MOSt
Advisor
Monthly Markets Newsletter
February 2017
In This Issue
•
Market Outlook for the month
•
Investment Ideas
• Equity Market Outlook
• Derivatives & Commodities Market Outlook
• Model Advisory Portfolios
• Recommended Funds
• Focused Multicap Opportunities Fund
Key Highlights in January 2017 - Strong rally in Equities
Union Budget
Global Equities: India among top performing markets.
Dear Investor,
Market in January 2017:
The year started on a bullish note
for Indian equities. Nifty was up 4.6% in January being the
highest M-o-M rise in last 10 month. India was among the
top performing markets others being Brazil (+7%), MSCI EM
(+5%) & Taiwan (+2%). Mid-cap outperformance continued
with MoM expansion of valuation premium over large-caps.
YoY(%)
Global Market
Index
31-Jan 17
MoM (%)
Sensex
Nifty
FTSE
Dow
Nasdaq
Hang Sang
27,656
8,561
7,099
19,864
5,615
23,361
3.9
4.6
-0.6
0.5
4.3
6.2
11.2
13.2
16.7
20.6
21.7
18.7
The Sensex trades at a P/E of 17.1x, at its long-period average of 17.1x. MSCI India
trades at a 35% premium to MSCI EM (historical average premium: 42%). Q3FY17
earnings announced so far have been in line with expectations. For the 90 companies
in our universe that have reported results so far, sales/EBITDA/PAT have grown 9%/
11.3%/7.4%, as against expectations of 9.1%/136%/11.8%. Management commen-
tary also suggests that the impact of demonetization is less than feared initially. On
sector front the gainers were Telecom (+19%), Metals (+15%), Cement (+11%) and
Utilities (+9%) being the top outperformers for January, while Technology (-6%) was
the only sector to deliver negative returns.
The FY18 budget was a fine balancing act, with an emphasis on capital spending,
Economic Pulse
Key Indicators Current Mth
Pre. Mth
fiscal prudence, rural spending and modest stimulus to select sections (personal
income tax cut, corporate tax cut for MSME), even as it kept a tight leash on overall
spending growth. Select sectors like Housing and Infrastructure should be the
beneficiaries of the budget measures. Markets applauded the fact tax structure for
equity participants was left unchanged. All worries and speculation regarding change
in tax structure of Long Term Capital Gains or Short Term Capital Gains or STT etc.
was put to rest. FII's were provided further relief as the concession of low 5%
withholding tax for FII bond investors in India was extended by 3 years till 2020.
FII's are likely to return back aggressively as India stands tall when compared to Global
peers from equity allocation perspective.
Outlook February 2017:
With the budget overhang behind, the market attention
should revert to fundamentals and corporate earnings, in our view. Near-term
challenges exist in the form of impact of demonetization, commodity inflation and
regulatory-related cost inflation. However, demand recovery in domestic market and
speedier re-monetization is likely to induce faster return to normalcy. We advocate
of our QGLP philosophy for deploying money into quality stocks.
IIP
WPI
10 Year Yield
USD/ INR
Crude ($)
Gold (10 gms)
5.7%
3.39%
6.40%
67.86
55.7
29008
-1.9%
3.15%
6.51%
67.92
56.82
27830
Thought for the month
Dharmesh Kant
Vice President- Head - Retail Research
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