Global Markets & India

For Private Circulation Only

Current situation in Global Markets, including India, is uncertain and unforeseeable due to de-growth in China and fear of Interest
rate hike by Fed. As of now these two events have puzzled the world. There will be certain negative impact on the world markets
but how much, time will tell. However, we believe that India can be differentiate itself among other EMs if India speed ups its Macro
Economic reforms as compared to other EMs.

Global Markets & India:

Foggy Transition
Pg. 1

1st September-2015 to 30th September-2015

PSU Banking
Sector
Pg. 3-6

AHLUWALIA Ahluwalia Contracts

CONTRACTS (India) Ltd
(INDIA) LTD. Pg. 8-11

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From The MDs Desk

International events & RBI rate cut hopes will
drive the market either Way
Recently, the devaluation of Yuan by China triggered heavy selloff in the world market including India.
The world market is waiting for one meaningful correction as the rally was mainly driven by liquidity.
Valuations of many sectors and companies are at unsustainable level in China as well as in other
countries. FIIs have sold equities to the tune of 15 to 18 thousand crores of shares and still are in selling
mode. Majority of emerging markets have seen outflow from ETF and hot money. The figures suggest
that still there is no respite and every bounce is seen as a relief rally.
The market is cautious on back of lack of rain in the month of August, the uncertainty around GST rollout
and the outcome of Bihar election. The uncertainty around the rate hike by Fed is also keeping the
market sentiment weak. The market is waiting for next level of trigger.
Under the circumstances, international events will be driving the market in near term. The RBI decision
on rate cut on 29th September will also be a decisive event for the market. It is suggested to keep an eye
on the data coming out of China and USA.
Technically, the broad range of the market is 7600 to 8100.

Kamlesh Jhaveri ( MD )
Jhaveri Securities Ltd.

www.jhaveritrade.com

Global Markets & India : Foggy Transition

Issue Theme

Currency devaluation and its likely impact

A devaluation occurs in a fixed exchange rate regime (like in China). A depreciation occurs in a floating exchange rate
system (like in India). Both means a fall in the value of the currency.
Devaluation means a deliberate downward or adjustment to the value of a country's currency relative to another currency or
group of currencies which is decided by the government who issues the currency. Depreciation is a result of nongovernmental activities and open market forces. Devaluation is a monetary policy tool of countries that have a fixed
exchange rate regime.

Effects of devaluation
Cheaper exports: A devaluation of the exchange rate will make exports more competitive and become cheaper for
foreigners. This will increase demand for exports.
Expensive imports : A devaluation means imports will become more expensive. This will reduce demand for imports.
Increased Aggregate (total) Demand (AD) : A devaluation could cause higher economic growth. Therefore part of AD
is (X-M) higher exports and lower imports should increase total demand (assuming demand is relatively elastic).
Improvement in the current account : Competitive exports and expensive imports leads to higher exports and lower
imports, which will reduce the current account deficit.

Evaluation of Devaluation
The effects of a devolution depends on
Demand for exports and imports : If demand is price inelastic (No change), than a fall in the price of exports will lead
to only a small rise in quantity.
State of the global economy : If the global economy is in recession, then a devaluation may be insufficient to boost
export demand.
Inflation : It depends why the currency is being devalued. If it is due to a loss of competitiveness, then a devaluation can
help to restore competitiveness and economic growth. If the devaluation is aiming to meet a certain exchange rate
target, it may be inappropriate for the economy.

Why did China opt for currency devaluation ???

Unlike most countries that allow the value of their currency to be determined in world markets or open market (like India),
Chinas government uses the U.S. dollar as a benchmark against which they manage their currencys value.
For decades, China had an unsustainable growth rate (higher GDP growth rate than usual). For example investments made
up 48 percent of economic activity in 2014, in most countries the number is between 15 and 30 percent.
However, recently Chinas economy, the worlds second largest after the U.S, has been slowing down. Chinas growth
rate has dropped to 7 percent, a high number as compared to any country in the world, but low in a country that averaged
10.6 percent growth in 2010.

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Global Markets & India : Foggy Transition

Q3 2013

Q4 2013

Q1 2014

Q2 2014

Q3 2014

Q4 2014

Q1 2015

Q2 2015

GDP

7.80%

7.70%

7.40%

7.50%

7.30%

7.30%

7.00%

7.00%

May-15
Apr-15
Month
Jan-15
Feb-15
Mar-15
Jun-15
Jul-15
Dec-14
There has been a slowdown in property and in construction market and consumer spending is down. Chinas stock
Exports
9.70%
-3.40%
48.30%
-15.00%
-6.50%
-2.90%
2.80%
-8.30%
market
crashed in June.

To strengthen the economy, monetary policy is the only tool to revive the economy,
People Bank of China has cut interest rates four times in the past 12 months, increased the amount of money banks
can lend outmeasures meant to boost domestic demand. However, there will have adverse impact also and this scope
is limited up to certain extent.
China has kept the Yuan tied to a strong dollar, other countries exports have gained an edge over Chinas as their
currencies have fallen against the Yuan over the past year.

