally, the plan is to increase the benefits for not only first-time investors but those
already doing so in equity, if they put money in the scheme.
Courtesy: Business Standard
Banks to get freedom in fixing base rate: RBI

After four years of introducing base rate as the benchmark lending rate, Reserve Bank of
India (RBI) has shown for the first time that it is thinking of making it more flexible in
calculating it. In a move to offer operational freedom to banks, RBI said banks can do it
either on the basis of average cost of funds or on marginal cost of funds or any reasonable
method provided it is consistent and made available for supervisory review/scrutiny as
and when required.
Courtesy: The Economic Times
Real estate investment trusts may get taxation relief

Real estate investment trusts (REITs), notified last year, have so far found few takers due to
taxation-related issues. To address this, the Central Board of Direct Taxes (CBDT) wants
this market instrument to be made exempt from Minimum Alternate Tax (MAT). The idea
behind granting a 'pass-through' status to REITs was not to levy MAT on those. It is a
technical issue we are working to resolve, said a source. REITs are a security instrument
that sell on bourses like a stock and invests in real estate - properties or mortgages.
Courtesy: Business Standard
RBI cuts repo rates by 25 basis points

Encouraged by softening inflation, the Reserve Bank of India (RBI) decided to cut the
benchmark interest rate by 0.25 per cent to 7.75 per cent with a view to boost growth. The
decision to reduce repo rate comes a fortnight ahead of the scheduled date of monetary
policy announcement on February 3. The RBI has been keeping the benchmark interest
rate at elevated level at 8 per cent since January 2014.
Courtesy: The Hindu
Sebi floats discussion papers on e-IPOs, fast-tracking FPOs

The Securities and Exchange Board of India (SEBI) has proposed draft norms for initial
public offerings (IPOs) in electronic form and fast track follow-on public offerings (FPOs)
and rights issues in an effort to minimize the listing timeline, boost retail participation and
make it easier for companies to raise money. To enable electronic-IPOs, Sebi proposed
allowing investors to submit applications to a registered stock broker, depository
participant (DP) or registrar and transfer agent (RTA) and self-certified syndicate bank
(SCSB). Depositories can access the stock exchange platform and, in turn, provide the
same to their DPs or RTAs, Sebi proposed. Investors, however, will continue to have the
option of submitting applications supported by blocked amount (ASBA) to SCSB or stock
broker.
Courtesy: Livemint
January 2015
FUNDAMENTAL
MARKET OUTLOOK 2015
Growth nourishment to resurrect economic recovery
Pankaj Pandey,
Head-Research,
ICICIdirect
Equity markets, having

appreciated 29% this year,
have been running ahead of an
economic recovery, which is
expected to follow with a lag.
The government has already
initiated several confidencebuilding measures and taken
key decisions like allowing
foreign direct investment (FDI)
in several sectors, railway fare
hike, online environment &
forest clearance, etc. However,
an economic recovery is
expected only at a gradual
pace. After trading around 14x
one year forward EPS
(earnings per share) for most of
the last five years, the Sensex is
now trading at 14.6x one year
forward EPS (FY16E).
is entering a new phase of

economic growth that would
be characterised by a multiyear bull run. In this backdrop,
we expect four major themes
to play out, which will last for
the foreseeable future.
Consumption growth: With a
revival in macroeconomic &
per capita income growth,
lifestyle-based consumption
sectors would be direct
beneficiaries. While
consumption expenditure has
always been the driver of
Indian economic growth, the
pace and size of consumption
spends is expected to multiply
manifold. With favourable
demographics and the largest
working age population, India
is set to have largest middle
class by 2050, contributing
32% of global middle class
spending. On the one hand,
with more people crossing the
poverty line, overall
consumption is expected to
increase while on the other,
We have already witnessed a

bottoming out of the economic
growth cycle, which coupled
with a reduction in crude and
other commodity prices has
aided lower inflation. This has
also led to hopes of a rate cut in
the first half of next year. India
January 2015
FUNDAMENTAL
MARKET OUTLOOK 2015
with rising income level,
several households would
move up the value chain
resulting in premiumisation.
Consumption spending is
expected to cross $3.2 trillion
by 2025, 3x of US$991 billion in
2010. Consumption driven
sectors like branded apparel,

communication, healthcare,
housing, consumer durables,
fast-moving consumer goods
(FMCG) and automobile would
stand out and exhibit
accelerated growth in years to
come.
32% of world's middle class spending will be in India by 2050
20
00
20
03
20
06
20
09
20
12
20
15
20
18
20
21
20
24
20
27
20
30
20
33
20
36
20
39
20
42
20
45
20
48
10 0%
9 0%
8 0%
7 0%
6 0%
5 0%
4 0%
3 0%
2 0%
1 0%
0%
Chi na
Indi a
Othe r A sia
Japan
Lower cost of capital: Secondly,

with an improvement in
medium-term economic
outlook that would warrant
higher foreign inflows in
sovereign and corporate debt,
cost of capital would gradually
come down. In addition, a
structural shift in retail inflation
by almost 400 basis points
(bps) from double digit to
expected sustainable 6%
levels is a marked
improvement leading to
positive real interest rates,
which may prompt the Reserve
Bank of India (RBI) to cut
Uni ted States
EU
Othe rs
interest rates by 75-100 bps in

the next calendar year. Both
these measures would
facilitate capital investments,
which would drive growth and
enhance profitability. This, in
turn, would be reflected
through expansion in valuation
multiples. Our analysis
suggests that sectors like auto
ancillaries, capital goods,
cement, ceramic products,
logistics; packaging and plastic
products would be key
beneficiaries of lower cost of
capital and may witness a
multiple expansion.
6
January 2015
FUNDAMENTAL
MARKET OUTLOOK 2015
Output based on interest rate sensitivity with cost of capital
FY14
WACC
Agro Chemical
Alcoholic Beverages
Auto Ancillaries
Automobile
Cables
Capital Goods Electrical Eq
Capital Goods-Non Elec.
Cement
Ceramic Products & Tiles
Chemicals
Construction
Consumer Durables
Crude Oil & Natural Gas
Gems and Jewellery
Diversified
Edible Oil
Entertainment
Fertilizers
FMCG
Gas Distribution
Glass & Glass Products
Healthcare
Hotels & Restaurants
Infrastructure Developers
WACC in diff scenario

ROCE (4 ROCE
-0.5% -1.0% -1.5% -2.0% yr avg) (FY14)
12.6
13.3
12.5
12.5
12.7
12.8
13.2
12.6
12.5
12.4
13.6
12.2
12.3
12.0
13.4
12.9
12.3
13.0
12.2
12.4
12.9
12.0
12.9
13.6
12.3
13.1
12.2
12.2
12.5
12.5
13.0
12.3
12.2
12.0
13.4
11.8
11.9
11.8
13.2
12.7
11.9
12.8
11.8
12.0
12.8
11.7
12.6
13.5
11.9
13.0
12.0
11.9
12.3
12.1
12.7
11.9
11.9
11.7
13.3
11.4
11.5
11.6
13.0
12.5
11.5
12.5
11.4
11.7
12.7
11.3
12.3
13.4
11.6
12.8
11.7
11.7
12.2
11.8
12.5
11.6
11.7
11.4
13.2
11.0
11.2
11.4
12.9
12.2
11.1
12.3
11.1
11.4
12.6
11.0
12.1
13.2
11.2
12.6
11.5
11.4
12.0
11.5
12.3
11.2
11.4
11.1
13.1
10.6
10.8
11.2
12.7
12.0
10.8
12.1
10.7
11.1
12.6
10.7
11.8
13.1
20.1
5.1
15.3
19.7
8.6
17.9
14.7
15.0
15.0
20.7
6.5
29.4
22.8
15.1
6.2
10.8
19.1
12.8
40.1
19.1
4.7
10.4
4.1
6.7
21.6
-12.2
14.3
17.8
6.3
8.7
12.8
11.8
13.2
15.7
4.6
25.3
17.1
12.2
7.4
12.0
19.2
7.6
42.3
16.1
5.6
8.1
1.3
6.6
Output based on interest rate sensitivity with cost of capital

FY14
WACC
IT - Hardware
IT - Software
Logistics
Media
Mining & Mineral products
Non Ferrous Metals
Packaging
Paints/Varnish
Paper
Pharmaceuticals
Plantation
Plastic products
Power
Realty
Refineries
Retail
Ship Building
Shipping
Steel
Sugar
Telecomm-Service
Textiles
Tobacco Products
Trading
Tyres
WACC in diff scenario

ROCE (4 ROCE
-0.5% -1.0% -1.5% -2.0% yr avg) (FY14)
12.0
12.0
12.1
12.3
12.7
12.8
12.4
12.1
12.6
12.0
12.4
12.5
13.3
13.2
12.5
12.6
13.5
13.1
13.2
13.6
13.2
13.4
12.0
12.7
12.4
11.7
11.5
11.6
11.9
12.4
12.5
12.2
11.7
12.4
11.7
12.0
12.2
13.1
12.9
12.3
12.4
13.4
12.9
13.1
13.5
13.0
13.3
11.5
12.6
12.2
Softening commodity prices:

Thirdly, global commodity
prices have corrected
significantly led by a demandsupply mismatch as global
supply continued to increase
while demand from the largest
consumer, China, tapered
down. Going ahead, a
commodity slowdown is
11.4
11.1
11.2
11.6
12.0
12.2
11.9
11.2
12.2
11.3
11.7
11.9
12.9
12.6
12.1
12.2
13.2
12.7
12.9
13.4
12.7
13.2
11.0
12.5
11.9
11.1
10.6
10.7
11.2
11.7
11.9
11.6
10.8
12.0
11.0
11.4
11.7
12.7
12.3
11.8
12.0
13.1
12.5
12.7
13.3
12.5
13.0
10.5
12.4
11.6
10.8
10.1
10.2
10.9
11.4
11.7
11.3
10.3
11.9
10.6
11.1
11.4
12.5
12.0
11.6
11.8
13.0
12.2
12.5
13.2
12.3
12.9
10.0
12.2
11.3
14.8
31.0
19.2
20.5
35.8
12.1
14.8
35.1
6.9
19.7
19.7
12.6
8.3
7.5
9.5
9.8
8.0
7.4
9.3
6.1
7.0
10.3
46.1
7.3
17.9
14.3
34.5
17.2
22.1
21.0
9.5
8.8
33.4
6.3
21.3
14.9
11.7
7.7
6.7
9.7
7.4
5.3
8.4
6.9
-1.3
8.3
11.7
46.7
7.4
22.7
expected to sustain led by

excess supply in the mediumterm and a shift towards
renewable energy sources in
the long run. In the backdrop,
sectors like aviation, paints,
textiles, auto ancillaries (tyre
and battery), logistics,
telecom, lubricants and mining
could be major beneficiaries.
7
January 2015
FUNDAMENTAL
MARKET OUTLOOK 2015
Commodity prices have crashed from their peaks ($/tonne)
Commodities
2002
2014
Peak
% decline from peak
Crude ($/barrel)
27
59
144
(58.9)
Iron
15
67
205
(67.3)
Coal
NA
62
195
(68.2)
1550
6409
9879
(35.1)
Copper
Favourable regulatory framework:

Finally, the new government
has been effective in breaking
the policy deadlock with
several decisions on key
policies like increase in FDI
limit in insurance, defence &
railway, easing of environment
& forest clearance process, etc.
already being taken. Moreover,
there has been considerable
progress in other key reforms
like implementation of goods
and services tax (GST) and
innovative measures like
Make in India, Digital India

and Smart cities. These
measures will improve
business sentiments; provide
policy stability and an impetus
to a revival in capital
expenditure (capex) cycle.
Stalled projects worth Rs. 25
lakh crore could be kick started
benefiting several sectors
ranging from oil & gas,
defence, banks, railways,
metal & mining, telecom,
c o n s t r u c t i o n a n d
infrastructure.
Reforms
FDI in defence,
construction, railways and
insurance
Long-term bonds for

infrastructure projects, new
restructuring/refinancing
norms for infrastructure
projects
New investments
Auction of coal mines

to provide predictable
& stable business
environment
Investment trust:
Make in India
Real estate investment

trust, Infrastructure
Digital India
100 smart cities
Rail infrastructure projects like

suburban corridor projects,
dedicated freight lines,
passenger terminals, bullet
trains, Industrial corridors etc.
Ease of doing business

?
GDP Growth
Digital India
Make in India
Make in India aims to increase the share of
manufacturing in GDP from 16-25% by 2022 and
will create 100 million additional jobs
The adoption of key technologies across sectors

spurred by the Digital India initiative could help
boost India's GDP by $550 billion to $ 1-trillion by
2025
Smart Cities
A committee on investment requirements in urban
infrastructure estimates total investment
requirement potential could exceed ` 7 lakh crore
over 20 years
January 2015
FUNDAMENTAL
MARKET OUTLOOK 2015
Sensex and Nifty target: Factoring
in the fall in inflation,
comfortable current account
deficit (CAD), improved
sentiments and pick-up in
gross domestic product (GDP)
growth, we expect the Sensex
EPS to grow at a CAGR
(compounded annual growth
rate) of 17% over FY14-17E. A
decline in cost of equity
coupled with a dovish
environment will further fuel
portfolio flows for India in
equities as well as debt
instruments. The Sensex is
trading at 14.6x one year
forward P/E multiple (FY16E),
in line with historical mean.
However given the
resurrection of corporate
earnings cycle, we believe
there exists a case for a rerating of the Indian markets.
We assign a price-to-earnings
(P/E) multiple of 15x on FY17E
EPS to arrive at a fair value of
32,500 by end CY15, implying
an upside of 18.5%. The
corresponding Nifty target
would be 9,750.
may inhibit index expansion.

