Nifty hits 6500, Sensex surges over 300 pts.
rvind Sanger, managing partner, Geosphere Capital Management is highly bullish on the India story after the current account deficit (CAD) saw a smart decline in Q3. The CAD or the difference between the country’s exports and imports, has come down to USD 4.2 billion or 0.9 percent of the gross domestic product and has been aiding the positive market sentiment. India has been getting robust flows from foreign institutional investors (FIIs) in the past 15 sessions. Despite FIIs offloading funds from emerging markets (EMs), Indian has clearly bucked this trend explains Sanger. He further adds that he has a target of low to mid-7000 on the Nifty for this year. Sanger further says that the market is likely to be volatile from a one month perspective driven by all the global events and local news flows around the general elections. However, the market is heading higher as it has a lot of tailwinds in the form of CAD and expectation of positivity from the inflation numbers, he adds. On what stocks to invest in, Sanger says the demand stories, infrastructure plays are likely to do well, but one must be cautious when dealing with the infra space. “Their debt to EBITDA ratios are too high, so be careful when choosing stocks in this space,” he warns. Sanger is bullish on the banking sector and says State Bank of India (SBI) is a safe play among public sector banks.

A mutual fund is a type of professionally managed collective investment scheme that pools money from many investors to purchase securities.While there is no legal definition of the term "mutual fund", it is most commonly applied only to those collective investment vehicles that are regulated and sold to the general public. They are sometimes referred to as "investment companies" or "registered investment companies."Most mutual funds are "open-ended," meaning stockholders can buy or sell shares of the fund at any time. Hedge funds are not considered a type of mutual fund.
In the United States, mutual funds must be registered with the Securities and Exchange Commission, overseen by a board of directors (or board of trustees if organized as a trust rather than a corporation or partnership) and managed by a registered investment adviser. Mutual funds, like other registered investment companies, are also subject to an extensive and detailed regulatory regime set forth in the Investment Company Act of 1940. Mutual funds are not taxed on their income and profits if they comply with certain requirements under the U.S. Internal Revenue Code.
Mutual funds have both advantages and disadvantages compared to direct investing in individual securities. They have a long history in the United States. Today they play an important role in household finances, most notably in retirement planning.
There are 3 types of U.S. mutual funds: open-end, unit investment trust, and closed-end. The most common type, the open-end fund, must be willing to buy back shares from investors every business day. Exchange-traded funds (or "ETFs" for short) are open-end funds or unit investment trusts that trade on an exchange. Open-end funds are most common, but exchange-traded funds have been gaining in popularity.
Mutual funds are generally classified by their principal investments. The four main categories of funds are money market funds, bond or fixed income funds, stock or equity funds and hybrid funds. Funds may also be categorized as index or actively managed.
Investors in a mutual fund pay the fund’s expenses, which reduce the fund's returns/performance. There is controversy about the level of these expenses. A single mutual fund may give investors a choice of different combinations of expenses (which may include sales commissions or loads) by offering several different types of share classes.

cmp: 951.50-52
target price::975
stoploss ::940
go for it.........

NEW DELHI: The S&P BSE Sensex pared most of the morning gains and turned choppy in the afternoon trade on Friday, led by losses in HUL, ICICI Bank BSE -2.44 % and M&M Ltd.

At 11:30 am, the 50-share Nifty index was at 5,717.45, down 10 point or 0.2 per cent. It touched a high of 5,761.85 and a low of 5,705.05 in early trade today.

The S&P BSE Sensex was at 19,309.13, down 7.7 points or 0.04 per cent. It touched a high of 19,451.70 and a low of 19,273.08 in trade today.

 Ashwani Gujral of ashwanigujral.com

TCS Ltd is a 'BUY' call with a target of Rs 1870 and a stop loss of Rs 1820.

Titan Industries BSE 8.05 % Ltd is a 'BUY' call with a target of Rs 285 and a stop loss of Rs 270.

BPCL BSE -6.28 % is a 'SELL' call with a target of Rs 287 and a stop loss of Rs 305.

Power Grid Ltd is a 'SELL' call with a target of Rs 82 and a stop loss of Rs 95.

Mitesh Thacker of miteshthacker.com

Voltas Ltd BSE -4.08 % is a 'SELL' call with a target of Rs 67 and a stop loss of Rs 76.

Jubilant FoodWorks Ltd is a 'SELL' call with a target of Rs 1040 and a stop loss of Rs 1111.

Infosys Ltd is a 'BUY' call with a target of Rs 3085 and a stop loss of Rs 2977.

Lupin Ltd is a 'BUY' call with a target of Rs 915 and a stop loss of Rs 874.