Chinas currency devaluation and its impact on world economy

China signaled with its currency devaluation that the domestic economic slowdown and it has failed to reverse it is no longer
a problem only restrict to China. It is now the worlds problem.
China has demand for natural resources (biggest consumer of commodity) and has been a key factors supporting the
price of oil in recent years.
There will be an indirect impact on the countries which are having heavy debt because while wages and profits fall in a
deflationary period, the value of debts remains fixed, making them harder to service (to pay interest on).
The recent Chinas decision is an evidence of lack of demand in the global economy, which will unleash deflation. Brief
periods of falling prices can be good news but consistent fall can be danger for world economy also. Which can
undermine spending and investment and feed through to wages, as consumers and businesses delay spending,
expecting goods to be even cheaper in future.
As the cheaper a countrys currency, the more competitive its exports. With such a weak Yuan, China is a fierce
competitor more so than ever to rest of export countries. Its possible that countries will depreciate their own
currencies in order to compete with China.
Canada, New Zealand, Australia, Korea, Thailand, and Malaysia are likely to be hardest hit. They export a lot to China,
but with a weakened Chinese economy, there is less demand for their goods.

Conclusion
We believe that the current situation of global markets, including India in spite of better macros, are uncertain and confusing
because of China. China has taken various steps to bolster its economy but these steps are not enough to support economy.
China, being a largest economy in the word and largely depended on exports, is always a Black Box for global economy and
always being difficult to predict, understand and analyze. So there will be a only perception based analysis and which kind of
scenario will emerge from this situation that only time will tell. We also believe that However, as far as India is concerned,
market valuations are going to be attractive if nifty will reach 7400-7500. Long term investors should wait a while for fresh
entry and traders should strictly follow the Index trend on daily basis.

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Issue Theme

Quarter

PSU Banking Sector

Sector Update

Introduction
The Public Sector Banks (PSBs) play a vital role in Indias economy. In the past few years, because of a variety of issues
such as banks own performance, delay in various approvals, low global and domestic demand, many large projects stalled.
Public Sector Banks which have got predominant share of infrastructure financing and prior sector lending have been badly
affected. This has resulted in lower profitability for PSBs, mainly due to provisioning for the restructured projects as well as
for gross NPAs.
The performance of public sector bank (PSB) stocks can be understand by a single parameter. In the past year, while the
BSE India Bankex (both public and private sector banks) rose 22.2 per cent, the CNX PSU Bank index is down 1.5 per cent.
Monthly

Quarterly

Half Yearly

Yearly

CNX NIFTY

-3.86

-1.88

-6.04

5.18

CNX PSU Bank

5.22

-0.87

-9.85

-1.50

Company Name

CNX PSU Bank

Bank of Baroda

30.75

28.47

8.92

10.74

St Bk of India

-0.39

-5.29

-11.51

8.40

Oriental Bank

-8.68

-21.08

-34.33

-41.29

IDBI Bank

4.27

-2.54

-12.00

-16.49

Canara Bank

15.16

-7.22

-20.42

-15.53

Union Bank (I)

20.86

22.49

11.15

-6.11

Syndicate Bank

-2.64

-7.71

-17.10

-22.59

Bank of India

-3.25

-17.64

-30.23

-42.40

Allahabad Bank

-0.62

-12.65

-21.10

-28.73

Andhra Bank

5.79

-2.54

-15.55

-1.12

IOB

-2.32

-10.10

-23.69

-41.99

Punjab Natl.Bank

14.60

6.30

-4.70

-17.49

Note : Absolute Return in % (Monthly, Quarterly, Half Yearly, Full Year)

All absolute return calculated from CMP (*CMP as on 21/08/2015 )

Why revamping of PSU Banks are important ?

Making 70% of the system credit.
Low growth at all the PSU banks are running at low level and deposit growth at moderate level.
A significant pile up of stressed assets has been seen over the last three years.
The stressed assets pool has large contribution from the power (particularly SEBs) and infra sectors partly
due to the implied onus on PSBs to support government initiatives. Therefore, it also the onus of the
government to reciprocate through constructive policy measures.
To come out from this vicious loop of low capital - low growth - low profitability - low valuation, an effective
intervention in the functioning and capital infusion by the promoter (GOI) had become necessary.

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PSU Banking Sector

To revamp the performance of PSU Bank- Government has introduced INDRADHANUSH

According to Crisil, The governments plan to revamp public sector banks could be a game-changer and will help banks
address problems which are impacting their performance including governance, accountability and capitalization. The
focus on capital efficiency rather than business growth marks a paradigm (big) shift.

INDRADHNUSH
1

Appointments

Bank Board
Bureau

Capitalization

De-Stressing
PSBs

Empowerment

Framework of
Accountability

Governance
Reforms

Key takeaways from this revamp strategy

Appointment
The Government has decided to separate the post of Chairman and Managing Director. The subsequent vacancies ( the
other ) to be filled up by the CEO and will get the designation of MD & CEO. There would be another person who would be
appointed as non-Executive Chairman of PSBs.
The entire process of selection for MD & CEO was revamped. This approach is based on global best practices and as per
the guidelines in the Companies Act . Private sector candidates were also allowed to apply for the position of MD & CEO
of the five top banks i.e. Punjab National Bank, Bank of Baroda, Bank of India, IDBI Bank and Canara Bank.

Bank Board Bureau

The BBB will be a body of eminent professionals and officials, which will replace the Appointments Board for appointment of
Whole-time Directors as well as non-Executive Chairman of PSBs. The BBB will start functioning from the 01st April, 2016.
They will also constantly engage with the Board of Directors of all the PSBs to formulate appropriate strategies for their
growth and development.

Likely Impact : The Bank Board Bureau will be responsible for board-level appointments and performance
monitoring of PSBs on the key indicators. The bureau will advise banks and act as a link with the government.