- Brent crude oil has fallen
sharply by 47% year-to-date
(YTD), and is trading below the
fiscal break-even price for
most oil exporting countries.
We have already witnessed the
impact of crash in crude prices
on Russian economy. With the
fall in crude prices, sovereign
credit default swaps (CDS) of
many oil exporting countries
has increased several times,
highlighting the global risk
perception. A global contagion
could put investors in risk-off
mode, impacting global flows
in emerging markets.
- While India would indirectly
benefit from divergence of
foreign institutional investor
(FII) flows from such countries
in favour of India and may not
be directly adversely impacted
with crash in crude prices, our
exports could be hampered.
38% of our exports are to
commodity-based economies,
which can face slower growth
as economic variables
deteriorate due to falling oil
revenues.
Strategy 2015 - Sensex & Nifty Target

Sensex EPS - FY17E
Target Multiple
Sensex / Nifty Target
2167
15x
32500 / 9750
- Risks will also emanate from

the complexity of rate cycles
panning out in various parts of
globe. For instance, strong
growth prospects for the US
economy will lead to
commencement of rate hike
Risks: Though the markets

seem to have shifted into a
higher growth trajectory, we
highlight certain pitfalls that
January 2015
FUNDAMENTAL
MARKET OUTLOOK 2015
cycle in mid 2015 whereas
European Central Bank (ECB)
has
to
be
more
accommodative to stave of a
deflationary trend in the
Eurozone while India is all set
to see the easing of rate cycles.
The implications can be
humongous and perplexing as
interest rate decisions will have
a meaningful impact on Indian
rupee vis--vis other global
currency and hence on
GDP/corporate profitability in
2015.
- Finally, with formation of
government with a strong
mandate and reformistoutlook,
the investor
expectations
have built up over the period.
While, the government has
shown clear intent and has
initiated several reforms,
things are yet to start moving
on the ground level. There is a
huge risk of the current
government falling short of
meeting enormous
expectations.
Sector Outlook
- Since we expect the economy
and corporate profitability to
make a meaningful comeback
thereby making cyclical
sectors the biggest beneficiary
as pick up in utilisation rates,
positive operating and
financial leverage will lead to a
recovery in profitability and
10
improve the quality of the

balance sheet. Hence we are
positive on sectors like banking
(pick-up in loans, lower interest
to cushion net interest margins
(NIMs), lower bond yields to
aid provisioning and non
performing assets (NPA) cycle
peaking), cement (increase in
capacity utilisation and lower
input costs to aid profitability),
capital goods (revival in capex
cycle to lead to better orders
and execution), autos & auto
ancillaries (lower rates to boost
pent up demand and lower
commodity to help margin
recovery).
- We are neutral on defensives
like IT (demand intact, rich
valuation), pharmaceuticals
(rich valuation, tepid domestic
growth), oil & gas (earnings
dependent on deregulation,
limited volume growth) &
media (earnings visibility
intact, rich valuation).
- We remain negative on
sectors like Real estate (High
inventory and huge debt pile
up and regulatory hurdles to
weigh over positives like lower
interest rates and pick-up in
demand), Metals (Lower
realisations and leveraged
balance sheets) and shipping
(Highly dependent on global
trade and demand for
commodities).
January 2015
TECHNICAL OUTLOOK 2015

Riding the bull with zeal to zenith
northward move over the
coming year.
We do not foresee any major
shift in the current directional
positive bias. However, any
sizable correction towards
25000/7400 (Sensex/Nifty)
should be used as an attractive
incremental opportunity to buy
for the long term
Indian equities gave a

thunderous applause to the
strong verdict in the general
elections in May 2014. The
markets have rediscovered
their animal spirits that is very
well reflected in the
performance of domestic
equities, which are up 31%
year-to-date (YTD) and 15%
post election results, thereby
allowing India to top the global
equity charts.
Theme: Cyclicals to be the flavour

of 2015
Our bottom up approach
based on technical parameters
applied across the entire
universe of NSE cash segment
suggests cyclicals will be at the
forefront of the rally in 2015.
The midcap space has a lot of
headroom to do the catch-up
exercise and will outperform
the benchmarks, going
forward.
As we enter the second year of

changed regime, we believe
the markets will continue to
give a thumbs-up to the proreforms government and
continue to rise in a similar
fashion as displayed over the
past six months.
Top sectors: Auto, auto ancillary,

capital goods, PSUs and
cement.
The strong resolution past the

seven year bullish Ascending
Triangle pattern has major
bullish implications and
supports upsides towards
35000/10500 (Sensex/Nifty)
levels for the current
Our preferred picks: Bhel (BHEL),

BEL (BHAELE), Alstom India
(ABBALS), Exide (EXIIND),
Federal Mogul Goetze
(GOEIND), Asahi India Glass
(ASAIND), Ramco Cement
(MADCEM), GIC Housing
11
January 2015
BSE Sensex Monthly Candlestick Chart

The breakout past the seven year
consolidation pattern has
signalled a structural shift in the
market from sideways to bullish.
The convincing breakout past the
seven year bullish Ascending Triangle

pattern has major implication of
upside towards 35000 in the
forthcoming years for the Sensex
2008
2010
2013
21206
21108
21483
Seven year consolidation post

2008 peak took the pictorial
shape of a bullish Ascending
Triangle pattern
Source: Bloomberg, ICICIdirect.com Research
12
January 2015

fold rally between 2003 and
2007 (2900 to 21206) and,
t h e r e a f t e r, e n t e r e d a
consolidation phase lasting
seven years from 2008 to early
2014. The resolution past the
2008 bull cycle peak, therefore,
has the underpinnings of a
burgeoning bull market, which
can lead to unfolding of multi
fold gains over the coming
years.
Multi-fold rally followed by

multi-year consolidation,
perfect recipe for bull market
Historically, the multi-year bull
runs are followed by multi-year
consolidation as markets enter
a reconciliation phase. As the
consolidation matures with the
passage of time and price
correction, the market will
pierce new highs above the
previous bull cycle peak to
signal continuance of the
secular uptrend.
The characteristics of market

internals during the past seven
year consolidation and post
the breakout past the previous
bull-cycle peak defines the
changing dynamics of the
market. Between 2008 and
2014, the index re-tested the
2008 high on two occasions in
2010 and 2013. However, both
these attempts lacked broader
market participation. The firm
resolution past the 2008 peak
in 2014 has the backing of
strong participation of broader
markets that represents the
larger section of market
participants, which augurs well
for the longevity of the
uptrend.
In the context of our markets,

there is also one historical
precedence of a multi-fold rally
followed by a multi-year
consolidation, which adds
credence to the current secular
bull market setup. Between
1989 and 1992, the Sensex
witnessed an 11-fold rally from
390 to 4546. This was followed
by a 11 year consolidation
phase as the index gyrated in a
range from 1992 to 2003. The
breakout from this elongated
consolidation paved way for
the multi-fold rally from 2003 to
2007.
The Sensex witnessed a seven
13
January 2015
BSE Sensex Quarterly Candlestick Chart
2008
7 Fold rally between

2003 to 2008
7 year consolidation
2008 to 2014
1992
11 year consolidation
1992 to 2003
2003
11 Fold rally
between 1989-1992
14
January 2015

for the current rally over 2015.
Headroom for current bull run to

extend to 35000/10500
The entire up move since 2012

has occurred in a rising
channel originating from 2009
lows as highlighted in the
adjoining yearly chart. Over
the past three years, the
indexhas respected the upper
and lower bands of this long
term channel. The past two
years lows are resting upon
the lower band of this channel
while 2014 high is also placed
at the upper band of this
channel. The upper band of
this channel for 2015 is placed
at 35000 levels, making this a
likely target.
The breakout from the

Ascending Triangle pattern
comprising entire seven year
consolidation since 2008 till
early 2014 has major bullish
implications as it signals the
end of elongated correction
phase and start of a new
uptrend. The minimum
measuring implication of the
price pattern i.e. the width of
the triangles base (21206
7697=13509) added to the
breakout point of 21206
projects an upside potential up
to 35000 /10500 (Sensex/Nifty)
BSE Sensex Monthly Bar Chart
Minimum measuring implication of the pattern i.e.

width of the base of Triangle (13061 points) added to
the breakout point of 21206 projects upside potential
towards 34500 levelsfor the current rally
2008 high
21206
2010 high
21108
2013 high
21483
Seven year consolidation

since 2008 to 2014
occurred in Ascending
Triangle pattern
15
January 2015
BSE Sensex Yearly Candlestick Chart
Upper band of Rising

Channel for 2015 @ 35000
16
January 2015

The long term trendline
connecting yearly lows of 2003
and 2009 acted as a cushion
during 2013 and 2014 as the
respective yearly lows rest
upon the same. The value of this
trendline for 2015 is at 22300
/7000, which will remain a major
base for the index. We believe
any corrective decline towards
25000 / 7400 should be used as
a long term buying opportunity.
Placement of 52 week EMA, the
base formed post election
results and 38.2% retracement
of 2013-14 rally all coinciding
around at 25000/7400,
reiterates our view point that
any declines towards these
levels should be bought into.
Conversely, 25000/7400 is strong

base; act bravely if it materialises
Long term investors should
note that secular bull markets
also go through phases of
secondary corrections, which is
a healthy phenomenon to work
off the excesses developed
during rallies. Even during the
secular bull run from 2003 to
2008 the index was subject to
intermediate corrections
ranging from 13% to 30%.
However, these counter trend
corrections did not alter the
overall bullish fabric of the
market. We have identified a
crucial support zone where
demand will outstrip supply to
help investors ride the uptrend
and also provide a fresh entry
opportunity for those who have
missed the earlier rally.
BSE Sensex Yearly Candlestick Chart
Long term trendline

2015 value @ 22300
17
January 2015
BSE Sensex Weekly Bar Chart
Long term Support @ 25000
52 week EMA ~25000

Post Election result base
formation ~25000
38.2% retracementof 2013-14
rally ~25000
18
January 2015

strong bull trend after
conquering its 2008 high
(21206) in April 2014 and has
already rallied 35% above its
2008 peak. We believe the BSE
midcap index is all set to follow
suit with the benchmarks and
enter a strong uptrend as we
head into 2015. A similar
magnitude of rally replicated
on the BSE midcap index
(minimum implication) would
project upsides towards 14000
over the medium term.
Broader markets: Brace up for

relatively strong performance
The broader markets are at the
cusp, led by a major
turnaround in the BSE midcap
index, as it has steered past its
2008 high (10245) while the
small cap index has also
strengthened above its 2010
high (11366). A look back at the
behaviour of the benchmark
Sensex after its breakout
above 2008 highs provides a
strong roadmap for the
broader markets, going
forward. The Sensex entered a
BSE Sensex and BSE Mid-cap index comparative Chart
2008
2010
2013
BSE Sensex
Midcap index
The Sensex got catapulted into a higher orbit after confirming a resolute breakout
past its 2008-10 highs during early 2014 and has already rallied 35% above its
2008 peak. The Midcap Index is following in the footsteps of the benchmark and
has just risen above its 2008 peak signaling a major trend reversal. A similar
magnitude of up move in the midcap index is on the cards moving into 2015
19
January 2015

(3290 to 13320) measured from
2013 low of 8349 projects the
next destination for current
rally towards 24000 levels over
the coming year.
Bank Nifty: Commander to

zenith
The Bank Nifty emerged out of
its four year consolidation by
steering past the yearly highs
of 2010 and 2013 towards mid
2014. The strong resolution
past the four year
consolidation band above
13300 has flagged off a strong
bull run, which will continue to
propel the sectoral
heavyweight Bank Nifty in the
forthcoming year as well.
From a structural point of view,

the long term price chart of the
Bank Nifty exhibits a strong
underlying trend. Post the 2008
market wide deluge, the Bank
Nifty was one of the first
heavyweight index to surpass
its 2008 peak (10806) in 2010
itself.
We expect the Bank Nifty to

continue its northward journey
in 2015 and travel towards
24000 levels. The current rally
off 2013 low of 8349 to recent
all time high of 18929 has
already surpassed the
magnitude of 2009-2010 rally
which measured around 10000
points. The faster pace and
larger magnitude of current
move as compared to the
preceding rally clearly signals
an extending market which has
significant steam left to
continue its rally in similar
fashion. The next logical price
objective in an extending
markets is derived by plotting
the Fibonacci price extension.
The 161.8% Fibonacci price
extension of 2009-2010 rally
After a three fold rally during

2009-10 the index went into
hibernation mode and
consolidated between the
broad range of 13300 and 7800
over the next four years
between 2010 and mid-2014.
Price wise, the index retraced
its 2009-10 rally by just 50%
while time wise correction
extended to 200% of the
preceding rally. Elongated time
correction with limited price
decline highlights the inherent
strength in the trend. The index
formed a double bottom
precisely near the 50%
retracement of 2009-10 rally
(8000) and registered a strong
breakout in 2014 to signal the
end of the four year basing
pattern and continuance of the
20
January 2015

larger uptrend.
2013-14 rally and intermediate

base formed during six month
consolidation during JuneOctober 2014.
The major support base for the

index is placed around 15000
being the confluence of the
38.2% retracement of the
CNX Bank Nifty Monthly Bar Chart
161.8% Fibonacci extension

@ 24000
The current rally from 2013 low of 8349 to recent

all time high of 18929 is already larger than the
2009-2010 rally signaling extending market. We
expect the Bank Nifty to continue its northward
journey in 2015 and head towards 24000 levels
2010
13320
2013
13348
Support zone
38.2% @ 14900
2008
10806
8349
Double Bottom near

50% retracement of
2009-2010 rally
3 Fold rally between

2009-2010
2009
3290
21
January 2015

US Dollar Index (89.2) :
resolved past a multiyear
Greenback wakes up from seven
consolidation.
While in the medium-term, the
year slumber
index appears to have

The year 2014 draws to an end
stretched to overbought
after witnessing huge currency

moves triggered by the
territory, the price structure
forward guidance of the US
points towards a further rally
Federal Reserve about interest
going into 2015.
rates. As a result, major global
The 50%
retracement of the 2002-08
currencies like euro and Yen

hard landed while the US
decline (120-71) and value of
Dollar Index rose from a multi-
the declining trend line drawn
year slumber.
off 1985 and 2002 peaks

projects upside target of 96 for
Sharp advance off May lows

the US dollar index over the
(79.90) steered the US Dollar
next year.
Index past 2012-13 highs of

84.75 to fresh five year highs
triggering a bull trend. The
The monthly MACD indicator,
sharp rally is primarily
which has emerged above its
contributed by weakness in
euro
and
Ye n ,
signal line provides insight
which
about the strong underlying
contributes around 83% of
momentum in the US dollar.
weightage in the US dollar

index. In the process, the index
22
January 2015

US Dollar Monthly Bar Chart
50% retracement of 20022008 decline @ 96

March 2009
89.62
84.75
79.90
71
23
January 2015

2013, bullion prices remained
in consolidation mode
throughout 2014 and oscillated
in the broad range of $1180
1390. The floor of this
consolidation rested upon the
yearly low of 2013 at $1180.
Despite several attempts
during the first half of 2014,
gold prices failed to rise above
$1400 suggesting consistent
overhead pressure.
Gold Spot ($1197): Bear cycle

extended
The positive economic data
out of the US and prospects of
higher US interest rates from
next year pushed the dollar to a
four-year high against the euro,
keeping the precious metals
complex close to multi-year
lows as investors showed
better risk appetite and stayed
We believe the breach of the

2013 low signals resumption of
the preceding downtrend.
Following the breakdown, we
expect gold prices to remain in
a downward trajectory and
head towards $1000 over a
medium-term horizon.
away from the traditional safehaven commodity.