Sandeep Wagle, Founder & MD, APTART Technical Advisory Services

M&M Ltd is a 'SELL' call with a target of Rs 830 and a stop loss of Rs 870.

Jindal Steel Ltd is a 'SELL' call with a target of Rs 179 and a stop loss of Rs 191.

Titan Industries Ltd is a 'BUY' call with a target of Rs 292 and a stop loss of Rs 273.

Prakash Gaba, CFT, prakashgaba.com

BHEL BSE 1.46 % is a 'BUY' call with a target of Rs 157 and a stop loss of Rs 149.

Tata Communications BSE -1.43 % Ltd is a 'BUY' call with a target of Rs 162 and a stop loss of Rs 142.

M&M Ltd is a 'SELL' call with a target of Rs 835 and a stop loss of Rs 870.

Ashish Chaturmohta, Head Technical & Derivatives Desk Research, Fortune Equity Brokers

Infosys Ltd is a 'BUY' call with a target of Rs 3100 and a stop loss of Rs 2995.

Aurobindo Pharma Ltd is a 'SELL' call with a target of Rs 145 and a stop loss of Rs 165.

Hindustan Zinc Ltd is a 'SELL' call with a target of Rs 90 and a stop loss of Rs 100.

Mitesh Panchal, AVP (Value Addition), Shah Investor's Home Limited

Infosys Ltd is a 'BUY' call with a target of Rs 930 and a stop loss of Rs 820.

Ambuja Cements Ltd is a 'BUY' call with a target of Rs 200 and a stop loss of Rs 160.

JP Associates Ltd is a 'BUY' call with a target of Rs 38 and a stop loss of Rs 30.50.

ET Now: The big picture is that macro is looking slightly challenging, money is moving out of the markets and crude prices are refusing to come down.

Prasun Gajri: Yes, the macro is clearly challenging and that is what is reflected in the way the rupee has been behaving. So that is a clear indication that any capital inflow or outflow, which happens very quickly, can lead to a large change in the way our macro is positioned. So that has been a problem for a while, it is just getting accentuated.

ET Now: Is it a time now to hunker down all the recovery expectations?

Prasun Gajri: If you are looking at current account that is a challenging problem,, which is not going to go in a hurry. Clearly, one can argue whether it is $80 billion or $90 billion, but we have to fund somewhere to the tune of $80 to $90 billion every year at least for this year and that will require reasonably benign global flows. Therefore, that problem remains.

On the fiscal side, while the intentions from the government do seem to indicate that they want to control the fiscal at 4.8% of GDP, it is going to be a very tough challenge given the slowdown in the economy, the tax numbers for the first two months, little progress on the disinvestment, and food security bill.

Inflation definitely seems to be under control. So that is one big positive which has emerged. Interest rates have not really moved up too much despite the rupee cracking. So that correlation between the rupee falling and interest rates also rising seems to have broken down a little bit over the last few days. Tat is something which is again a positive sign.

ET Now: The argument for Indian equities at least for next one year is not very constructive and given the kind of macros we are working with looks like that we could be in a range for another one year?

Prasun Gajri: We could be in a range for another one year. I do not think there is too much debate about that. For the markets to really move out of the range, something has to happen either positive or extremely negative. So I would agree that the range is there, but having said that what sectors do well and what do not may not necessarily follow what has been happening in the past and that is going to be something which could be different.

We saw some outflows in June, but that was hardly anything compared to the inflows which we have seen this year and in the earlier year as well. So if they sell what they own then clearly some of the stocks which are at very high valuations will not do so well and some of the stocks which are at completely beaten down valuations may sustain. So clearly what outperforms, what underperforms is something which remains to be seen.

The market today is in a complete risk off mode where we continue to give higher multiples to sectors where the fundamentals are clearly deteriorating, but the valuations are higher than what they were 12 months back and there are some other sectors where the fundamentals are clearly weak, but the valuations are just getting beaten up every single day. So clearly that dichotomy may change over the next 12 months, especially if you see FII outflows and ETF outflows from the Indian market that is something which may undergo a change. So the nature of what performs in the market or does not perform in the market could be interesting.

ET Now: Do you expect that Q1 numbers will be rather noisy given the way how the rupee has moved for the quarter gone by, what has happened to bond yields and commodity prices?

Prasun Gajri: See there could have been noise, but the fact is that the rupee movement does not tend to appear in the P&L given the way the accounting is done. It tends to go into the balance sheet, so it does not necessarily make it all that noisy. Having said that, I do not think there are any great expectations from this quarter. Most people anticipate virtually zero to very-very low growth for this quarter. So we are not really building in any major positive surprises. The interest rates have moved, that is something which has been the case for a while. So I do not think that really clouds the things, but overall no major expectations from this quarter.