Capitalization
The PSBs are adequately capitalized and meeting all the Basel III and RBI norms. However, all the banks should have a
safe buffer over and above the minimum norms of Basel III. Therefore, govt. has estimated how much capital will be
required this year and in the next three years till FY 2019. The capital requirement of extra capital for the next four years
up to FY 2019 is likely to be about `1,80,000 Cr.

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Sector Update

To revive the fortunes of public sector banks, the Government has finally announced a concrete plan towards
revamping the functioning, improving competitive positioning and elevating long-term profitability of the Public
Sector Banks (PSBs). Government has launched a seven pronged / steps plan- Indradhanush - to revamp functioning of
public sector banks. The seven elements include :

PSU Banking Sector

Sector Update

Out of the total requirement, the Government proposes to make available ` 70,000 Cr. out of budgetary allocations for
four years as per the figures. These are : 2015-16 and 2016-17 ( `25,000 Cr.) , 2017-18 and 2018-19 ( `10,000 Cr.).
For FY15-16, The manner of allotting ` 25,000 crore capital this year, as announced earlier, is as follows :

Phase : 1
About 40% of this amount will be given to those banks which require support, and every single PSB will be brought to the
level of at least 7.5% by Financial Year 2016.

Phase : 2
40% capital will be allocated to the top six big banks viz. SBI, BOB, BOI, PNB, Canara Bank, and IDBI Bank in order to
strengthen them to play a vital role in the economy.

Phase : 3
The remaining portion of 20% will be allocated to the banks based on their performance during the three quarters in the
current year judged on the basis of certain performance.
Name of Bank

Capital Allocation Capital Adequacy

(Rs. in Cr.)
Ratio (in %)

Name of Bank

Capital Allocation Capital Adequacy

(Rs. in Cr.)
Ratio (in %)

State Bank of India

5531

12

Canara Bank

947

10.7

Bank of India

2455

11.2

Indian Overseas Bank

2,009

10.1

IDBI

2229

11.9

Union Bank of India

1,080

10.2

Bank of Baroda

1786

13.1

Corporation Bank

857

11.1

Punjab National Bank

1,732

12.9

Andhra Bank

378

10.7

Allahabad Bank

283

10.4

Bank of Maharashtra

394

11.9

Dena Bank

407

10.9

Total Amt. ( `. in Cr.)

20,088

De-stressing
In order to reduce asset quality stress of PSBs, the government would take various policy level action such as getting
projects moving through expeditious approvals altering duty structure to support stressed sectors, improving financial
health of SEBs.
Asset Reconstruction Companies will be strengthen so that they can take over bad loans from PSBs. The Government
intends to deepen the corporate debt market so that long term infra projects could be funded through it reducing the onus on
PSBs.

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PSU Banking Sector

Empowerment of PSBs

The Government intends to provide greater flexibility in hiring manpower to Banks. The Government is committed to
provide required professionals

Frame work of Accountability and Governance reforms

The present system for the measurement of banks performance was a system called SoIStatement of Intent where
based on certain criteria decided by Ministry of Finance, the banks used to come up with their annual target figures. In
this programme, a new framework of Key Performance Indicators (KPIs) to be measured ( with various tools and
techniques for performance of PSBs.
In governance, the Government has been constantly engaging with the Banks through review meeting and sessions for
strategic reviews.

Conclusion
We believe that PSU banks' revival plan 'Indradhanush' could help the lenders register higher growth rate than earlier
estimated and effectively deal with the issue of NPAs.

Stocks to watch in PSBs

Stock

Book Value
FY 16E

FY 17E

RoA (%)
FY 16E

FY 17E

RoE (%)
FY 16E

Comments

FY 17E

State Bank
of India

230

258

0.72

0.80

12.20

13.90

Asset quality performance relatively stable ,Complete

change of the troubled SME , Focus on reducing cost
to income ratio, better in Tier-I capital adequacy ratio
than peers, A focus on profitable growth and a strong
liability ty franchise (largely low-cost retail
deposits)

Bank of
Baroda

184

206

0.66

0.78

12.50

15.00

Credit growth to be led by domestic book in next two

years, Healthy deposit franchise, NIM to stay steady
ahead, Improvement contingent on asset quality.

Andhra
Bank

180

196

0.55

0.62

9.50

11.90

Mid Sized bank with stable asset quality and strong

earnings growth potential, Earnings are likely to grow
by 47.2 per cent over FY14-17.

Punjab National
Bank

220

258

0.57

0.70

12.20

13.90

More levered to economic recovery and best bet on

economic recovery , PNBs tier-I is healthy at 8.5 per
cent and government fund infusion will strengthen
this.

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Sector Update

In this rule , there will be no interference from Government and Banks are encouraged to take their decision
independently keeping the commercial interest of the organization in mind.

Why Equity Sip ?

Transparency

Cost Effective

Goal Based

condition apply*

Investment of `1000 per month

Call
+91 265 3071200, +91 99254 20000
Email : [email protected] Web : www.Jetrade.in

AHLUWALIA
CONTRACTS
(INDIA) LTD.