Among the precious metal
complex, the sharp decline in
prices of gold since mid-2014
led yellow metal prices to fresh
four year lows. The violation of
yearly lows of 2013 ($1180)
signals a shift of trend from
sideways to negative and
opens up further lower
avenues for prices towards
$1000 levels over a medium
term horizon.
Monthly declining MACD has

settled in a negative zone and
continues to trend lower
suggesting underlying
negative momentum in prices
from a medium-term
perspective.
After the sharp decline during

24
January 2015

Gold Yearly Bar Chart
Breach of long term rising trendline during

2013 signaled a major trend reversal.
Bullion prices reacted lower after testing
the breakdown area in 2014 signaling
continuation of downtrend
Gold Monthly Bar Chart
13-month EMA
Gold prices breached 2013 low to signal resumption of

the preceding downtrend. We expect bullion to correct
toward $1000 in the coming year
25
January 2015

trading range. Resultant panic
Brent Crude ($59.6):

Consolidation to pan out after
2014 debacle
selling led prices to lowest

levels since 2009 triggering
major bear cycle for black gold
since the 2008 crisis.
Global commodity prices have

been on a slippery path since
June 2014. The safe haven
After the stupendous fall in the
demand for the US dollar amid
past couple of months prices
an uncertain global economic
are expected to stabilise near
environment propelled the
the $52-55 zone, which is a
Dollar Index to a five-year high.
combination of key rising long
As a result, dollar denominated
term trend line (blue) and 80%
commodities have remained in
retracement of the 2009-10
the line of fire. Factors like US
rally (36-128).
independence in the energy

sector and slowing growth in
China and Europe added to the
However, given a weak long
supply glut in crude oil prices.
term price structure for Brent

crude, upsides remain capped
to $75 being the 38.2%
After trading in a minuscule
retracement of the 2014
range of ` 100-120 for 14
decline.
quarters, crude prices broke

loose as they breached the
lower band of the four year
26
January 2015

Brent Crude Quarterly Bar
Chart
147
128
Breach of four year lows triggered
panic sell off in Crude prices
36
80% retracement
and long term
trendline at $ 54
The views expressed in the article are personal views of the author and do not necessarily represent the views
of ICICI Securities.
27
January 2015
DERIVATIVES STRATEGY 2015
Nifty likely to hit 9500 in 2015; key support placed at 7600

Once the Nifty gives breakout
above Mean+2 sigma levels, it
becomes a positional support for
the index, which is currently placed
at 7600:
Amit Gupta
Head - Derivatives Research,
ICICI Securities
On the lower side, key support

is placed near 7600, which is
the mean+2 sigma level for the
Nifty. Post the election verdict,
the Nifty went into
consolidation before taking out
7600 convincingly. On any
major decline, this level would
again act as major support for
the index.
Nifty: Mean + 3.5 sigma level is at

9500, which is expected target of
2015:
As per our analysis, mean+3.5
sigma levels have been helpful
in predicting the positional
target of the Nifty.
In the cyclical up move seen
between 2003 and 2007, the
Nifty on multiple occasions
saw a surge, which got
arrested near mean + 3.5
sigma levels. These levels are
currently placed at 9500, which
remains the target for 2015.
This level is likely to be tested

only in the event of any major
global event like US
Fedincreasing interest rates,
euro area concerns, etc.
In between, a 400-450 point
correction in the market would
be a strong buying opportunity
for positional investments.
28
January 2015

Since October 2013, Nifty
intermediate declines have been
arrested within 5-7%
Nifty going S&P way: Since 2012,

S&P declines have also been
arrested within 6-9%
Since September 2013, when

the Nifty started moving from
5120, intermediate declines
have been arrested within 57% on multiple occasions.
The US S&P500 has been in an

uptrend since 2012. During this
time, declines have been
arrested within 6-9%.
However, these declines, as
the evidence suggests, have
always been a buying
opportunity, as each time post
this decline, S&P made a
record high.
One should note that most of

these declines were on the
back of globally driven news
flows.
In 2015 as well, intermediate
declines are likely to be
triggered by some geo political risks.
In the table below, we have

highlighted the major declines
since 2012. As visible, these
decline were intermittent and
short lived and were followed
buy strong buying action.
We expect a similar pattern of

intermediate falls getting
arrested in 2015 and it is likely
to continue till the target of
9500 is not achieved.
S&P500 major declines since September 2012
In the table below, we have

shown how the Nifty has
witnessed declines of 5-7%
since the current rally emerged
in 2013.
End date
19-Sep-13
1-Oct-13
12
442
7.19%
3-Nov-13
13-Nov-13
10
371
5.84%
2-Jan-14
4-Feb-14
33
425
6.68%
25-Apr-14
8-May-14
13
231
3.37%
16-May-14
30-May-14
445
5.88%
8-Jul-14
14-Jul-14
387
4.95%
25-Jul-14
8-Aug-14
15
301
3.84%
8-Sep-14
16-Oct-14
38
451
5.51%
No of days Points Decline % Decline
End date
14-Sep-12
16-Nov-12
No of days Points Decline

63
131
% Decline
8.90%
22-May-13
24-Jun-13
33
127
7.52%
2-Aug-13
28-Aug-13
26
82
4.81%
19-Sep-13
9-Oct-13
20
83
4.82%
15-Jan-14
5-Feb-14
21
113
6.10%
4-Apr-14
11-Apr-14
83
4.37%
24-Jul-14
7-Aug-14
14
87
4.35%
19-Sep-14
15-Oct-14
26
199
9.84%
Nifty PCR-OI of 0.90 still not

showing sign that market is
overbought
Nifty declines since September 2013

Start date
Start date
Despite this exuberance in the

Nifty, scepticism is still present
in the system and indicators
like Put Call Ratio (PCR) Open
29
January 2015
1.80
Interest (OI) are still trading at

sub-1.0 levels. In bull markets,
this indicator has even traded
at 1.5/1.8 levels. The low
reading of this indicator
suggests participants are
sceptical to write Put options
and have been more active in
writing Call options.
PCR OI
1.40
1.20
1.00
0.80
3-Jul-14
3-Sep-14
3-Nov-14
3-Jan-14
3-Mar-14
3-May-14
3-Jul-13
3-Sep-13
3-Nov-13
3-Jan-13
3-Mar-13
PCR OI
3-May-13
3-Jul-12
3-Sep-12
3-Nov-12
3-Jan-12
3-Mar-12
3-May-12
3-Jul-11
3-Sep-11
3-Nov-11
3-Mar-11
3-May-11
3-Jan-11
0.60
Nifty Spot
India VIX likely to remain below 20

levels after witnessing sharp
correction post election outcome
India Volatility Index (VIX) had
seen a sharp up move towards
40 levels in May 2014 ahead of
the election verdict. However,
post the event, the volatility
cooled off sharply. In the last
couple of months, India VIX
has been trading subdued
below 20 levels.
Looking at the Nifty PCR OI, the

current reading of 0.90 is even
lower than the PCR OI average
seen since 2011 of 1.1. This has
happened despite the Nifty
trading at life-time highs. This
leaves scope for further Put
writing, which bodes well for
Buy at declines strategy for
Nifty.
Going ahead, in 2015, we

believe the Volatility Index is
likely to stay subdued for a
major part of 2015. However,
events like Union Budget in
February and the US Fed
increasing rates could push the
I n d i a V I X h i g h e r. S u c h
escalation should be used as
an opportunity to create short
volatility strategies as we
believe the equity markets
could continue to display a
gradual upward bias with
lower volatility in the coming
year.
In the current up leg since

October end, volatility has
remained subdued. This is
giving an opportunity for
further Put writing. However,
prevailing scepticism due to
secular up move in Nifty has
made Put writers very nervous.
This has kept the Nifty PCR-OI
consistently at lower levels
since the election verdict in
May.
8,700
8,400
8,100
7,800
7,500
7,200
6,900
6,600
6,300
6,000
5,700
5,400
5,100
4,800
4,500
1.60
Nifty Spot
30
January 2015
S&P Volatility Index: Also in long

term consolidation after sharp
correction seen in early 2012
and has been consolidating at

lower levels. Intermediate
upsides seen in these years
have translated into 6-9%
correction in the S&P Index
while VIX failed to move above
the levels seen in 2012.
After witnessing sharp

declines in early 2012, US VIX
has failed to witness any major
recovery in the last three years
31
January 2015

FII Debt flows in 2014
Record FII inflows in equity is key

pillar of strength for Nifty
20000
15000
10000
Oct-14
Nov-14
Sep-14
Jul-14
-15000
5000
Aug-14
-10000
10000
Jun-14
15000
Apr-14
-5000
May-14
20000
Jan-14
Rs. cr.
5000
Feb-14
FIIs Equity flows in 2014

25000
Mar-14
Rs. cr.
30000
Oct-14
Nov-14
Sep-14
Jul-14
Aug-14
Jun-14
Apr-14
May-14
Feb-14
Mar-14
Jan-14
-5000
Debt inflows of over US$24

billion were the key stabilising
factor for the currency and
bond markets. This is
especially when it is compared
with over US$11 billion
outflow in the last financial
year.
In the equity segment, foreign

institutional investors (FIIs)
bought a record US$16 billion
during the year so far. Post the
election verdict, FIIs greeted
the new government policy
initiatives with strong buying of
over US$9 billion.
In the current financial year, as

the FII limit for bond
investment increased to
US$25 billion, buying in the
debt segment picked up.
The current inflow in the India

equity segment is the largest
inflow seen in the Asian,
Middle East and emerging
European markets. This has
helped the Nifty to register a
strong up move of over 35%,
making India one of the best
equity markets.
Cooling off inflation and falling

crude & commodity prices
along with policy initiatives
taken by the new government
helped to boost investments in
the debt segment further.
Current year FII inflows of over

US$16 billion are more than
the last year inflow of US$14
billion.
FII inflows in debt segment equally
remarkable as their debt buying
was over US$24 billion
The views expressed in the article are personal views of the author and do not necessarily
represent the views of ICICI Securities.
32
January 2015
STOCK IDEAS 2015
Credit Analysis & Research Ltd (CARE)

Target Price: Rs. 2,175 (53% upside)
CARE, the second largest
rating agency by market share,
is a pure play on the rating
business with ~99% (` 230
crore) of its FY14 core revenue
generated from the rating
segment. The highlight of
CARE's business is its best-in
class EBITDA (earnings before
interest, taxes, depreciation,
and amortization) margin of
60%+ and PAT (profit after tax)
margin of 50%+. The business
model is asset light in nature
with not much capital
expenditure or capex (` 10-15
crore) while it generates strong
operating cash flow. Post its
listing, the dividend payout
ratio has improved from 30%
(FY12) to 63% (FY14). We
expect this to grow to ~73%
by FY17E. Considering the
improving economic outlook
with the expected upturn in the
investment cycle, peaking of
interest rates and gradual &
structural development of the
bond market we have factored
in 18% PAT CAGR
(compounded annual growth
rate) in FY14-17E to Rs. 210
crore vs. 12% CAGR seen in

FY11-14.
In 1993, CARE was the third
credit rating agency (CRA) to
be incorporated in India.
However, it gained significant
ground to become second
largest CRA by revenue post
FY09. It clocked 50% revenue
CAGR in FY08-11 vs. 30% by
peers. CARE is strong in bank
loan rating (BLR) & bond
market while it does not have a
significant presence in small
and medium-sized enterprises
(SME) space as of now. We
expect it to maintain its
revenue market share of
~28%, going ahead.
CARE's strong margins can be
attributed to: i) relatively lower
employee cost ii) high
proportion of large ticket bank
loans & bonds (high margin
business) and iii) offices being
largely owned saving on lease
cost. Going ahead, margins are
expected to decline from 64%
in FY14 to 62% by FY17E
owing to a rising focus on the
low margin SME business and
mainly due to expected rise in
33
January 2015
STOCK IDEAS 2015

staff costs.
FY17E EPS (earnings per

share), is at a steep discount to
CRISIL's ~60x multiple. The
company has strong RoE
(return on equity) of 27% for
FY14 and potential to further
enhance it to 46% by FY17E.
We value CARE at 30x FY17E
EPS (~50% discount to
CRISIL's core rating business
multiple) and arrive at a target
price of ` 2,175.
CARE has emerged as a strong

player in the rating business
with strong margins and
improving market share with
best brand recall after CRISIL. It
is trading at a discount to the
consolidated business of
CRISIL & ICRA. If we just
consider CRISIL's core rating
business, CARE, trading at 20x
Key Financials
FY14
FY15
FY16E
FY17E
Net sales (` crore)
230
275
331
380
EBITDA (` crore)
147
173
207
237
PAT (` crore)
129
161
188
210
EPS (`)
44.4
55.6
64.7
72.5
FY14
FY15
FY16E
FY17E
19.7
Valuations Summary
P/E (x)
Target P/E (x)
EV / EBITDA (x)
P/BV (x)
32.2
25.7
22.1
49
39.1
33.6
30
24.9
21.5
17.9
15.5
8.6
11
9.8
9.1
RoNW (%)
26.6
42.8
44.3
46.2
RoCE (%)
29.7
45
48.1
51.2
(EBITDA: Earnings before interest, taxes, depreciation, and amortization;

PAT: Profit after tax; EPS: Earnings per share; P/E: Price-to-earnings; EV:
Enterprise value; P/BV: Price-to-book/value; RoNW: Return on net worth;
RoCE: Return on Capital Employed)
34
January 2015
STOCK IDEAS 2015
Castrol India Ltd.

Target Price: Rs. 611 (22% upside)
Castrol India, a 71% subsidiary
of British Petroleum Plc., is one
of the leading players in the
domestic lubricants business.
The company operates three
manufacturing plants in India
and has the largest distribution
network of 380 distributors,
servicing over 1,05,000 retail
sites. The main focus of Castrol
is on the lucrative automotive
lubricant segment where it
commands a market share of
~22% in value terms. The
company derives ~90% of its
revenues from the automotive
segment and ~10% in
industrial segment. Castrol
reported revenues of ` 3,179.6
crore and PAT of ` 508.6 crore
in Cy13.
automobile sector to post sales

growth at 13.2% CAGR over
FY14-17E to 314 lakh units in
FY17E. Hence, Castrol's total
volume is expected to increase
at 3.8% CAGR over CY13-16E
from 196.8 million litre in Cy13
to 220 million litre in CY16E on
the back of an improvement in
auto sales and industrial
growth.
Castrol is the price maker in the
automotive lubricant industry.
With the sharp decline in crude
oil prices over the past few
months, raw materials costs
(base oil prices) for Castrol are
expected to come down,
aiding the improvement in
margins. We expect gross
margins to increase by ` 29.1
per litre over CY13-16E from `
70.7 per litre in CY13 to ` 99.8
per litre in CY6E. Subsequently,
we expect EBITDA to increase
from ` 34.9 per litre in CY13 to `
60.4 per litre in CY16E.
Castrol's volume had remained

subdued over the past few
years due to the slowdown in
the Indian economy. The
prospects of the lubricant
industry are highly dependent
on growth in the automotive
sector.
We
expect
the
Castrol's strong brand

35
January 2015
STOCK IDEAS 2015

positioning and superior
distribution network allows it
to command higher pricing
power and premium for its
products over its competitors.
The company's focus on the
personal mobility segment will
remain the key driver for the
automotive lubricant business
and create value for
shareholders, going forward.

We expect revenues and
profits to grow at a CAGR of
7.1% and 20.5% over Cy13 16E
to ` 3,910.9 crore and ` 889.1
crore, respectively. We value
Castrol India at 34x CY16E EPS
of Rs. 18 to arrive at a target
price of ` 611 in 12-18 months.
Key Financials
CY13
CY14E
CY15E
CY16E
3,179.6
3,405
3,641
3,910.9
EBITDA (` crore)
687.6
714.9
1,207.1
1,328.6
PAT (` crore)
508.6
480.1
812
889.1
10.3
9.7
16.4
18
CY13
CY14E
CY15E
CY16E
27.8
Net sales (` crore)
EPS (`)
Valuations Summary
P/E (x)
48.6
51.5
30.5
Target P/E (x)
59.4
62.9
37.2
34
EV / EBITDA (x)
35.1
34
19.9
17.9
P/BV (x)
32.9
42.7
35.5
30.7
RoNW (%)
67.7
82.9
116.5
110.5
RoCE (%)
87.4
117.6
168.2
160.2
(EBITDA: Earnings before interest, taxes, depreciation, and amortization;

PAT: Profit after tax; EPS: Earnings per share; P/E: Price-to-earnings; EV:
36
January 2015
STOCK IDEAS 2015
Container Corporation of India Ltd.

Container Corporation of India
Ltd. (ConCor) is well poised to
benefit from an improving
economic scenario owing to its
pan-India presence and strong
competitive intensity by virtue
of infrastructure and
scalability. It is planning to
garner higher volumes and
provide value added services
and is, thus, investing in setting
up private freight terminals
(PFT) and multi modal logistic
parks (MMLP) across 15
locations in India. Currently,
the PFTs at Khatuwas and
Nagulpally are operational and
are expected to scale up in the
near term. Further, ConCor
plans to acquire land in the
central and eastern regions of
the country, in close proximity
to the dedicated freight
corridor (DFC), to scale up its
PFT business.
2.2%. However, FY14 has seen

a revival in cargo volumes with
10.9% year-on-year (YoY)
growth. Going ahead, we
expect total cargo volumes to
grow at a CAGR of ~11% over
FY14-17E on account of the
improving economic scenario
and ConCor's strategy of
providing better rates for
volume commitments by
clients.
ConCor is the market leader
with a dominant market share
(79%) among container train
operators (CTOs) while other
CTOs are still miniscule in size.
ConCor has an unmatched
infrastructure and existing panIndia presence that would
enable it to capture higher
volume growth in an improved
economic scenario. It has
made strategic investments in
building infrastructure close to
the proposed DFC with the
intention of capturing higher
Over FY10-13, ConCor's

volume growth remained
sluggish and grew at a CAGR of
37
January 2015
STOCK IDEAS 2015

volume share over the longer
t e r m . F u r t h e r, w i t h
implementation of goods and
service tax (GST) imminent we
expect both export-import
(exim) and domestic cargo to
g r o w c o n s i d e r a b l y.
Consequently, we envisage
earnings per share (EPS) will
register a CAGR of 16% over
FY14-17E to Rs. 76 with return
on equity improving from

13.8% in FY14 to 15.8% in
FY17E. Considering the
expected acceleration in
earning growth, improvement
in return ratios and debt free
status we assign a P/E multiple
of 22x FY17E EPS to arrive a
target price of ` 1,670.
Key Financials
FY14
FY15E
FY16E
FY17E
Net sales (` crore)
5,109
5,460
6,478
7,912
EBITDA (` crore)
1,078
1,269
1,555
1,998
Net profit (` crore)
950
904
1,133
1,479
EPS (`)
48.7
46.3
58.1
75.9
FY14
FY15E
FY16E
FY17E
17.2
Valuations Summary
P/E (x)
26.8
28.2
22.5
Target P/E (x)
34.3
36
28.7
22
EV / EBITDA (x)
21.2
17.7
14.2
10.5
3.7
3.4
3.1
2.7
RONW (%)
P / BV (x)
13.8
12
13.6
15.8
ROCE (%)
12.8
11.3
13.2
16
(EBITDA: Earnings before interest, taxes, depreciation, and

amortization; EPS: Earnings per share; P/E: Price-to-earnings; EV:
38
January 2015
STOCK IDEAS 2015
Gujarat Pipavav Port Ltd.