Ahluwalia Contracts (India) Ltd

Company Basics

Financial Basics
2.00
9.56
24.91
4.74
1.6817
3.55

FV (`)
EPS (`) (TTM)
P/E (x) (TTM)
P/BV (x) (TTM)
BETA
RONW (%)

Share Holding Pattern

Holder's Name

CMP : `234

TGT : `368

ROI : 57%

Investment Rationale
Company Overview
ACIL is an integrated construction company, offering turnkey solutions in engineering
and designing to public and private sectors. The company is primarily in the business of
construction of wide range of structural building and manufacture of Ready Mix
Concrete. They are having business interests in varied segments including IT Parks,
Retail, Multi Storied Housing Complexes, Industrial Complexes, Luxury
Hotels, Hospitals and Commonwealth Games Village & Stadium. In the past five years,
ACIL has executed more than 50 projects.

Industry Overview
Construction activity is an integral part of the countrys infrastructure and industrial
development. The construction industry covers some vital sectors such as hospitals,
schools, urban infrastructure, highways, roads, ports, railways, airports, power
systems, irrigation and agriculture systems, telecommunications etc. with such a wide
spectrum covered, the sector becomes the basic input for the socio-economic
development. construction sector contributes to about 65% of the total investment
towards infrastructure.

% Holding

Government initiatives

Foreign

15.49

Institutions

5.92

Promoters

66.87

Incubement governments Housing for all by 2022

Govt. Holding

6.44

Rs. 48000 Cr. for building 100 smart cities under smart cities mission

Public & Others

5.29

Non Promoter
Corp. Hold.

0.00

Valuations
AHLUCONT is currently trading at
17.76X FY16E EPS of `13.20 and
14.63x FY17E of `16.00, Valued the
stock at 23x FY17E with target price
of ` 368.

Investment Horizon : 12 to 15 Months

Relaxation on FDI norms in construction industry

Rs. 500 Cr. allocated in budget towards 3P India to rejuvenate the PPP model

Investment Rational
Superior execution and declining competition
ACL with over 80 ongoing projects across 50 cities has superior execution capabilities,
having executed slew of projects across residential and commercial complexes over
the past five decades. competition is now limited to only 3-4 players namely shapoorji
pallonji, L&T, simplex and NCC as the most of the other compansies do not have the
balance sheet strength to bid for composite EPC contracts.

PSUs have made their norms more stringent to weed out faltering contractors
Many contractors have entered into CDR

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Company Analysis

BSE ID
532811
NSE Symbol
AHLUCONT
Group
B
EQUITY (` in Cr.)
13.40
MKT.CAP(` in Cr.)
1594.97

Buy

Company Analysis

AHLUWALIA
CONTRACTS
(INDIA) LTD.

Ahluwalia Contracts (India) Ltd

Revival of ordering in other infra sectors like roads has reduced focus from buildings
segments

Strong Order book

ACIL has a robust order book built on the strengths of its strategically focused direction, expertise and strong execution
capabilities. The order book comprises of 65% orders from Government sector against 32% as on 31st March, 2014.
The company is also currently L1 in projects worth `3.5 bn which includes projects like Indraprastha Institute of Information
Technology (IIIT), Delhi of `2.6 bn Hospital building (HSCC) at Kolkata of ` 800 mn.
Buildings segment is expected to pick up with new governments focus on building new educational institutes, hospitals and
metro projects. Also, NDA governments mission for low cost housing to provide additional opportunity of ` 45 bn p.a.
However, order inflow from residential, industrial and commercial segments is expected to pick up from FY17.
Year

FY 08

FY 09

FY 10

FY 11

FY 12

FY 13

FY 14

FY 15

Order Book (in Cr.)

3150

4143

5300

5847

5735

5538

5221

5895

Segment wise Order book as on 31st March,2015

Segment

Commercial

Hospitals

Hotels

Industrial

Infrastructure

Institutional

Residential

Percent (%)

4%

4%

2%

1%

15%

22%

52%

Tie-up with Russian company

Ahluwalia contracts ltd. has entered into technology tied up with KUB STROY Russia to build structures using a patented
high speed pre-cast construction technology. The company expects huge opportunity in the institutional and affordable
housing segment and expects this technology to play a key role the mass housing projects.

Building construction contractor with proven track record

Ahluwalia Contracts (ACIL) is a leading construction contractor with a focus on building EPC contracts across
residential, commercial and govt. buildings. We are positive on its operating performance due to a shift in its focus
toward government contracts where the investment cycle is likely to precede the private sector and the risk of bad debt is
low. The current order book largely consists of variable price contracts (with better margins) which gives the better
visibility on earnings growth.

Increasing urbanisation trend

Today, about 31% of Indias population lives in the urban areas. It is much lower than its emerging market peers-49% in
china, 54% in Indonesia, 78% in Mexico, and 87% in Brazil. However, Indian economy is in quest of a rapid change in the
pace of urbanisation that will dominate what it has witnessed in the past decade. Indian economy is slated to grow to 43% ,
housing a population of about 540 million. This will help the company to receive more order inflows and thereby improving
the margins of the company.

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AHLUWALIA
CONTRACTS
(INDIA) LTD.

Ahluwalia Contracts (India) Ltd

KOTA BOT projects starts to generate revenues from FY 16

Better quality orders to improve the margins

EBITDA (Rs in Cr.)
200

12.79%

150

148.9

174.5

EBITDA Margin (%)

157.1

12.00%

126.5

11.13%
9.30%

100

14.00%

11.94%

6.81%
65.4

50

24.3

4.00%
-2.00%
0.00%

-11.7

1.78%
-0.84%

-50
FY 09

FY 10

FY 11

FY 12

FY 13

10.00%
8.00%
6.00%

FY 14

FY 15

-2.00%

As more than 90% of new orders are being given on composite basis vs earlier practice of awarding separate packages for
civil works, electrical works, etc. composite orders enjoy higher margins owing to higher value projects and sensible bidding
from players due to low competition. The company has suffered losses in both FY12 and FY13 due to delayed execution of
projects in the private sector. The EBITDA margin rose to 11.94% in FY15 due to successful completion of the
projects and strong execution capabilities. The company has shifted its focus from private sector to government orders
(50:50) currently. Due to increasing portion of the government orders and operating efficiencies with better utilizations of
capital equipment has further scope of margin improvement.
Quarter

Q1 FY14

Q2 FY14

Q3 FY14

Q4 FY14

Q1 FY15

Q2 FY15

Q3 FY15

Q4 FY15

Total Sales

2202

2495

2408

2498

2389

2398

2672

3141

Sales Growth (YoY)

-36.01%

-29.10%

-24.02%

-33.02%

8.54%

-3.90%

11.00%

26%

Q1 FY16 Conference Call Update

The company maintains revenue growth of 20-25% for FY16 and FY17 as well. The company will maintain EBITDA
margin of 12-12.5% for FY 16.
Slow-moving or low margin orders amount Rs 250 Cr. Some of these orders are not at all moving and the company is
looking at exiting these project.
In metro segment the company is looking for elevated stations orders which is the forte of the company.

10
8

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Company Analysis

ACIL has leased 45-50% of the space and would start earning rentals from H2FY16 onwards. The company is expected to
earn lease rentals of `100 mn / p.a. from this project for next 40 years.

AHLUWALIA
CONTRACTS
(INDIA) LTD.

Ahluwalia Contracts (India) Ltd

(` in Cr.)

Company Analysis

Financial Performance
Key Financials
Equity Paid Up
Networth
Capital Employed
Total Debt
Gross Block (Excl. Reval. Res.)
Net Working Capital ( Incl. Def. Tax)
Current Assets ( Incl. Def. Tax)
Current Liabilities and Provisions ( Incl. Def. Tax)
Total Assets/Liabilities (excl Reval & W.off)
Gross Sales
Net Sales
Other Income
Value Of Output
Cost of Production
Selling Cost
PBIDT
PBDT
PBIT
PBT
PAT

FY 11
12.55
321.4
611.95
202.79
344.38
290.57
833.08
542.51
1154.46
1752.98
1752.98
7.86
1741.16
1551.1
6.73
169.87
145.99
132.45
108.57
72.05

FY 12
12.55
274.97
546.87
248.3
384.17
150.51
772.43
621.92
1168.79
1445.85
1445.85
9.18
1511.08
1441.63
3.84
29.99
-0.96
-17.46
-48.41
-46.43

FY 13
12.55
203.66
512.81
274
358.24
169.74
729.72
559.98
1072.79
1432.52
1430.87
42.67
1416.55
1468.27
4.35
6.25
-30.83
-34.23
-71.31
-71.31

FY 11
0.62
0.09
1.17
3.45
5.55
9.69
7.56
8.33
6.24
4.11
26.1
25.12

FY 12
0.76
0.09
1.03
2.49
-0.56
2.07
-1.21
-0.07
0.07
-3.21
-3.01
-15.57

FY 13
1.09
0.2
0.93
2.7
-1.49
-1.03
-3.86
-3.62
-3.62
-6.45
-10.43
-38.58

FY 14
12.55
225.39
531.39
238.59
338.24
184.02
702.4
518.38
1049.78
960.63
960.6
26.9
977.36
908.59
4.34
72.79
34.15
60.38
21.74
21.74

Ratio Analysis
Key Ratios
Debt-Equity Ratio(x)
Long Term Debt-Equity Ratio(x)
Current Ratio(x)
Total Asset Turnover Ratio(x)
Interest Cover Ratio(x)
PBIDTM (%)
PBITM (%)
PBDTM (%)
CPM (%)
APATM (%)
ROCE (%)
RONW (%)

11

FY 14
1.19
0.26
0.97
1.84
0.93
5.01
3.72
0.99
0.99
-0.3
6.85
-1.34

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Monthly Technical Picks

On Weekly chart stock has penetrated below the lower

arm of its rising channel pattern. Addition in volume at
these levels could add more panic in the stock. Also
stock is trading below its 34 Week EMA which is placed
at 538. RSI trading with Negative crossover at 40.91
stock can seen some more bearish moves from this
levels.

On Weekly Head & Shoulder pattern was seen in the

stock. Stock is trading near the neckline of the pattern
which is at 3360. Panic in the stock below 3360 can
attract more bear to participate. Also stock is trading
below its 34 Week EMA which is placed at 3573. RSI
trading with Negative crossover at 42.16 stock can seen
some more bearish moves from this levels.

SELL BTWN : 498-518 TGT : 403-368 SL : 603

SELL BTWN : 3460-3605 TGT : 3013-2733 SL : 3947

IPCALAB

LAOPALA

On weekly chart stock has given breakout of Bullish

Flag Pattern and has closed above the upper arm of the
pattern. Here the breakout point was at 750. Stock is
also trading above its 34 Week EMA which is placed at
706. Sustainable close above the flag could see sharp
Bull Run in the stock from these levels. With RSI trading
with positive crossover at 66.59 stock hold good
potential up move intact.

On weekly chart stocks was trading within the

consolidated rectangle pattern since last few weeks and
now have observed the breakout of the pattern at 485
level. Stock has observed good volume accumulation at
higher levels in last few weeks. Stock is also trading
above its 34 Week EMA which is placed at 415. With RSI
trading with positive crossover at 67.87 stock hold good
potential up move intact.