Gujarat Pipavav Port Ltd.
(GPPL) with a capacity of
8,50,000 TEUs (twenty-foot
equivalent units), and
strategically located on the
western coast of India with
proximity to industrial clusters
provides scope for significant
growth. Besides containers,
the port is well equipped to
handle bulk cargoes including
fertiliser and agri-products.
Further, GPPL plans to expand
its container handling capacity
to 1.35 million TEUs as the port
container volumes have grown
at a CAGR of ~12% over CY1013. In terms of infrastructure,
the port is well connected via
road and rail besides housing a
container freight station to
manage its throughput.
flattish. As nearly 70% of the

revenue is derived from
container, GPPL's growth was
highly skewed towards a
particular segment. In order to
diversify the cargo base, GPPL
entered
into
various
arrangements with tank farms
owners and providing Ro-Ro
(Roll-on/roll-off) facility for auto
logistics handlers. Going
ahead, as GPPL is present in
proximity to auto hubs coupled
with acting as a gateway to
northern hinterland auto
manufacturers, it is well poised
to gain through new business
addition.
With the addition of a couple of
new business lines and
improved revenue visibility,
GPPL is expected to post
revenue CAGR of nearly 20% in
CY11-15 whereas EBITDA
CAGR is expected at ~27% in
the same period. As nearly
70% of GPPL's cost is fixed, the
Port revenues grew at a CAGR

of ~22% over CY10-13 aided
by ~12% growth in container
volume whereas bulk volume
growth remained mostly
39
January 2015
STOCK IDEAS 2015

new business is expected to
further improve the operating
leverage, thereby aiding the
EBITDA margin. Further,
GPPL's debt-free structure and
external commercial
borrowing (ECB) funding for
new capex is expected to bring
down the interest cost. A
diversified cargo portfolio and
presence in high growth

segments like tank farms and
auto export provide
confidence on the earnings
g r o w t h o f G P P L .
Consequently, we revise our
estimates upwards and arrive
at a discounted cash flow
(DCF)-based target price of `
221.
Key Financials
CY12
CY13
CY14E
CY15E
Net sales (` crore)
416
518
676
831
EBITDA (` crore)
182
257
381
475
74
192
321
427
EPS (`)
1.5
6.6
8.8
CY15E
Valuations Summary
CY12
CY13
CY14E
P/E (x)
122.9
47.4
28.3
21.3
Target P/E (x)
144.8
55.8
33.4
25.1
EV/EBITDA (x)
18.1
51.3
36
23.5
P / BV (x)
7.5
6.5
5.3
4.2
RONW (%)
6.1
13.7
18.6
19.8
ROCE (%)
8.2
9.5
17.9
17.4

40
January 2015
STOCK IDEAS 2015
Heidelberg Cement India Ltd.

Heidelberg Cement is a player
company in achieving cost
in the central region that
savings of about ~ ` 45-
contributes over ~94% of its
50/tonne. Further, to reduce its
total revenues. The company
power costs, the company is
has recently doubled its
currently setting up a 13 MW
cement capacity to 6 million
waste heat recovery plant
tonnes (MT) from 3 MT in Cy13
(capex of ` 150 crore), which
at a total capex of ` 1,570 crore.
will be commissioned by early
With a revival in demand along
2016E. Considering the benefit
with stabilisation of new
of conveyor belt, economies of
capacity, we expect its margin
scale coupled with better
to reach over 15% by CY16E
utilisations, we expect
with capacity utilisation of over
operating margins to improve
85% during the same period.
to 14.8% in CY15E and 15.4%

in CY16E from 6.3% in Cy13.
After scaling up capacity, the

company is now focusing
towards cost reduction. It has
environment coupled with
installed a conveyor belt
strong promoter back-up
between its limestone
(Heidelberg AG: world's third
reserves and clinker units,
largest cement producer) allay
which are 20 km away (at ` 200
our concerns with regard to its
crore) to transport limestone to
debt servicing ability. The debt
its clinkerisation unit, which is
to-equity (D/E) ratio currently
currently being transported by
stands at 1.2x.
trucks. This would help the
healthy
operating
Given the scope for margin

41
January 2015
STOCK IDEAS 2015

expansion along with better
MT), which leaves scope for
demand-supply matrix, we
further upside once its
expect the company to report a
operating matrix improves
net profit of ` 104.4 crore in
fully. Hence, we remain
CY16E.
expect
positive on the stock with a
EBITDA/tonne of Rs. 662/tonne
target price of Rs. 105/share
in CY16E from Rs. 260/tonne in
(i.e. valuing at 9.5x CY16E
CY13. On an EV/tonne basis,
EV/EBITDA, $100/tonne on
the stock is trading at
capacity of 5.4 MT).
We
$86/tonne (on capacity of 5.4

Key Financials
Net sales (` crore)
CY13
CY14
CY15E
CY16E
1,364.8
1,638
1,896.6
2,166.5
86.4
234.5
281.2
332.6
-40.7
65.5
70.8
104.4
-1.8
2.9
3.1
4.6
CY13
CY14
CY15E
CY16E
NA
28.4
26.3
17.8
22.8
EBITDA (` crore)
PAT (` crore)
EPS (` )
Valuations Summary
P/E (x)
Target P/E (x)
EV / EBITDA (x)
P/BV (x)
NA
36.3
33.6
35.9
11.7
9.8
2.2
2.2
1.8
RoNW (%)
-4.9
7.6
7.6
10.2
RoCE (%)
-0.5
6.2
8.2
10.2

amortization; PAT: Profit after tax; EPS: Earnings per share; P/E: Price-toearnings; EV: Enterprise value; P/BV: Price-to-book/value; RoNW: Return
on net worth; RoCE: Return on Capital Employed)
42
January 2015
STOCK IDEAS 2015
Infosys Ltd.
Infosys announced the
selection of Dr Vishal Sikka, the
former SAP executive board
member, as its new Chief
Executive Officer and
Managing Director (CEO &
MD), effective August 1, 2014,
for a period of five years. Under
the new CEO, Infosys is
undergoing another strategic
transformation and is broadly
emphasising on two themes:
1) Renewing the core business
and 2) Innovating into new
business. Acknowledging that
this transformation is
demanding and could stretch,
the management is confident
of execution and believes such
a company could sustain 1518% revenue growth and 2528% EBIT (earnings before
interest and tax) margins.
investments in this area.

Currently, ~8,300 entry level
and 160+ senior employees
have been trained on design
thinking while more could
follow. Interestingly, 70% of
US-based consultants have
been trained on design
thinking while 1,000 people
have been trained on artificial
intelligence (AI)/machine
learning with 500 being added
every quarter. The company
noted that next generation
product lifecycle management
(PLM), integration of physical
with digital, is creating
opportunities with Infosys
starting three to six such
engagements in the last four
months. The company is hiring
aggressively in new
technologies with headcount
up 59% in data analytics, 31%
in infrastructure services, 22%
in security, 13% in cloud, and
4% in digital in the last two
quarters. Infosys is adding
more feet on the ground and
has added 207 (104 US, 42
Europe, 61 Rest of World
The new management

emphasised massive embrace
of design thinking new in
renewing existing offerings
such as consulting services,
product engineering & Finacle
and committing considerable
43
January 2015
STOCK IDEAS 2015

(RoW)) sales heads in the last
two quarters.
9%, 14% in FY14-16E (average

25.6% EBIT margins in FY1516E), vs. 18%, 12% reported in
FY09-14 (average 28.1%),
respectively. Though the
earnings trajectory may
improve over time, incoming
CEO continues to impress with
his strategic direction. We
value Infosys at 20x its FY16E
EPS of Rs. 120 with a target
price of ` 2,400.
With a cash pile of $5 billion,

the company has put in place
an active mergers and
acquisitions (M&A) strategy to
augment growth in underpenetrated segments &
geographies. We expect
Infosys to report rupee
revenue, earnings CAGR of
Key Financials
FY13
FY14
FY15E
FY16E
Net sales (` crore)
40,352
50,133
53,940
59,874
EBITDA (` crore)
11,551
13,415
14,734
16,566
9,421
10,648
11,939
13,711
82.4
93.2
104.5
120
PAT (` crore)
EPS (`)
Valuations Summary
FY13
FY14
FY15E
FY16E
P/E (x)
23.8
21
18.7
16.3
Target P/E (x)
29.1
25.8
23
20
EV / EBITDA (x)
16.5
14.2
12.9
11.5
5.6
4.7
4.5
4.2
RoNW (%)
25.7
24.4
24.5
26.6
RoCE (%)
28.5
27.6
28.2
30
P/BV (x)

44
January 2015
STOCK IDEAS 2015
SKF India Ltd.

SKF India (SKF) is the leader in the
coupled with a lean balance sheet
Indian bearing market (pegged at
and is poised to capture the
` 8,000-8,500 crore) with ~28%
opportunity arising from the
share. Known for deep groove ball
revival in demand in the
bearings (forming ~35% of
automotive segment. We expect
revenues and ~45% market
SKF's manufactured product
share), SKF is equally present
(auto) sales to exhibit ~14.6%
across the industrial (46% of
CAGR over CY13-16E, in line with
sales) and automotive segments
overall auto growth assumptions.
(54% of sales including exports).
Industrial bearings (46% of
With expected industrial revival
revenues) are sourced from
and an uptick in auto demand,
the parent (~90%) and SKF
going ahead, SKF is well poised to

capture the opportunity given its
Technologies. We expect
strong balance sheet with cash
import substitution of
flow generation and scalability
industrial bearings, through
bandwidth.
ramp up in SKF Technologies,
With the auto industry finally
to be a key revenue driver for
showing signs of recovery after
SKF's revenues and margin
nearly two years of a demand
expansion as SKF would
slump, new launches and product
improve its turnaround time
refreshes are the key, going
while the resultant cost saving
ahead. SKF, being the largest
would lead to market share
bearings player in the industry,
gains. Consequently, we
commands scalability bandwidth
expect industrial (traded
45
January 2015
STOCK IDEAS 2015

goods) sales to grow at 11.6%
of 24% in CY13-16E), healthy
CAGR over CY13-16E with
balance sheet with robust cash
o v e r a l l E B I T DA m a r g i n s
flow generation (` 680 crore
recovering to 13.7% in CY16E
over CY14E-16E) and core
vs. 11.5% in Cy13.
RoEs in excess of 30%, we

ascribe a P/E multiple of 26x on
Given SKF's leadership
CY16E EPS and a target price
position in the bearing space,
of ` 1568/share.
strong earnings growth (CAGR
Key Financials
CY13
CY14E
CY15E
CY16E
2,246.4
2,446.8
2,802.4
3,266.5
EBITDA (` crore)
261.4
318.9
376.2
453.1
166.7
223.4
263.6
318
31.6
42.4
50
60.3
CY13
CY14E
CY15E
CY16E
21.3
Net sales (` crore)
EPS (`)
Valuations Summary
P/E (x)
40.6
30.3
25.7
Target P/E (x)
49.6
37
31.4
26
EV / EBITDA (x)
24.5
19.7
16.4
13.2
5.3
4.8
4.3
3.8
RoNW (%)
P/BV (x)
13.1
15.9
16.7
17.6
RoCE (%)
16.6
18.9
20.2
21.7

46
January 2015
STOCK IDEAS 2015
State Bank of India (SBI)

SBI is the largest bank in the
country both by asset size (Rs.
19 lakh crore balance sheet
size) and profitability (~ `
12,000 crore). SBI has
managed ~16-17% market
share in both deposits and
advances consistently. Going
ahead, we expect SBI to
maintain its market share and
grow in line with industry with
deposit CAGR of 15.5% to `
18,60,692 crore and credit
C AG R o f 1 5 . 2 % t o R s .
16,04,457 crore in FY14-16E.
For FY15, growth is expected
to be relatively subdued.
highest domestic net interest

margin (NIM) among public
sector undertakings (PSU)
banks at ~3.5%. A strong
operational performance led
by net interest income (NII)
enables SBI to cover up for
higher provisioning & post
decent profitability.
The gross non-performing
assets (GNPA) stood at `
60,712 crore (4.9% of credit)
while its standard restructured
assets are manageable at 3.5%
(` 43,962 crore) as on
September 2014. Considering
the large size of SBI, its
exposure to stressed sectors is
relatively low. Overall, the bank
has relatively stable asset
quality compared to other PSU
banks with stressed asset (net
non-performing assets (NNPA)
+ restructured assets (RA))
proportion of 6.2% as on
Q2FY15 compared to ~10%
for other PSU banks. We
In 1993, retail deposit funds

~80% of total deposit, which is
stable in nature while its bulk
deposit proportion is sub 10%.
The CASA (current and
savings account) stood at
42.79% for the bank. Hence,
liquidity and interest rate risks
remain limited for SBI. Hence,
it is maintaining one of the
47
January 2015
STOCK IDEAS 2015

expect GNPA and NNPA ratios
at 4.7% and 2.5%, respectively,
by FY16E.
comfort on scale and relatively

lower headwinds on the asset
quality. We have a target price
of ` 374, valuing the core book
at 2.5x FY16E standalone ABV
(adjusted book value) and
adding ` 45 for associate banks
& subsidiaries (life & general
insurance, asset management
company (AMC), etc).
We expect the bank to post

healthy 18% CAGR in profit to `
15,908 crore, over FY14-16E
with return ratios of RoA
(return on assets) at 0.7-0.8%
and RoE (return on equity) of
11-12%+. We continue to
recommend SBI led by
Key Financials
FY13
FY14
FY15E
FY16E
NII (` crore)
44,331
49,282
53,475
57,595
PPP (` crore)
31,083
32,109
34,207
36,953
PAT (` crore)
14,105
10,891
34,207
36,953
20.6
14.1
18.5
21.3
FY16E
EPS (`)
Valuations Summary
FY13
FY14
FY15E
P/E (x)
14.9
21
16.6
14.4
Target P/E (x)
18.1
25.6
20.2
17.6
P/ABV (x)
2.7
2.6
2.4
2.2
Target P/ABV (x)
3.3
3.2
2.7
RoA (%)
0.6
0.7
0.7
RoE (%)
15.4
10
11.1
11.7
(NII: Net interest income; PPP: Pre-provision profit; PAT: Profit after tax;
EPS: Earnings per share; P/E: Price-to-earnings; EV: Enterprise value;
P/ABV: Price-to-adjusted book-value; RoA: Return on Assets; RoE: Return
on equity)
48
January 2015
STOCK IDEAS 2015
UltraTech Cement Ltd. a