BUY BTWN : 750-800 TGT : 924-1004 SL : 656

BUY BTWN : 530-565 TGT : 689-788 SL : 421

12

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Monthly Technical Picks

GRASIM

AXIS BANK

Mutual Fund

Can Balanced Funds be Your Best Bet

The perpetual question that investors are faced with is: Debt or Equities. As an investor should one opt for the volatility and to
get high returns of equities? Or one should seek safety in debts while gathering moderate returns? What if there was a way
to invest in both - equities and debts, generate high returns with moderate risk? That sounds like perfection and that is what
Balanced Funds strive to be.

What are Balanced Funds

These are a fund that constitutes of investments in equities, debt and occasional investments in short term money market all
in a single fund. Balanced funds have a fixed percentage of investment in every asset class. An Equity Oriented Balanced
Fund will have minimum 65% of equity and 35% of Debt investment. A Debt Oriented Balanced Fund will have 70 - 85% in
debt and 15 - 30% investments in equity. A balanced fund is ideal for investors who are looking for a mix of safety, income and
modest returns on their investment.

Reduces the Need to Diversify

Diversification is one aspect you have probably heard your financial planners and experts talk about when they discuss
successful ways of building a portfolio. You are constantly thinking of ways to rebalance and diversify and moving around
your funds and not allowing your investments to settle at one place. Investing in balanced funds reduces the need to
constantly move around funds as it auto rebalances the allocation.

Asset Allocation has been done

Getting the asset allocation right is the biggest challenge for any investor. People spend years in the industry and still fail to
be sure if the asset allocation will yield the right results as it has often been on a slippery ground. One of the major factors
taken into consideration during asset allocation is the current age and risk appetite of the investor.
While the Balance Funds rebalances the risk, the return difference between pure Diversified Equity Mutual Funds and
Equity Oriented Balanced Funds is very less. See the chart below and you will notice that investors can still make good
returns from Equity Oriented Balanced Funds by not taking as much risk as they would have taken in case of Diversified
Equity Funds.
Diversified Equity Funds
Hybrid Equity Oriented
22.33%
19.08%

19.22%

17.80%

16.64%
12.41% 12.96%

1 Year

3 Years

5 Years

13

14.57%

10 Years

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Can Balanced Funds be Your Best Bet

Promises Returns and Safety

Return : 1
Year

Cumulative
Return: 2 Year

Cumulative
Return: 5 Year

Cumulative
Return: 10 Year

Debt Oriented Aggressive

11.63%

32.04%

51.61%

139.57%

Debt Oriented Conservative

10.72%

28.47%

53.58%

128.46%

Equity Oriented

18.59%

60.68%

78.07%

270.04%

Type of Balanced Fund

The table above shows balanced funds with various asset allocations and the category performances over the years. It can
be seen in the last ten or so years the funds have delivered decent returns and in some cases stellar returns. Equity oriented
Balanced Funds have given a stellar performance and generated cumulative returns of over 270%. So do you want to
believe the experts? That is alright! But numbers do not lie and your bank accounts statements definitely do not.

The Flipside
Asset Allocation is often considered to be a personalized task where investors and advisors discuss and design a portfolio
which is especially suited to the investors need. While Balanced Funds have asset allocation inbuilt in the funds they are not
customized to fit into the individual investors needs. Hence, these funds are not tailor made and cater to a larger objective
and not to personalized objectives or needs. So an investor has to make an investment decision to design a portfolio with
asset allocation which will generate the stellar returns as the funds or invest in Balanced Funds.

Conclusion
Balanced Funds are excellent option for investing for the long term. Balanced Funds make a good investment choice even in
a falling market as the fixed returns on debts keep the returns steady. Therefore, investors with the help of the debt
component often get ahead of falling markets. The investors again can take advantage of rising markets due to the exposure
in equities. Hence, investors can gain much more than they have to lose by investing in balanced funds.
With automatic rebalancing of your portfolio and tax efficient returns, equity oriented Balanced Fund could be one of your
best investing choices if you are able to take moderate risk. However, if you are a conservative investor then you can
consider debt oriented balanced funds like Monthly Income Plans (MIP), etc. So, instead of pouring hours over different
funds and schemes and figuring the right asset allocation and the ways to rebalance go for the Balanced Fund options and
see your investments grow steadily.

14

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Mutual Fund

It would be an ideal scenario if an investor could maximize returns by undertaking zero risk. The Balanced Fund balances
out the risk imposed by equities by investing in debts and thus making this a moderately safe investment. The sudden rise or
drop in performances is never appreciated as it points towards volatility and the investors must try to avoid it. So let us take a
look at the past performances of various types of Balanced Funds.

Commodity

Commodity

Bullion
Bullion prices plummeted last week with the gold off by more than 2% to settle at 26623 amid expectations the Federal
Reserve will start raising interest rates at its next policy meeting in September. Comments by Federal Reserve Vice
Chairman Stanley Fischer on Friday suggested that the door was still open for a rate hike at the Fed's next meeting due to
take place September 16-17. Fischer said that the case for a rate increase in September was "pretty strong", though it was
still too soon to say what the central bank might do. The timing of a Fed rate hike has been a constant source of debate in the
markets in recent months. Expectations of higher borrowing rates going forward is considered bearish for gold, as the
precious metal struggles to compete with yield-bearing assets when rates are on the rise. While Silver dropped more than 5% tracking weakness from Comex Silver plunged to $13.91 on Wednesday, a level not seen since August 2009 on the
week, the biggest weekly decline since mid- February. Last weeks damage was due mainly to the continued deflating of
the stock market bubble in China in the early part of the week, which also triggered some dramatic movements in global
equity markets. This is likely due to the fact that silver is more of an industrial metal than a monetary metal,
whereas gold is viewed significantly more as a safe haven asset during times of financial distress. Last week dollar index,
inched up 0.4% on Friday to close at 96.15, the strongest level since August 20. The index rose 1.2% on the week as upbeat
U.S. economic data fanned expectations that the Fed will raise interest rates next month. Meanwhile hedge funds and
money managers hiked a bullish bet in Comex gold and raised their net long position in silver Futures and Options in the
week ended Aug. 25, US CFTC data showed on Friday. In the week ahead, investors will be focusing on Fridays U.S. jobs
report for August, which could help to provide clarity on the likelihood of a near-term interest rate hike. Markets will also be
watching surveys of the manufacturing and service sectors, factory orders and trade data from the worlds largest economy
for fresh indications on the timing of a rate hike.

Recommendation
SELL GOLD OCT ON JUMP @ 26850 SL 27100 TGT 26450-26100.
SELL SILVER DEC @ 35900 SL 36800 TGT 34800-33800.
Energy
SELL GOLD OCT ON JUMP @ 26850 SL 27100 TGT 26450-26100.
In energy market Crude oil rose nearly 12% on geopolitical instability in Yemen and worries about weather in the Gulf of
Mexico. While Natural Gas regained strength as forecasts for warm weather across key consumption regions of the U.S. In
the week ahead boosted demand expectations for the fuel. Crude prices rallied as market was saturated with short sellers
which can be seen from the drop in open interest by -49.30% to settle at 18975 against previous weeks 37472. Crude oil
prices rebounded from steep declines suffered earlier in the week as Chinese equity markets bounced back from a brutal
selloff, easing jitters over an ongoing stock market collapse. China's central bank boosted liquidity, cut interest rates and
lowered the reserve requirement ratio for large lenders earlier this week in a bid to boost economic growth and halt a stock
market rout. The turmoil in markets began when China unexpectedly devalued the yuan on August 11, sparking fears that
the economy may be slowing at a faster than expected rate. Crude oil prices have been under heavy selling pressure
in recent months, as ongoing concerns over a glut in world markets drove down prices. Global oil production is outpacing
demand following a boom in U.S. shale oil production and after a decision by the OPEC last year not to cut production.
Worries over high domestic U.S. oil production are likely to remain in focus after industry research group Baker Hughes said
late Friday that the number of rigs drilling for oil in the U.S. increased by one last week to 675, the sixth straight weekly gain.
The rig count dropped for 29 straight weeks before rebounding modestly in recent weeks. While Natural gas
regained strength on Friday, as forecasts for warm weather across key consumption regions of the U.S. in the week ahead
boosted demand expectations for the fuel. Updated weather forecasting models released Friday showed that most
parts of the southern and western U.S. will be engulfed by hot temperatures in the coming days. However, cooler
weather was expected across most parts of the Great Lakes, Northeast and Midwest-regions as the week progresses.
Markets will also be watching surveys of the manufacturing and service sectors, factory orders and trade data from the
worlds largest economy for fresh indications on the timing of a rate hike.

Recommendation
BUY CRUDE OIL SEPT @ 2920 SL 2800 TGT 3060-3180.
SELL NAT.GAS SEPT @ 185 SL 192 TGT 177-172.

15

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Member: NSE / BSE / NSDL / MCX / NCDEX

ONLINE

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Date
Tue Sep 1

Wed Sep 2

Thu Sep 3

Fri Sep 4

Mon Sep 7
Tue Sep 8
Wed Sep 9

Thu Sep 10

Fri Sep 11

Mon Sep 14
Tue Sep 15

Time in IST Currency

6:30am
CNY
CNY
7:15am
CNY
12:45pm
EUR
1:25pm
EUR
2:30pm
EUR
7:30pm
USD
11:30am
EUR
12:30pm
EUR
5:45pm
USD
6:00pm
USD
USD
7:30pm
USD
8:00pm
USD
7:15am
CNY
12:45pm
EUR
2:30pm
EUR
5:15pm
EUR
6:00pm
EUR
USD
USD
7:30pm
USD
11:30am
EUR
5:40pm
USD
6:00pm
USD
USD
USD
11:30am
EUR
2:00pm
EUR
7:30pm
USD
11:30am
EUR
3:30pm
USD
12:30am
USD
7:00am
CNY
CNY
7:30pm
USD
8:00pm
USD
11:30pm
USD
11:00am
EUR
12:15pm
EUR
6:00pm
USD
USD
7:30pm
USD
8:00pm
USD
11:00am
CNY
CNY
6:00pm
USD
USD
7:30pm
USD
12:15pm
EUR
1:30pm
EUR
2:30pm
EUR
2:30pm
EUR
EUR
6:00pm
USD
USD
USD
6:45pm
USD
USD
7:30pm
USD