We c o n t i n u e t o p r e f e r
UltraTech Cement in the largecap space as we believe the
company is best placed to
capture the full growth
potential in tandem with a
sharp economic recovery,
given its pan-India presence
and high cost efficiencies
among large caps in the
cement space. The current
grey cement capacity stands at
60.2 MT (ex-MP unit of Jaypee
Cement) with market share of
17% in the cement industry in
India.
Jaypee's Gujarat cement unit

with 4.8 MT capacity. Further
m e m o r a n d u m o f
understanding (MoU) for
acquiring 4.9MT cement
capacity in Madhya Pradesh of
Jaypee Cement has resulted in
total capacity of ~65 MT, which
is well ahead of the company's
targeted expansion plans for
FY15E.
The lower lead distances due
to pan-India presence, captive
power plants (733 MW), higher
sales realisations due to higher
trade mix has helped the
company to generate healthy
operating margins (i.e. 18 20%)
in the industry. It has also been
able to reduce its power
consumption per tonne
gradually through various
initiatives. Power requirement
of ~80% is met through
captive power plants, which
helps the company in
maintaining lower fuel costs
The company has consistently

remained ahead of its peers in
terms of capacity expansion
with a CAGR of 23% vs. peer's
CAGR of 13% over the past five
years. During FY14, UltraTech
increased its capacity by 6%
Yo Y t o 5 3 . 9 M T b y
commissioning the 3.3 MT
clinker plant in Karnataka. The
company recently acquired
49
January 2015
STOCK IDEAS 2015

per tonne.
UltraTech is well positioned to

reap the benefit of a recovery in
demand and generate healthy
free cash flows in future. The
stock is currently trading at
13.7x and 11.3x EV/EBITDA for
FY16E and FY17E,
respectively, against last four
year's average valuations of
13.0x. We value the stock at
13.5x its FY17E thereby
arriving at a target price of `
3,240.
We believe the industry's

capacity utilisation bottomed
at ~71% in FY14. We think low
capacity additions and
demand recovery should lift
utilisation levels from hereon
given the cyclical upturn in the
economy coupled with an
expected policy push to drive
investments in the
infrastructure sector. Being a
n e t d e b t- f r e e c o m p a n y,
Key Financials
Net sales (` crore)
FY14
FY15E
FY16E
FY17E
20,077.9
24,704.4
28,791.5
34,007.5
3,616
4,246
5,563.3
7,283
2,144.5
2,405.4
2,938
3,967.2
78.2
87.7
107.1
144.7
FY14
FY15E
FY16E
FY17E
34
30.3
24.8
18.4
EBITDA (` crore)
PAT (` crore)
EPS (`)
Valuations Summary
P/E (x)
Target P/E (x)
40.7
36.3
29.7
22
EV / EBITDA (x)
20.3
17.8
13.7
11.3
4.3
3.7
3.4
2.9
RoNW (%)
P/BV (x)
12.5
12.3
13.5
15.7
RoCE (%)
11.9
11.3
13.2
16.5

50
January 2015
STOCK IDEAS 2015
Voltas Ltd.
Voltas, India's leading room air

conditioner (RAC)
manufacturer (with ~20%
volume market share) &
electro-mechanical project &
services (EMPS) player, is set
to benefit from a changing
demographic profile & revival
in India's investment cycle. Its
unitary cooling products (UCP)
division's revenue has grown
at 16% CAGR in FY10-14
mainly due to a change in
product mix towards premium
products. With sustained
demand from tier-II, tier-III
cities and rising trend of
urbanisation, we expect the
UCP division to witness
volume growth of ~8% (vs.
~5% industry growth) for
FY14-17E. In the EMPS
business, Voltas' strategy to
focus on profitability by
bidding for small size, high
margin projects and their
timely execution would help in
margin expansion in future.
Given the strong performance
of UCP division, its
contribution to revenue may
change from current 39% to

44% by FY17E. We expect
consolidated sales, earnings
CAGR of ~12%, ~24%,
respectively, in FY14-17E.
Voltas follows an asset-light
model for its UCP division,
which has an assembling
capacity of 7,70,000 units and a
total dealer network of over
6,500 in India. Strong brand
recall value and relatively
lower A&P (advertising &
promotion) expenditure than
competitors helped Voltas
maintain EBIT margin of 9-12%
in FY10-14. We expect EBIT
margin of the segment to
remain strong (~12.5-12.8% in
FY14-17E) due to increasing
contribution of split AC. Strong
RoCE of ~40-43% in FY11-14 &
strong cash flow generation
capacity of UCP division
helped in funding higher
working capital requirement of
EMPS business in difficult
times. We believe a steady
recovery in profitability of
EMPS & robust cash flow
51
January 2015
STOCK IDEAS 2015

generation capacity of UCP
division would generate
operating cash flow of Rs. 413
crore in FY17E.
margin projects. It will help

reduce working capital
requirements with improving
return ratios, going forward.
The
continuous
out
performance of the UCP
division makes Voltas a re
rating candidate in line with
consumer durable stocks.
Based on our sum-of-the-parts
(SOTP) valuation, we arrive at a
target price of ` 348.
Voltas is trading at a PE
multiple of 20x FY16E and 18x
FY17E earnings. We expect the
EMPS segment to narrow its
losses in FY14 and start
contributing to the EBITDA in
FY15E by executing high
Key Financials
FY14
FY15E
FY16E
FY17E
Net sales (Rs. crore)
5,266
5,572.4
6,316.7
7,395.2
EBITDA (Rs. crore)
265.6
423.8
501.8
591
PAT (Rs. crore)
245.4
486.9
410.3
464.8
7.4
14.7
12.4
14.1
FY14
FY15E
FY16E
FY17E
EPS (Rs.)
Valuations Summary
P/E (x)
31.5
15.9
18.9
16.7
Target P/E (x)
46.9
23.6
28
24.8
EV / EBITDA (x)
26.8
16
13.2
11
4.3
3.5
3.1
2.8
P/BV (x)
RoNW (%)
13.5
22.1
16.5
16.7
RoCE (%)
11.5
15.9
16.9
18

52
January 2015
FLAVOUR OF THE MONTH

Investment Outlook 2015
The calendar year 2014 saw financial assets performing well, with equity
market delivering around 30% return and debt market delivering 15%. The
year, however, proved to be negative for gold, delivering -1.50% in dollar
terms. What does 2015 have in store for investors? We asked a panel of
fund managers for their views on how they see 2015 panning out for major
asset classes and their advice to retail investors. Read on.
remain well supported.
Markets would now reward
earning growth and a further
re-rating on valuations would
be contingent on earnings
improvement.
As the pace of the economy
improves over the next few
quarters and inflation shows
signs of cooling, corporate
balance sheet and cash flows
are likely to see improvement
and thus, broader market will
continue to look attractive in
2015.
Pradeep Gokhale
Senior Fund Manager Equity,
Tata Mutual Fund
Outlook for equity: Broader market

will continue to look attractive in
2015
Sector views: We believe a

bottom-up approach to
investing will set us up for
decent returns. Among
sectors, we continue to like and
remain invested in auto/auto
ancillaries, cement, consumer
discretionary, capital goods
and pharmaceuticals. We are
equal weights on BFSI
(Banking, Financial services
and Insurance) and IT
(Information Technology). We
continue to remain
We continue to retain our

positive outlook on the Indian
equity markets over the
medium term. After a strong
run-up in 2014, markets are
trading at fair valuations. With
global liquidity remaining
benign and India being viewed
favourably by global investors
due
to
a
reformist
government, and a beneficiary
of lower commodity prices;
the valuations are likely to
53
January 2015

underweight on Metals, oil and
gas, consumer staples and
Realty sector.
We feel the main risks to
markets are global.
Competitive devaluation and
resultant moves in currency
markets and recessionary
conditions in many economies
of the world can lead to higher
volatility in the markets.
Raghupathi Acharya,
Fund Manager Fixed-income
Tata Mutual Fund
Advice for retail investors: Invest

systematically and use the possible
increase in volatility to your
advantage.
Outlook for fixed-income: Duration

strategies would yield better return
opportunities than accrual going
forward
Indian equities are poised for a

long-term upward trending
market. All fresh allocations
should be made with a three to
five year view to reap the
benefits of this trend. While
large-caps are relatively safer
bets, with prospects of
economic growth benefiting a
broader spectrum of
companies, investors should
allocate some money to midcap funds also. There are many
attractive long-term
investment opportunities
available across market
capitalization.
We believe the calendar year

2015 will be a year of transition
albeit a slower one but a
positive one for both the
economy and the debt market.
The year would see the
Reserve Bank of India (RBI)
initiating the long awaited rate
cut process; while on the other
hand, markets will be keen to
see the reforms process
gathering pace.
The shift of household savings
from physical assets to
financial instruments due to
falling inflation and higher real
rates will lead to capital flows
to real sector. Implementation
of the much-awaited Goods &
Service Tax (GST) will lead to
We would urge investors to

invest systematically in the
equity market and use the
possible increase in volatility
to their advantage.
54
January 2015

improvement in tax revenues
and a big positive for the
economy.
currency volatility and external

geopolitical risks.
Advice for retail investors: Add
duration (long-term bond funds) to
benefit from capital appreciation
opportunities
We e x p e c t g o v e r n m e n t
security (G-sec) yields to be
volatile with a downward bias
on the back of rate cut
expectations and gradual fall in
consumer price index (CPI).
RBI may initiate rate cuts in the
first quarter of 2015. We expect
the 10-year benchmark yield to
trade around 7.50% levels by
the second half of the calendar
year 2015.
We are bullish on debt market

in the year 2015. Investors
should add duration (long term
bond funds) to benefit from
capital appreciation
opportunities as the yields
come down. We believe
investors should play duration
through sovereign papers as
credit spreads are not
a t t r a c t i v e e n o u g h . We
recommend such duration
exposure through dynamic
bond funds or gilt funds as
compared to regular bond
funds because in dynamic
bond fund the fund manager
has flexibility to tactically
manage duration to benefit
from any volatility arising from
any change in global risk
appetite.
On the corporate debt side we

have a negative bias towards
lower-rated bonds which are
currently trading at
compressed spreads. While
we expect the government
issuances to moderate on the
back of fiscal prudence policy
of government, we see the
corporate issuances to
increase due to improvement
in credit off-take and capital
investment. We are however,
positive on AAA-rated papers
than lower-rated ones.
If investors have a short-term

investment horizon, they
should look at short-term
funds. In case investors have
medium to long term
investment horizon, they can
start investing in medium term
gilt funds with an investment
horizon of at least 3 years.
Duration strategies would

yield better return
opportunities than accrual
going forward.
The risk to our view is the
volatility in crude prices,
55
January 2015

meaningful manner and to
sustain, we need to see further
policy action from new
government. Till now, we have
been beneficiaries of cyclical
bounce back. Post the new
government, we have seen a
steady reforms agenda in
2014, we expect this to
continue in 2015 and will serve
as a catalyst to growth. The
government's efforts to
improve the ease of doing
business and boost business
confidence can result in
productivity gains, the Make in
India campaign, financial
inclusion, the Goods and
Services Tax (GST) all these
could help put India in a better
spot.
Soumendra Nath Lahiri,

Head Equities,
L&T Mutual Fund
Outlook for equity: Earnings is what

finally drives markets
The outlook for global growth
has stabilised even as
challenges do remain. The
headwinds that faced most
economies since the global
financial crisis have eased. The
diverging momentum
between the US and Europe
could be a key theme in the
year ahead. Secondly, the
divergent monetary policy
regime could continue. On one
hand, the US and the UK are
tightening their monetary
policies, while Europe and
Japan are delivering more
stimulus.
What markets are now looking

forward to is evidence of the
investment cycle taking off.
That will sustain earnings
momentum in the medium to
long term. From a near-term
point of view, perhaps the
market will be looking towards
the Budget with some
anticipation, even as earnings
take some time to build
momentum. We expect to see
an uptick in earnings
momentum in the second half
of next year - towards the 16
17% growth, up from the 12
13% levels we are at. The oil
prices coming off its highs plus
the de-regulation of
In India, after two years of sub

5% growth, we are seeing a
bounce back. Over the next
year or two, we could see
growth range 6-6.5% in 2015.
For growth to come back in a
56
January 2015

government subsidies will
help reduce subsidies
substantially.
n e a r- t e r m p r o s p e c t s f o r
commodities continue to be
challenging. Utilities earn a
fixed return on capital
employed - not a sector you
want to bet on when the overall
environment is gearing up for
earnings expansion. And
telecom currently has many
challenges to deal with
including spectrum issues,
license fees, new auctions and
so on - these uncertainties
keep us away from telecom.
On the valuations front, while

we are no longer cheap, we are
not expensive either. Bull
markets in India are known to
take price-to-earnings (PE)
multiples to the 24-25 range we are now at 16-17x 1 year
forward earnings. So, we don't
see any reason to get unduly
worried on valuations,
especially when you are
looking towards earnings
momentum building from here
on. In forward PE terms, the
mid-cap index has caught up
with large-cap index in terms
of valuations. Earnings, as we
all know, is what finally drives
markets.
Advice for retail investors: Invest

systematically through SIPs
In the last one year both equity
and fixed income have done
extremely well. We believe that
investors should have a well
constructed and diversified
portfolio with investments
spread across asset classes.
Do not try to time the market
but invest systematically
through systematic
investment plans (SIPs).
Longer term investors pay an
average price for units over
time and this helps beat
volatility. Stay invested in the
markets and do not worry
about short term volatility.
Often investors make the
mistake of trying to time the
market and as a result end up
entering the markets at higher
levels and sometimes stop
their SIPs or exit when markets
decline.
Sector views: Given the current

state of the economy, we
remain positive on autos and
auto ancillaries, banks and
cement. All three benefit from
cyclical recovery and have
strong structural growth
stories in place as well. Given
the strong performance in
global sectors such as IT and
pharma in the last five years,
we have market weightages in
the two segments. We have
underweights in metals,
utilities and telecom. Metals
are getting impacted by the
global commodity cycle, and
with China slowing down,
57
January 2015