Country/Event
Manufacturing PMI
Non-Manufacturing PMI
Caixin Final Manufacturing PMI
Spanish Manufacturing PMI
German Unemployment Change
Unemployment Rate
ISM Manufacturing PMI
German Retail Sales m/m
Spanish Unemployment Change
ADP Non-Farm Employment Change
Revised Nonfarm Productivity q/q
Revised Unit Labor Costs q/q
Factory Orders m/m
Crude Oil Inventories
Caixin Services PMI
Spanish Services PMI
Retail Sales m/m
Minimum Bid Rate
ECB Press Conference
Trade Balance
Unemployment Claims
ISM Non-Manufacturing PMI
German Factory Orders m/m
FOMC Member Lacker Speaks
Non-Farm Employment Change
Unemployment Rate
Average Hourly Earnings m/m
German Industrial Production m/m
Sentix Investor Confidence
Labor Market Conditions Index m/m
German Trade Balance
NFIB Small Business Index
Consumer Credit m/m
CPI y/y
PPI y/y
JOLTS Job Openings
Crude Oil Inventories
Federal Budget Balance
French Final Non-Farm Payrolls q/q
French Industrial Production m/m
Unemployment Claims
Import Prices m/m
Wholesale Inventories m/m
Natural Gas Storage
Industrial Production y/y
Fixed Asset Investment ytd/y
PPI m/m
Core PPI m/m
Prelim UoM Consumer Sentiment
French CPI m/m
Italian Trade Balance
Industrial Production m/m
German ZEW Economic Sentiment
ZEW Economic Sentiment
Core Retail Sales m/m
Retail Sales m/m
Empire State Manufacturing Index
Capacity Utilization Rate
Industrial Production m/m
Business Inventories m/m

Date
Wed Sep 16

Thu Sep 17

Fri Sep 18
Mon Sep 21
Tue Sep 22

Wed Sep 23
Thu Sep 24

Fri Sep 25

Mon Sep 28

Tue Sep 29

Wed Sep 30

Time in IST Currency

1:30am
USD
11:30am
EUR
2:30pm
EUR
6:00pm
USD
USD
8:00pm
USD
1:30pm
EUR
6:00pm
USD
USD
USD
7:30pm
USD
8:00pm
USD
11:30pm
USD
USD
12:00am
USD
1:30pm
EUR
7:30pm
USD
2:00am
EUR
3:30pm
EUR
7:30pm
USD
7:15am
CNY
7:30am
CNY
12:30pm
EUR
EUR
1:00pm
EUR
EUR
1:30pm
EUR
EUR
1:30pm
EUR
8:00pm
USD
2:30pm
EUR
2:45pm
EUR
6:00pm
USD
USD
USD
6:30pm
EUR
7:30pm
USD
8:00pm
USD
11:30am
EUR
1:30pm
EUR
EUR
6:00pm
USD
USD
7:30pm
USD
6:00pm
USD
USD
USD
7:30pm
USD
11:30am
EUR
12:15pm
EUR
12:30pm
EUR
1:30pm
EUR
2:30pm
EUR
6:00pm
USD
7:30pm
USD
1:25pm
EUR
2:30pm
EUR
EUR
EUR
5:45pm
USD
7:15pm
USD
8:00pm
USD

Country/Event
TIC Long-Term Purchases
German WPI m/m
Final CPI y/y
CPI m/m
Core CPI m/m
Crude Oil Inventories
ECB Economic Bulletin
Building Permits
Unemployment Claims
Current Account
Philly Fed Manufacturing Index
Natural Gas Storage
FOMC Economic Projections
FOMC Statement
FOMC Press Conference
Current Account
CB Leading Index m/m
German PPI m/m
German Buba Monthly Report
Existing Home Sales
Caixin Flash Manufacturing PMI
CB Leading Index m/m
French Flash Manufacturing PMI
French Flash Services PMI
German Flash Manufacturing PMI
German Flash Services PMI
Flash Manufacturing PMI
Flash Services PMI
German Ifo Business Climate
Crude Oil Inventories
Italian Retail Sales m/m
Targeted LTRO
Core Durable Goods Orders m/m
Unemployment Claims
Durable Goods Orders m/m
Belgian NBB Business Climate
New Home Sales
Natural Gas Storage
GfK German Consumer Climate
M3 Money Supply y/y
Private Loans y/y
Final GDP q/q
Final GDP Price Index q/q
Revised UoM Consumer Sentiment
Core PCE Price Index m/m
Personal Spending m/m
Personal Income m/m
Pending Home Sales m/m
German Import Prices m/m
French Consumer Spending m/m
Spanish Flash CPI y/y
Italian Monthly Unemployment Rate
Italian Prelim CPI m/m
Goods Trade Balance
CB Consumer Confidence
German Unemployment Change
CPI Flash Estimate y/y
Core CPI Flash Estimate y/y
Unemployment Rate
ADP Non-Farm Employment Change
Chicago PMI
Crude Oil Inventories

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DISCLAIMER : Trading and Investment decision taken on your consultation are solely at the discretion of the traders/investors.We are not liable for any loss, which occur as a result of our recommendations. This document has
been prepared on the of publicly available information, internally developed data and other sources believed to be reliable.
NSE:INB/F/E 230823233 BSE: INB/F 010823236 NSDL: IN-DP-NSDL-166-2000, MCX-SX: INE 26082333 AMFI ARN 3524 MCX: TM 29040 / FMC REG NO. MCS / TC / CORP / 0963 MCDEX: TM 00749 / FMC REG NO.
NCDEX / TCM / CORP / 0736 / NSEL TM 10110* Note: Dealing in Commodity Segment through its group company Jhaveri Credits & capital Ltd.
Distributors for IPOs & Mutual Funds. Past performance is not a measure for future returns.