FY16. Over the course of this
year, this gap between lofty
market expectations and
somewhat slower reality could
result in volatility amidst
disappointment in certain
segments of the market.
For fixed income markets, the
outlook for 2015 appears
bright. With supply side
inflation viz. food, oil,
commodities all trending
sharply lower over the past few
months, a continuation of
these trends, combined with
benign demand-side
inflationary pressures on
account of the slow pickup in
growth imply good risk
reward characteristics for our
markets. We expect RBI to ease
rates by 50 basis points (bps) in
the first half of 2015, given a
likely 5.5-6% inflation
trajectory in 2015-16 and RBI's
framework of 1.5-2% real
interest rate. If, however, oil
were to stay at or trend below
50$ per barrel for a sustained
period in 2015 and the Modi
government manages to keep
food inflation under check (by
tackling any potential food
price shocks with well planned
Shriram Ramanathan,
Head Fixed Income,
L&T Mutual Fund
Outlook for fixed-income: The

entire yield curve to move lower
If 2014 was a year of hope,
promises and expectations
build-up from the Modi
government (particularly the
second half), 2015 would be
keenly watched for delivery
and results.
While intent of this
government to move ahead on
various policy reforms to
revive growth is clear, practical
constraints are unlikely to
make it an easy way forward to
the 8%+ growth path. As
confirmed by recent current
activity indicators, it is likely to
be a slow grind upwards, and
we expect growth to average
around 5.3% in FY15 and only
gradually move up to 6-6.3% in
58
January 2015

supply side measures), room
for an additional 25-50bps of
easing could open up in the
second half of the year.
India stands comfortably

placed on the external front,
thanks to various measures by
the RBI over the course of
2014. While most estimates of
India's CAD still stand at 1.5
2%, one cannot rule out a
much smaller level of CAD
especially if oil prices continue
to drift lower. However, with
the US Dollar rally likely to
continue against most other
currencies and with RBI keen
on bolstering our FX reserves
over the next few years, we
expect the rupee also to
gradually weaken in line with
the trends in other emerging
markets albeit in a controlled,
less volatile manner.
Within the fixed income

market, we expect the entire
yield curve to move lower; in
line with the expected 50bps
policy rate cuts in first half of
2015. With the longer end of
the government bond curve
already discounting the first
rate cut, the short to medium
end of the corporate bond
curve could benefit a bit more
once the rate cuts actually
start.
After an extremely strong year
of foreign institutional inflows
(FII) inflows into Indian debt in
2014, we expect offshore
interest to remain strong
given India's relative
attractiveness. However,
government bond buying by
FIIs is however constrained by
lack of available limit on these.
Unless this limit is freed up
further, we expect bulk of the
incremental FII buying to
happen in high quality
corporates. Hence, from that
perspective - AAA spreads are
reasonably attractive.
Advice for retail investors: Both

duration as well as accrual funds
are likely to perform well
For domestic fixed income
mutual fund investors, we
believe both duration as well as
accrual funds are likely to
perform well in 2015. While
over the next one year, long
duration funds (bond funds,
gilt funds) are likely to do
better, on back of the expected
rate cutting cycle over a 3year perspective, the higher
59
January 2015

portfolio yield in accrual funds
could lead them to deliver
superior performance.
Accordingly - investors can do
well by having a good

proportion of both - duration
and yield, in their fixed-income
portfolios.
Disclaimer: The article (including market views expressed herein) is for general information only and does not
have regard to specific investment objectives, financial situation and the particular needs of any specific person
who may receive this information. Investments in mutual funds and secondary markets inherently involve risks
and recipient should consult their legal, tax and financial advisors before investing. Recipient of this article/
information should understand that statements made herein regarding future prospects may not be realized. He/
She should also understand that any reference to the securities/ sectors in the document is only for illustration
purpose and are NOT stock recommendations from the author or L&T Investment Management Limited, the asset
management company of L&T Mutual Fund or any of its associates. Any performance information shown refers to
the past should not be seen as an indication of future returns. The value of investments and any income from them
can go down as well as up.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully. CL01505
10%.
Gold: Is likely to be subdued
and may not return more than
7-8%.
Real estate: Supply is still high
where as demand is quite
muted and we expect this asset
class to remain flat at best for
Cy2015.
Lalit Nambiar,
Fund Manager & Head of Research,
UTI Mutual Fund
Advice for retail investors: Ensure a

healthy asset allocation
Outlook for various asset classes:

Equity to return at least 15%
Equity: Based on valuations,
earnings expectations, macro
backdrop as well as the
tendency seen in the past of
clustering of good return years
we feel the market should
return at least 15% in Cy2015.
Debt: Should do well, albeit
not well as equity, we think the
asset class should return about
60
Ensure a healthy asset

allocation based on risk
appetite which is in turn a
function of age, income and
liquidity needs. With equity do
not expect linear returns, they
will be volatile but the medium
term benefits are huge. Be
cautious about mid-caps and
small-caps while there may be
a few potential winners, most
of the others will turn out to be
junk. Choose your stock and
extent of exposure carefully, or
better still buy into a mid-cap
mutual fund.
January 2015

with a horizon of three years
and above.
Also, given that, India's CAD
has corrected and inflation
numbers have come down
there is a potential for interest
rate decline. Therefore, over
Sankaran Naren,
Chief Investment Officer (CIO),
ICICI Prudential Mutual Fund
the next 15 months or so, it is

very attractive to bet on fixed
income in 2015.
Indian equities remain one of the
As for gold and real estate,
best assets classes
Indian retail investors have
The macro-economic scenario
been overweight on these
for India looks healthy with
physical
positive outlook on both
underweight on equities. We
inflation and current account
do not see an uptrend for gold
deficit (CAD). This should
or real estate.
translate into lower interest

and
while
Advice for retail investors: Move to
rates which will increase

demand
assets
financial assets
improve
corporate profitability. We
We strongly advise investors
maintain that Indian equities
to reduce their investments in
are one of the best assets
physical assets and move to
classes and recommend
financial assets.
domestic investors to invest
61
January 2015

markets. At a later stage a re
rating in the equity markets will
only provide more reason to
cheer. Investments have not
picked up yet, but a gradual
return of capital and an
Tushar Pradhan,
Chief Investment Officer (CIO)
HSBC Mutual Fund
enabling environment can

unleash a multi-year cycle.
Equities are trading at a
Financial assets look very
multiple or two higher
attractive
thantheir average but this

could be a signal to rising
We prefer an asset allocation
earnings in the future, so we do
approach to investing in 2015
not think them to be
as opposed to taking a
excessively valued at the
unilateral view on any one
moment and thus should
asset class. Financial assets
remain a significant portion of
look very attractive given their

respective
one's portfolio. We also see
valuations
value in mid-caps since the
compared either to history or
potential of a multi-year
on an absolute basis. Interest
economic expansion will yield
rates seem to have peaked and
handsome returns to this asset
inflation coming off can
class if the same indeed pans
support a rally in the bond
out.
62
January 2015

Real estate and gold has been a
great long term investment
favorite with Indian investors in
experience than trying to time
the past since it appeals at
the markets on a yearly basis.
times of negative real rates of
We prefer long bonds and
return. With inflation coming
liquidity products. Global
down we believe these asset
equity and Indian equity also
classes will struggle to retain
looks quite attractive on a
their earlier seen growth rates
sustainable basis given the
of the past few years.
above trends. We would
Advice for retail investors: Prefer
encourage investors to
an asset allocation approach rather
allocate a significant portion to
than a blanket choice of a single
this asset class this year.
asset class
Toward the end of 2015, or

even driven by events during
We would suggest an asset
the year, there may be a need
allocation approach rather
to re-look at portfolio
than a blanket choice of a
allocation, but the longer term
single asset class. It is a well
trends indicate a preference
known phenomenon that
toward the equity asset,
returns of longer term
followed by long bonds and
portfolios are driven more by
the rest in liquidity, fine-tuned
allocation than securities
for individual preferences and
selection. Hence a judicious
risk appetite.
mix of assets can provide a
63
January 2015

by plummeting international
commodity and energy prices
and well managed food prices
internally has opened up
opportunities for rate
reductions as the real rates
widen.
Vetri Subramaniam,
Chief Investment Officer (CIO),
Religare Invesco Mutual Fund
Investors
are
encouraged to select funds

with fund duration longer than
their investment horizon in this
Outlook for equity: Earnings growth scenario.

to be the key driver of returns
Advice for retail investors: SIP is
Equities look attractive from a the best option

3-5 year perspective. Last The systematic investment
year's returns were driven plan (SIP) is the best option for
largely by a re-rating of price- retail investors. It evens out
to-earnings (P/E) ratio higher. volatility and returns.
But from here we expect
earnings growth to be the key
driver of returns. The upturn in
the economy is very mild and is
at a nascent stage and
investors will need to be
The views expressed in the

article are personal views of
the authors and do not
necessarily represent the
views of ICICI Securities.
patient. The protracted decline Please send your feedback to

in the headline inflation driven moneymanager@icicisecurities.com
64
January 2015
Guest Column
Real Estate Outlook 2015: Year of Opportunities
Rohit Salhotra, MD & CEO, ICICI Home Finance Company Ltd. shares with
us the key real estate takeaways from 2014 and the outlook for 2015.
developer and buyer interest,
clarification on real estate
investment trusts (REITs) and
further fine-tuning of the Land
Acquisition, Redevelopment
and Rehabilitation (LARR) Bill
and the Real Estate Regulatory
(RERA) Bill were an added
bonus. To top it all, with the
equity markets outperforming
most other asset classes
during 2014, increasing
investable surplus in the hands
of the home buyers, something
that could lead to greater
market buoyancy.
Rohit Salhotra,
MD & CEO,
ICICI Home Finance Company Ltd.
The year 2014 witnessed
growing buyer interest and
positive market trends for the
real estate sector in India. The
decisive election mandate in
favor of a single party has
allowed the new Government
to make progressive headway
in its plans for economic
revival, with tangible benefits
already visible on the horizon
for the real estate sector. While
the re-configuration of
'Affordable housing' by
according it 'Infrastructure'
status is expected to increase
Residential sales during the

year itself, however, were tepid
to say at best, with buyers
delaying signing on the dotted
line. While the first half of
CY2014 showed a gradual
increase in demand due to
expectations of a positive
electoral outcome at the
Centre. Unchanged interest
rates and high residential
prices post elections led to a
decline in demand in Q3 of
CY2104. A subdued demand
environment saw many
developers delaying the mid to
65
January 2015
Guest Column
high-end project launches and
were more willing to engage in
the low-margin affordable
housing segment, to indulge in
a volume game. The year also
saw developers extend
various innovative offers /
schemes to attract buyers,
especially during the festive

season.
The figure below shows the
quarter-on-quarter (q-o-q)
residential absorption rate and
available supply (as on 30th
September) for top 7 cities in
India for CY2014:
250000
200000
150000
100000
50000
Supply (No.of Units)
Absorption (No. of
Units)
Residential Absorption and Supply

20000
18000
16000
14000
12000
10000
8000
6000
4000
2000
0
0
NCR
MMR
Q1 Absorption
Bangalore Chennai Hyderabad

Q2 Absorption
CityQ3 Absorption
Pune
Kolkata
Available Supply (End of Q3)
*Source: PropEquity
On the other hand, Q3 of

CY2014 saw office absorption
picking up; a trend which is
likely to continue in 2015.
Office leasing activity
improved post the general
elections due to renewed
business confidence which led
companies to go on a talent
hiring and a consequent office
expansion spree. An
increasing number of start-ups
contributed to the demand for
small-to-medium-sized office
spaces while e-commerce
companies occupied larger
commercial spaces as they
upgraded their warehouses.
Bengaluru, Pune and

Hyderabad proved to be the
imminent commercial hubs as
the commercial office spaces
in these cities registered a
significant fall in vacancy rates
(a fall of 2.5%, 3.4% and 1.3%
respectively) as compared to
beginning of the year. This also
indicated a preference for
cheaper office spaces to
ensure cost-efficiency.
The figure below shows the qo-q commercial absorption
rate and vacancy rate (as on
30th September) for top 7 cities
in India for CY2014:
66
January 2015
Guest Column
40.00%
30.00%
20.00%
10.00%
Percentage
Area (Mn. Sq. Ft.)
Office Absorption and Vacancy

4
0.00%
Mumbai
NCR
Bangalore
Pune
Hyderabad Chennai
Kolkata
City
Q1 Absorption (mn. sq. ft.)
Q3 Vacancy (Percentage)
*Source: PropEquity
As the real estate sector
transitions into 2015, if
expectations of an interest rate
cut in view of reduced inflation
do materialize, it could nudge
the fence sitters to finally take
the plunge.
With the
manufacturing industry
starting to buck up with the
Make in India campaign and
with a renewed interest among
multi-national companies
(MNCs) in the India story, 2015
is slated to see a healthy spurt
of jobs in manufacturing,
service and IT/ITeS sectors.
These two factors coupled
together could get translated
into a major driving force for
the housing demand. Going
forward, the market is likely to
be skewed towards the end
user more than the investor.
Also, 2015 is expected to see

more developers focusing
their offerings in the moderate
income end-user segment of
the market and re-configuring
their product offerings to
achieve a balanced blend of
right-size and right-price with
optimum space utilization.
In 2015, favorable economic
activity will also drive
commercial realty segment in
India as corporate clients
expand businesses and
increase capital expenditure
(CapEx). This segment is likely
to gain traction with the
proposition of creation of 100
smart cities which has already
attracted a host of investments
such as Blackstone's
investment in a Noida-based
special economic zone (SEZ),
67
January 2015
Guest Column
Piramal Enterprises'
investment in a Bengaluru
project, etc. Lease rentals are
likely to increase in prime
commercial locations of
Mumbai and NCR due to
limited inventory and wait and
watch mode of developers
before they add more supply.
Rental values are expected to
remain more or less at the
same level in new commercial
hubs until demand in these
regions shows a strong revival.
residential project.and this is

just the beginning.
If I may summarize, the
markets are maturing, and the
industry will have to adapt
itself to the new customer the
END USER and the mature
institutional investor. With
favorable efforts initiated by
the new government for Real
Estate industry and increased
end user demand backed by an
improved economic scenario,
we expect a positive sentiment
to drive this industry in 2015.
Although investors continue to
invest in financial assets and
might take longer before they
throng the real estate market,
the industry is definitely
attracting favorable attention
of overseas funds and
institutional investors. All in all,
2015 promises to be an
interesting year that could well
define the future of this
industry.
Additionally, the new revised

foreign direct investment (FDI)
norms have allayed the
skepticism of offshore
investors and the industry is
already seeing a resurgence of
f o r e i g n m o n e y. G l o b a l
institutional investors are
already making their intentions
clear the Government of
Singapore Investment
Corporation (GIC) has
committed a large sum in
Bengaluru, Canada Pension
Plan Investment Board (CPPIB)
has set up an office in India,
Abu Dhabi Investment
Authority (ADIA) has co
invested with an Indian partner,
Blackstone has committed to a
The views expressed in the article are

personal views of the author and do not
necessarily represent the views of ICICI
Securities.
68
January 2015
MUTUAL FUND
REVIEW & PREVIEW
CY14: Good year for mutual funds

Here we offer a review of mutual funds performance in the calendar year
2014 along with outlook for building a better MF portfolio going ahead.
To start with, let us see how each category of mutual funds fared
in CY14.
CY14
75
Category Returns Viz a Viz Benchmark
69.2
54.7
50.3
41.0
29.9
14.3
10.3
10.5
9.0
8.7
9.2
0.1
Equity Funds
GoldInternational
Gold ETF
Crisil
Liquifex
Liquid
Income Ultra
Short Term
Crisil STbex
-6.1
inflows of Rs. 49,458 crore in

CY14. Last two years i.e. Cy12
and CY13, there were outflows
from equity mutual funds while
in CY14 barring March and
April, there were net inflows in
each month indicating that
retail investor sentiments have
turned positive.
Equity funds were the best

performing funds among all
categories. With the formation
of the new single -party
majority National Democratic
Alliance (NDA) government
there was a huge turnaround in
market sentiments. Indian
equity markets soared to new
highs pulling equity funds'
assets under management
(AUM) to their highest ever to
Rs. 3,19,478 crore (equity+
equity-linked savings schemes
(ELSS)) growth of 75% year
on-year (YoY). The AUM
growth was also led by net
Income
Short Term
Crisil
Combex
BSE Sensex
Income Long
Term
Divesified
Large cap
BSE MidCap
BSE SmallCap
-1.5
Gold-India
13.0
Mid cap
80
70
60
50
40
30
20
10
0
-10
-20
Within equity funds, mid-cap

funds were clear winners
delivering 75% return,
outperforming the large-cap
and diversified funds, which,
on an average, delivered 41%
and 50% returns, respectively.
Among sector funds, cyclical
i.e. infrastructure funds and
69
January 2015
MUTUAL FUND
REVIEW & PREVIEW
banking sector funds
outperformed delivering
61.5% and 64% returns,
respectively. Pharma funds
continued to grow investor's
wealth for the third
consecutive year delivering
49% average return while
average returns of technology
funds moderated from the year
before to 24% and were
laggards among sector funds.
FMCG funds, on which we had
a neutral stance (as
wementioned in our I-direct
monthly reports), managed to
deliver average 30% return
underperforming most other
sector funds.
negatives. Decline in
government security (G-Sec)
yields by ~50-100 basis points
(bps) across tenures led to
huge capital gains. However,
on the other hand, change in
tax rules lowered post-tax
returns.
The Union Budget 2014
increased the period for which
one has to remain invested in
debt funds for the capital gains
to be considered as long-term
from 12 months to 36 months.
Therefore, all redemptions
before 36 months will now be
taxed at the normal rate of tax
applicable to each individual,
which brings them at par with
bank fixed deposits (Fds).
There were a slew of new fund

offers of close-ended equity
funds from almost all leading
mutual fund houses. Between
January and November-end,
40 close-ended equity funds
were launched, which
collected Rs. 7,459 crore.
Fall in inflation by 550 bps to

4.35% by November 2014 from
over 9% in December last year
triggered a bond market rally.
The benchmark 10-year
government securities yield
dropped from 8.8% as on
December 31, 2014 to 7.89%
as at end of CY14. Debt funds,
therefore, posted double digit
Debt Funds
For debt fund investors, the
year had both positives and
70
January 2015
MUTUAL FUND
REVIEW & PREVIEW
return aided by higher accruals
+ high capital gains.
net inflows although the

quantum has been declining
each year. The impact of a
longer holding period may be
seen over the next full year
with inflows into debt funds
moderating further.
Within debt funds, G-Sec

funds were the winners as they
carried higher modified
duration and had a direct
linkage to the fall in yields,
delivering average 14% return.
Long-term income funds with
duration of over five years and
dynamic bond funds also
delivered double digit returns
in the range of 13-15%. Shortterm funds and credit
opportunities fund, which
enjoyed the benefit of higher
accrual delivered 10-11%
return. Ultra short-term and
liquid funds returns were in the
range of 8-9%. Income funds'
AUM as a whole increased
18% YoY to Rs. 5,02,154 crore
while gilt funds' AUM jumped
20% YoY to Rs. 9,025 crore.
Liquid funds' AUM was flat at
Rs. 1,78,491 crore. During
CY14, income funds garnered
Rs. 28,489 crore (better than
CY13 but lower than CY12). Gilt
funds garnered Rs. 950 crore,
the third consecutive year of
Gold Funds
As we expected, gold funds
lacked lustre in CY14 with a flat
closing and high interim
volatility. International gold
prices rose to $1,383 per ounce
and then dropped to $1,184
per ounce at the end resulting
in the rupee depreciating by
3% to Rs. 63 per dollar. This led
to flat returns for domestic gold
funds. Gold ETFs also
registered outflows for the
second consecutive year as
investors booked profit on
fears of prices dropping
further.
Global funds
Among global funds, US based
and commodity-linked funds
underperformed the Asia-pack
funds.
71
January 2015
MUTUAL FUND
REVIEW & PREVIEW
Outlook
consequential reduced
profitability may reverse as
reforms announced by the
NDA government start getting
implemented. We expect asset
quality pressure to moderate
from Q3FY15 itself with credit
growth recovering from
hereon.
Going ahead, we recommend

investing in equity funds in
astaggered manner. The
Sensex is trading at 14.6x one
year forward price-to-earnings
(P/E) multiple (FY16E), in line
with its historical mean.
H o w e v e r, g i v e n t h e
resurrection of the corporate
earnings cycle, we believe
there exists a case for a rerating of the Indian markets.
Midcap funds can be added to
the portfolio given that rerating of good quality midcaps
can happen as high growth
comes back on track.
Among debt funds, credit

opportunities and short-term
funds should be preferred with
an investment horizon of three
years or more as they offer
advantage of higher accrual
income. The corporate bond
market segment continues to
be attractive over a medium
term, especially with
expectations of an
improvement in corporate
profitability and improved
economic outlook.
Among sector funds, we prefer

banking funds. The banking
sector, being the barometer of
t h e e c o n o m y, h a s
outperformed in an improving
economic activity and rising
market scenario. The major
concern relating to the sector
in terms of high nonperforming assets (NPAs),
higher provisions and slower
credit growth and
Gold funds may continue to

provide moderate returns.
However, at least 5% of the
portfolio should be invested in
gold funds as they act as a
hedge against currency and
provide diversification.
72
January 2015
MUTUAL FUND
REVIEW & PREVIEW
CY14: MF Industry Highlights

AUM share (December 2014)
Gilt, 9025, 1%
AUM share (December 2013)

Gold ETFs ,
8784, 1%
Gold ETFs ,
7188, 1%
Gilt, 7495, 1%
Equity,
319478, 30%
Money
Market,
178491, 17%
Money
Market,
181238, 22%
Balanced,
24490, 2%
Other ETFs,
1864, 0%
FOF(Overseas)
Other ETFs,
7849, 1%
Income,
502154, 48%
Equity,
182682, 22%Balanced,
16813, 2%
, 2539, 0%
Income,
424445, 52%
FOF(Overseas)
, 2668, 0%
Share of equity funds has increased to 30% in December 2014

from 22% in December 2013
Change in tax holding period impacted liquid funds

the most
Average return
Equity funds grabbed investors interest

60000
Average return
CY14 :75%
40000
20000
CY14 :8-9%
49458
30000
20000
10000
0
-10000
7661
1363
0
-20000
CY09
-15838
CY10
CY11
-15620
CY12
-302
16259
17307
CY12
CY13
6218
-20000
-30000
-10426
CY13
19643
-21529
CY09
CY14
CY10
CY11
CY14
Gold ETF : Outflow for the second consecutive year

Income fund inflows better than last year
200000
5000
4000
3000
2000
1000
0
-1000
-2000
-3000
Average return
CY14 :13-15%
146712
150000
100000
56745
50000
28489
375
0
-50000
-12165
-100000
CY09
-83470
CY10
CY12
CY13
1826
1727
482
CY09
CY11
Average return
CY14 : -1%
4046
CY10
CY11
CY12
CY14
Source: Amfi India, ACE MF, ICICIdirect.com Research
73
January 2015
-1816
-1651
CY13
CY14
MUTUAL FUND TOP PICKS

Mutual Fund Top Picks
Wth over thousand of mutual fund schemes available in the market,
selecting the right ones may become too complex. To make it easy
for you, we present our research teams top recommendations,
across equity and debt categories
Equity
Category
Top Picks
Largecaps
Axis Equity Fund

Birla Sunlife Frontline equity Fund
ICICI Pru Focussed Bluechip Equity Fund
UTI Opportunities Fund
Midcaps
HDFC Midcap Opportunities Fund

ICICI Prudential Value Discovery Fund
Franklin India Smaller Companies Fund
SBI Magnum Global Fund
Diversified
Franklin India Prima Plus

ICICI Prudential Dynamic Plan
Reliance Equity Opportunities
ELSS
Axis Long Term Equity

ICICI Prudential Tax Plan
Franklin India Tax shield
Sector - Banking
ICICI Prudential Banking

Reliance Banking
UTI Banking
74
January 2015
MUTUAL FUND TOP PICKS

Debt
Category
Top Picks
Liquid Funds
HDFC Cash Mgmnt Saving Plan

ICIC Pru Liquid Plan
Reliance Liquid Treasury Plan
Ultra Short Term
Birla Sunlife Savings Fund

Franklin India Ultra Short Term Bond
Fund
ICICI Pru Flexible Income Plan
Short Term
Birla Sunlife Short Term Fund

HDFC Short Term Opportunities Fund
ICICI Pru Short Term Plan
Credit Opportunities
Fund
Birla Sunlife Medium Term Plan

Franklin India Short term Plan
ICICI Prudential Regular Savings
Income Funds
ICICI Prudential Dynamic Bond Fund

Birla Sun Life Income Plus - Regular Plan
IDFC Dynamic Bond Fund
Gilts Funds
ICICI Pru Gilt Inv. PF Plan

Birla Sunlife Gilt Plus
MIP
(Aggressive)
Birla Sunlife Savings 5

ICICI Prudential MIP 25
DSP Blackrock MIP
75
January 2015
ASK OUR PLANNER
Opening bank/demat account for minors

Q: Thanks for keeping us updated
on many important factors in
savings and managing money well.
My eldest child is 16 years and
studying. Can I open her PAN,
savings and stocks demat
accounts?
Bank accounts: A savings

/fixed / recurring bank deposit
accounts can be opened by a
minor of any age through
his/her natural or legally
appointed guardian. Minors
above the age of 10 years are
also allowed to open and
operate savings bank accounts
independently, if they desire
so. Banks may, however, fix
limits in terms of age and
amount up to which minors
may be allowed to operate
their deposit accounts
independently. On attaining
majority (i.e. on completion of
18 years of age), the erstwhile
minor should confirm the
balance in his/her account and
if the account is operated by
the natural guardian / legal
guardian, fresh operating
instructions and specimen
signature of erstwhile minor
will be obtained.
What is the age, when child

becomes independent / adult in
bank accounts? And by when the
child's income is not clubbed with
parent's income and the child can
independently file income tax
returns?
- Deepak Jain
A: PAN: There is no minimum
age to apply for a PAN. Parents
can apply for it even for a newborn baby, provided they have
chosen the name for the baby,
of course. However, on
attaining majority (i.e. on
completion of 18 years of age),
the PAN data of the minor child
should be updated to get
his/her signature and photo on
the PAN card so that it can
become a photo ID. This can be
done through a 'PAN change
request form', quoting the
already allotted PAN.
Demat: Demat account can be

opened in the name of a minor.
The account will be operated
by a guardian till the minor
becomes major, Guardian has
to be the father or in his
76
January 2015
ASK OUR PLANNER

absence, mother. In absence of
both, father or mother, the
guardian can be appointed by
court. On attaining the age of
18 years, two options are
possible:
application of his/her skill,

talent or specialized
knowledge and experience,
then the return can be filed
only in the name of the minor.
For example, income of a child
actor or singer derived from
acting or singing is not covered
by the clubbing provision. In
other circumstances, on
attaining majority (i.e. on
completion of 18 years of age),
the individual has to start filing
taxes independently.
The existing account can be

closed and new account
opened in the name of the
minor-turned-major and all
securities in the minor
account are transferred to
the new account.
Existing account can still be
used. Minor-turned-major
has to sign a new
agreement with the
Depository Participant (DP)
and complete all formalities
required for opening a new
demat account. Guardian
details entered earlier have
to be deleted.
Q: My age is 35. For next 15 years, I

am planning to invest ` 1 lakh every
year in mutual funds. I would like to
have wealth above ` 40 lakh at the
end of 15 years.
In the last 2 years, I have invested
around ` 2.50 lakh in below funds:
Franklin India Tax Shield Growth,
L&T Tax Advantage Fund Growth,
Sundaram Tax Saver Growth,
HDFC Balanced Fund Growth and
HDFC Top 200 Growth.
Tax filing: All income which

arises or accrues to the minor
child shall be clubbed in the
income of his/her one of the
parents, whose total income
(excluding minor's income) is
greater. However, if such
income arises on account of
any manual work done by the
minor or activity involving
I am planning to invest ` 2 lakh in

below funds over the next 2 years:
ICICI Prudential Dynamic Plan
Regular Plan Growth, Franklin
India Smaller Companies Fund
Growth, ICICI Prudential Value
Discovery Fund Regular Plan
77
January 2015
ASK OUR PLANNER

the funds diversify their
investments into different
shares. Hence, diversifying
your mutual fund portfolio into
a number of funds will lead to
over-diversification.
Growth and Birla Sunlife Equity

Fund Dividend.
I have two questions: (1) Can I
achieve my target of ` 40 lakh in the
next 15 years by investing Rs.1 lakh
per year? (2) Can I achieve or
exceed my target with the help of
above selected mutual funds?
Also, while selecting the funds,

try and select funds in different
categories, say for example,
one from large-cap category,
one from mid-cap/small-cap
category, one from value
investing category, one from
diversified category, etc. This is
because selecting two funds in
same category will mean that
the investments made by these
two funds will mostly be into
the same shares, thereby
negating the required
diversification.
- Rama Nageshwara Rao

A : To answer your first
question, if your investments
generate an average return of
around 11.50% p.a., you will
be able to accumulate ` 40 lakh
in 15 years by investing ` 1 lakh
p.a. for 15 years (without
considering your existing
investments).
Coming to the selection of
funds, your existing portfolio is
skewed towards tax-saving
funds. While there is nothing
wrong in it, you may limit them
to one to two in a portfolio.
Also, since you are looking at
accumulating a corpus, it is
better to avoid dividend option
in the mutual funds and opt
only for growth option.
Fo r
knowing
our
recommended funds, please
visit Mutual Funds page on our
website www.icicidirect.com.
Q: My age is 22. I started earning
only now. I am getting ` 23,000 per
month. Out of this, I am paying `
6,000 towards repayment of my
education loan. I can save ` 5,000
per month. Currently, I have an SIP
of ` 1,000 each in Reliance Small
Cap Fund, Reliance Tax Saver Fund
It also makes sense to limit the

number of mutual funds to 4 or
5 in your portfolio, as anyway
78
January 2015
ASK OUR PLANNER

and Canara Robeco Emerging
Equity Fund. The balance ` 2,000
p.m. is still available for
investment. I am having some
doubts.
goals and attach a cost and

timeframe for every goal.
Then, you may divert
yourexisting SIPs to these
goals. There are a lot of online
tools which can help you in
setting goals and finding the
amount of investment required
to achieve the same.
a) I am not holding Reliance Tax

Saver Fund in demat account. Will
it affect my tax benefits? If so, can I
change it now?
Another part of financial

planning, which has to be
addressed even before goal
planning, would be insurance
planning (both life & general). If
you have dependents, thenyou
should look at opting for a life
cover immediately. Under
general insurance, you should
consider taking a disability
cover and a medical cover.
b) Some suggestions for a better

financial planning.
- Hariprasad
A: It is good to note that you
have started investing as soon
as you have started earning at
a very young age of 22 years.
We appreciate you for the
same.
To answer your first question, it
is not compulsory to hold the
tax-saving funds in a demat
account to claim tax
benefitsunder Section 80C of
the Income Tax Act. Even if
youhave invested the
sameoffline, you will still be
eligible to claim the tax
benefits.
However, for a comprehensive

and customized financial plan,
it is always suggested to get in
touch with a financial planner.
ICICIdirect offers financial
planning service. For more
details, you may write to
fps@icicisecurities.com.
Do you also have similar queries to
ask our experts? Write to us at:
moneymanager@icicisecuriti s.com.
For suggestion on better

financial planning, now that
you have started investing, you
can list down your financial
79
January 2015
EQUITY MODEL PORTFOLIO

Our indicative large-cap equity model portfolio (Quality-21) has
continued to deliver an impressive return (inclusive of dividends) of
~74% since its inception (June 21, 2011) vis--vis the index return of
~52% during the same period, an out-performance of ~22%. This
validates our thesis of selecting companies with sound business
fundamentals that forms the core theme of our portfolio. Our mid-cap
portfolio (Consistent-15) outperformed the benchmark by ~1.5x
since June 2011 (~1x during June 2014). Our consistent outperformance demonstrates our superior stock picking ability as markets
in H2CY15 aligned to our view of favourable risk-reward, good
franchisee vs. reward-at-any-risk businesses. Some key performers of
our portfolio are Lupin, Sun Pharmaceuticals, Axis Bank, TCS and Info
Edge delivering ~120-230% returns since inception.
We have always suggested the systematic investment plan (SIP) mode
of investment and still find a lot of merit in it as the preferred mode of
deployment given the market conditions and volatility associated since
the inception of the portfolio. It has outperformed other portfolios, thus,
reinforcing our belief in a plan of investment. However, now we are also
advising clients to look at lump sum investments at any possible dips.
The last six months saw a paradigm shift in the global energy industry as
crude prices declined to a historic five-year low to $58 (down ~46%
year-to-date or YTD). Intense competition among oil-producing nations
for market share (OPEC (Organization of the Petroleum Exporting
Countries) vs. non-OPEC) and ramp-up in US shale resources led to this
slump in global commodity aided further by languishing global growth
prospects. While world economies adjust to this new normal, India,
which fulfils ~80% of its oil demand through imports, could be a major
beneficiary of this benign oil scenario. Thus, domestic equities attracted
strong foreign institutional investor (FII) flows (YTD $16 billion, highest
ever) helped by a stable, reformist central government. Consequently,
sectors geared towards a pick-up in domestic economy like consumer
discretionary, banks, auto and cement outperformed the benchmark
index. On the other hand, defensives saw profit booking as YTD CNX IT
and FMCG indices underperformed by ~13% each on moderating
valuations and changing investor preference.
Thus, we rebalance our portfolio, to capture the essence of a broader
economic revival, growing urbanisation and benefits of crude declines.
80
January 2015

Accordingly, thus add stocks like Castrol India (crude), CARE
(economy), Voltas (consumerisation) and Heidelberg Cement
(value buying) while we feel Tata Steel, ONGC are well placed to
be added to large-cap portfolio.
Though we have a tilt towards higher beta that could generate
substantial returns given their respective market dominance, we
have not deviated from our core focus on holding good brands.
We exit DCB (74% returns), JK Cement (71%) to book profits
since potential upside appears limited, hereafter, and remove
Tata Global Beverages and Oberoi Realty as company-specific
headwinds could likely persist in the medium term.
Our conviction in domestic recovery is visible in terms of relative
weightage of sector vis--vis the index. We remain overweight
on the consumer discretionary (auto, consumer), financials
(private sector banks in particular), and the infra space (cement,
infra and power). This has been primarily triggered by hopes of a
rate cut by the Reserve Bank of India (RBI) on the back of
moderating inflation and possibility of decisive action in the
infrastructure and real economy space by the new government.
We are also overweight on telecom, media owing to reducing
concerns & better earnings growth.
We have turned underweight on oil & gas as we have chosen to
replace Reliance with ONGC, which has better risk-reward
(muted return of investment (RoI) from unrelated investments
could impact the former while the latter has lessening regulatory
challenges). We continue to remain underweight on pure play
defensives (IT, FMCG) as secular earnings coupled with sector
rotation could de-rate valuations and offer limited upside. We
remain equal weight on pharmaceuticals, metals (global generic
opportunity, stock specific play).
On individual names, we are strongly overweight on companies
like L&T and UltraTech in the infrastructure space while we prefer
HDFC & SBI in financials.
81
January 2015

Name of the company
Largecap
(%)
Largecap Stocks
Consumer Discretionary
United Spirits
Tata Motors DVR
Bajaj Auto
Titan
BFSI
HDFC
HDFC Bank
SBI
Axis Bank
Power, Infrastructure & Cement
L&T
UltraTech Cement
FMCG
ITC
Metals & Mining
NMDC
Oil and Gas
Reliance
Gail
Pharma
Lupin
Sun Pharma
IT
Infosys
TCS
Wipro
Telecom
Bharti Airtel
Media
Zee Entertainment
Largecap share in diversified
Model Portfolio
Midcap
(%)
Diversified
(%)
12
4
4
2
2
30
8
7
8
7
15
8
7
8
8
4
4
8
6
2
5
2
3
13
5
5
3
3
3
2
2
82
8.4
2.8
2.8
1.4
1.4
21
5.6
4.9
5.6
4.9
10.5
5.6
4.9
5.6
5.6
2.8
2.8
5.6
4.2
1.4
3.5
1.4
2.1
9.1
3.5
3.5
2.1
2.1
2.1
1.4
1.4
70
January 2015

Name of the company
Largecap
(%)
Midcap Stocks
Consumer Discretionary
Bosch
Cox & Kings Ltd
Arvind
Voltas
Castrol
IT
Info Edge
BFSI
CARE
IndusInd Bank
FMCG
Kansai Nerolac
Pharma
Natco Pharma
Media
PVR
Capital Goods
Cummins
Realty/Infrasturcture/Cement
Heidelberg Cement
Container Corporation of India
Shree Cement
Midcap share in diversified
Total of all three portfolios
Model Portfolio
Midcap
(%)
Diversified
(%)
34
6
6
6
8
8
6
6
14
6
8
8
8
6
6
8
8
6
6
18
6
6
6
100
100
10.2
1.8
1.8
1.8
2.4
2.4
1.8
1.8
4.2
1.8
2.4
2.4
2.4
1.8
1.8
2.4
2.4
1.8
1.8
5.4
1.8
1.8
1.8
30
100
Content source: ICICIdirect.com Research

ICICI Securities Ltd. has been assigned an advisory mandate by Ranbaxy
Laboratories Limited with regard to Sun Pharmaceutical Industries Limited's
acquisition of Ranbaxy Laboratories Limited. This report is prepared on the
basis of publicly available information.
ICICI Securities Limited has received an advisory mandate from Natco Pharma.
This report is prepared based on publicly available information.
83
January 2015

Performance* so far Since inception
99.7
100
88.9
82.4
80
64.9
58.7
58.1
60
40
20
0
Portfolio
Benchmark
*Returns (in %) as on January 02, 2015

Large-cap Portfolio Benchmark: BSE Sensex; Mid-cap Portfolio
Benchmark: CNX Midcap; Diversified Portfolio Benchmark: Combination
of BSE Sensex and CNX Midcap
Value of ` 1,00,000 invested via SIP at the end of every month
7,000,000
6,102,921
6,730,221
4,400,000
4,400,000
3,000,000
4,400,000
4,000,000
5,938,005
6,317,730
5,000,000
6,822,450
7,956,365
6,000,000
2,000,000
Largecap
Investment
Midcap
Value of Investment in Portfolio
Divesified
Value if invested in Benchmark
Start date of SIP: June 30, 2011; *Value as on January 02, 2015
84
January 2015
QUIZ TIME
1. The government is planning to revise the lock-in period for Rajiv

Gandhi Equity Savings Scheme (RGESS) from the existing 3 years
to ______.
2. It is mandatory to hold the tax-saving funds in a demat account to
claim tax benefits under Section 80C.True / False
3. The Reserve Bank of India (RBI) decided to cut the benchmark
interest rate by ______ per cent to ______ per cent.
4. There is a 'minimum age' criteria to apply for a PAN card. True / False
5. Demat account cannot be opened in the name of a minor. True / False
Note: All the answers are in the stories that have appeared in this edition
of ICICIdirect Money Manager. You may send in your answers at:
moneymanager@icicisecurities.com
The answers will be published in our next edition. The names of the
earliest all correct entries will be published too. So jog your grey cells
and be quick to send in your entries.
Correct answers for the December 2014 quiz are:
1. In case of a monthly income plan (MIP), the fund house currently
pays dividend distribution tax (DDT) of ______%.
A: 28.325%
2. The Rajiv Gandhi Equity Savings Scheme (RGESS) tax benefits can
be availed for ______ consecutive financial years.
A: 3
3. If you do not want to keep some eligible securities as a part of
RGESS investment, you need to submit Form ______ to the
depository within one month from the date of transaction.
A: B
4. The interest earned from Senior Citizen Savings Scheme (SCSS) is
added to your income and is taxed as per the income slab. True /
False
A: True
5. Expand SWP.
A: Systematic Withdrawal Plan
85
January 2015
YEARLY TRENDS
WPI INFLATION (FOOD)
16.0
13.73
14.0
12.0
(%)
10.0
62.13%
8.0
5.20
6.0
4.0
2.0
0.0
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
(The figures are in %)
CRUDE OIL
110.0
$ per barrel
100.0
98.42
90.0
45.87%
80.0
70.0
60.0
53.27
50.0
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
NYMEX crude oil prices ($/barrel)
FII & DII INVESTMENTS

20500
15614
15500
10500
6853.12
5500
500
-4500
Dec/13
Feb/14
Apr/14
Jun/14
Aug/14
Oct/14
Dec/14
-942.13
-572
(Foreign institutional investors (FIIs) and domestic institutional

investors (DII) net equity investment ( ` in crore)
86
January 2015
YEARLY TRENDS
VOLATILITY INDEX (VIX)

35
30
25
20 15.12
15
10
5
0
12.90
Dec/13
Feb/14
Apr/14
Jun/14
Aug/14
Oct/14
Dec/14
DOMESTIC INDICES
BSE Sensex
30000
28000
27499.42
26000
24000
22000
21170.68
29.89%
20000
18000
16000
14000
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
NSE Nifty
8800
8400
8000
8282.70
7600
7200
6800
6400
6304.00
31.39%
6000
5600
5200
4800
4400
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
87
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
January 2015
YEARLY TRENDS
GLOBAL INDICES
Dow Jones
18400
18000
17600
17200
16800
16400
16000
15600
15200
14800
14400
14000
13600
13200
12800
12400
12000
17823.07
16576.66
7.52%
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
NASDAQ
4500
4250
4236.28
4000
17.94%
3750
3592.00
3500
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
EXCHANGE RATES
USD-INR
65.0
63.0
61.0
USD / INR
59.0
63.03
61.80
57.0
55.0
1.99%
53.0
51.0
49.0
47.0
45.0
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
88
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
January 2015
YEARLY TRENDS
POUND-INR
110.0
105.0
102.32
100.0
98.16
/ INR
95.0
90.0
4.06%
85.0
80.0
75.0
70.0
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
EURO-INR
90.0
84.94
85.0
/ INR
80.0
76.25
75.0
10.24%
70.0
65.0
60.0
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
BULLION
GOLD
$ per Ounce
1400
1300
1.78%
1204.94
1200
1183.55
1100
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
(The prices are in $ per ounce).
SILVER
25.0
$ per Ounce
23.0
21.0
19.41
19.38%
19.0
17.0
15.66
15.0
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
(The prices are in $ per ounce).

(Source for all indicators: Bloomberg, Reuters)
89
January 2015
Premium Education Programmes Schedule

ICICIdirect Centre for Financial Learning (ICFL) imparts quality education on
financial markets to beginners and amateurs, student, housewives, working
professionals and self employed. ICFL's broad objective is to make participant
feel confident to start investing in stock market.
Here is the list of our programmes scheduled for the month of January, 2015.
Schedule for Beginners' programme on Futures and Options (F&O) Trading
Sr.
No
City
Kolkata
10 and 11 Jan, 2015
Sumit on 08017516187
Bangalore
10 and 11 Jan, 2015
Subrata on 9620001478
Pune
17 and 18 Jan, 2015
Kusmakar on 7875442311
New Delhi
17 and 18 Jan, 2015
Vishal on 07838290143, Harneet on 09582158693
Mumbai
17 and 18 Jan, 2015
Vidhu on 9619716146
Thane
24 and 25 Jan, 2015
Vidhu on 9619716146
Mumbai
31 Jan and 02 Feb, 2015
Vidhu on 9619716146
Sr.
No
For More Information & Registration call:
Dates
Schedule for Fast-Track Programme on Futures & Options (F&O)

City
Dates
Jalandhar
Jamshedpur
05 Jan, 2015
Vishal on 7838290143
18 Jan, 2015
Sumit Sarkar on 8017516187
Schedule for Fast-Track Programme on Stock Investing

Dates
Sr.
No
City
10
Kanpur
04 Jan, 2015
Harneet on 09582158693
11
Jaipur
04 Jan, 2015
12
Ahmedabad
04 Jan, 2015
Yogesh on 8238053563
13
Bhopal
11 Jan, 2015
14
Faridabad
11 Jan, 2015
15
Meerut
19 Jan, 2015
Harneet on 09582158693
Schedule for MarketMaster Programme

Dates
Sr.
No
City
16
New Delhi
10 and 11 Jan, 2015
17
New Delhi
10 and 11 Jan, 2015
18
Bangalore
17 and 18 Jan, 2015
19
Ahmedabad
24 and 25 Jan, 2015
Yogesh on 8238053563
90
January 2015
Schedule for Technical Analysis
Sr.
No
City
20
Hyderabad
03 and 04 Jan, 2015
Ruchi on 8297362323
21
Hyderabad
10 and 11 Jan, 2015
Ruchi on 8297362323
22
New Delhi
10 and 11 Jan, 2015
Dates
23
Kolkata
17 and 18 Jan, 2015
Sumit on 08017516187
24
Bangalore
17 and 18 Jan, 2015
25
Mumbai
17 and 18 Jan, 2015
Vidhu on 9619716146
26
Hyderabad
24 and 25 Jan, 2015
Ruchi on 8297362323
27
Pune
31 Jan and 02 Feb, 2015
Sr.
No
City
Schedule for Foundation Programme on Stock Investing

Dates
28
New Delhi
03 and 04 Jan, 2015
29
Pune
10 and 11 Jan, 2015
30
Bangalore
10 and 11 Jan, 2015
31
Mumbai
10 and 11 Jan, 2015
Vidhu on 9619716146
32
Pune
10 and 11 Jan, 2015
33
Mumbai
10 and 11 Jan, 2015
Vidhu on 9619716146
34
Chandigarh
10 and 11 Jan, 2015
35
Mysore
10 and 11 Jan, 2015
36
Thane
10 and 11 Jan, 2015
Vidhu on 9619716146
37
Navi Mumbai.
10 and 11 Jan, 2015
Manish on 8451057943
38
Nagpur
17 and 18 Jan, 2015
39
New Delhi
17 and 18 Jan, 2015
40
Hyderabad
17 and 18 Jan, 2015
Ruchi on 8297362323
41
Mumbai
31 Jan and 02 Feb,2015
Vidhu on 9619716146
42
New Delhi
Sr.
No
City
43
Pune
31 Jan and 02 Feb, 2015 Vishal on 07838290143, Harneet on 09582158693
Schedule for Advanced Derivatives Trading Strategies

Dates
24 and 25 Jan, 2015
91
January 2015

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95 January 2015

The World Bank in its recent

discussion on your life goals. These goals should translate

ICICIdirect Money Manager

The year gone by saw a definite revival in investor sentiment. As

Abhishake Mathur, CFA

Sameer Chavan, CWM, Pankaj Pandey

Azeem Ahmad, Nithyakumar VP CFPCM, Nitin Kunte, Sachin Jain,

ICICIdirect Money Manager

ICICIdirect Money Manager

Equity savings scheme could be tweaked to make it more attractive

Courtesy: Business Standard

Banks to get freedom in fixing base rate: RBI

Courtesy: The Economic Times

Real estate investment trusts may get taxation relief

Courtesy: Business Standard

RBI cuts repo rates by 25 basis points

Courtesy: The Hindu

Sebi floats discussion papers on e-IPOs, fast-tracking FPOs

Growth nourishment to resurrect economic recovery

Equity markets, having

is entering a new phase of

We have already witnessed a

sectors like branded apparel,

32% of world's middle class spending will be in India by 2050

Lower cost of capital: Secondly,

Uni ted States

interest rates by 75-100 bps in

WACC in diff scenario

Output based on interest rate sensitivity with cost of capital

WACC in diff scenario

Softening commodity prices:

expected to sustain led by

% decline from peak

Favourable regulatory framework:

Make in India, Digital India

Long-term bonds for

Auction of coal mines

Real estate investment

100 smart cities

Rail infrastructure projects like

Ease of doing business

The adoption of key technologies across sectors

ICICIdirect Money Manager

may inhibit index expansion.

Strategy 2015 - Sensex & Nifty Target

- Risks will also emanate from

Risks: Though the markets

improve the quality of the

TECHNICAL OUTLOOK 2015

Indian equities gave a

Theme: Cyclicals to be the flavour

As we enter the second year of

Top sectors: Auto, auto ancillary,

The strong resolution past the

Our preferred picks: Bhel (BHEL),

ICICIdirect Money Manager

TECHNICAL OUTLOOK 2015

BSE Sensex Monthly Candlestick Chart

seven year bullish Ascending Triangle

Seven year consolidation post

Source: Bloomberg, ICICIdirect.com Research

ICICIdirect Money Manager