ET Now: So what could be the next big trigger because you are sounding more bearish than bullish to me?

Prasun Gajri: If I have to talk about the economy it is a more balanced view where we will see probably better growth, but structurally the economy needs to get back to 7-7.5% growth. We will be stuck around 5.5-6% for a while if we do not change that. On the market, clearly the market is bipolar while the valuations may look reasonable from averages perspective, there is a part of the market which is completely trading at the lows post the global financial crisis and there is another part of the market which is trading at all-time highs in terms of valuations.

We are seeing a relative slowdown. Obviously these categories are still doing well, there is a relative slowdown, but do the valuations really justify that? That is something which will remain to be seen and second aspect is if there is actually a sell off in the Indian equity markets from the global investors, I guess the stocks which will be more vulnerable are the high valued stock. So I do not have major expectations from this market. I don't think that it can give me a very high double digit return this year, but you could actually make reasonable returns if you get your sectors right.

ET Now: If you are of the view that one should still be buying into high beta and one should not get obsessed with quality, what are the options which are left?

Prasun Gajri: No, I am not suggesting either of the two strategies. One has to follow a balanced approach. I do not think it is a market which has helped being in high beta very clearly, but having said that it is not a market which is always going to help being in quality. So that is a distinction one will have to start making at some point of time and have that balanced approach to the portfolio.

If you look around, I cannot get into specific names, but there are enough stocks which are trading at post-2008 lows with may be weak fundamentals, but they are not as bad as being made out. So it is a stock-specific market, it is easy decision to be safe today. It is a safe decision from a fund manager's perspective. It is an easier decision, it is very little chance of you going wrong effectively, nobody is really going to question you, but having said that is where I do believe there could be some sense of complacency which could be set in and that gives an opportunity to really look at that from a very different perspective.

ET Now: What do you make of the global mood? One is getting a sense that we are staring at a divided world and emerging market equities are underperforming developed market equities.

Prasun Gajri: The story which has been for a while is a stronger US growth and weaker Europe and probably a little bit better Japan and a weaker China. Now that is something which seems to be driving the global economy at the moment, and at the margin that is something which is going to drive the global asset prices as well. Now the question remains how strong is really the US economy? The indicators we have seen so far do point out that it is coming out from the lows, but how strong does it really get? We are still talking about 2 to 2.5% kind of growth!
The fiscal situation in the US is still nothing great and it remains to be seen if once the QE starts tapering off whether the economy really stays as strong as it is being made out to be or are there repercussions of higher interest rates in the US and the economic growth in the US because we have clearly seen the bond yields and the mortgage rates rise fairly substantial in the US.

The emerging market will still give you between 5 and 7% kind of growth, the fiscal situation in emerging markets is still better than most of the developed world and the opportunities in the emerging markets could still possibly be better than a lot of the developed markets. So while on a cyclical basis, short term basis what you are saying is right, but structurally I do not think the emerging market theme is broken. Yes, there is a slowdown in emerging markets, but clearly if the US actually picks up, the emerging markets also should do well and once that happens you could see the fund flows back to the emerging markets and emerging markets again starting doing well. So it is a fairly linked process. It is difficult to write off the emerging markets so quickly and so soon.

ET Now: Let us look at the local fund flow situation whereas LIC has become a net buyer. What are local insurance firms doing, are you also putting money to work or redemption is still a problem?

Prasun Gajri: The local insurance companies are not necessarily getting the flows at the same pace as they were getting. I do not think their net redemptions are at a very serious level, but I do not think the inflows are very exciting either. LIC seems to have been a big buyer, but clearly LIC was a big seller in the Jan to March quarter when most of us and other private insurance companies were clearly buying. So they had a large amount of accumulated cash which has been put to work now, but overall I do not see too much of fund flows into the equity markets for the domestic institutional investors at that moment.

ET Now: When do you think will be the turning point where retail investors will start pulling money out of fixed income products and they could revisit equities?

Prasun Gajri: Equity market has to do well for a while and sustain itself and get some positive buzz around it for the retail investor to come. See a larger amount of retail investors whosoever have entered in 2007-2008 is a complete dissolution and nothing really to blame the investor because the markets have been like that and therefore it is going to take a little bit of time, markets have to sustain, real interest rates have to become positive. Only then one will see the retail investors being keen on the equity markets. So it could be a little bit longer than one anticipates.

ET Now: Let us look at currency sensitives now. The consensus call is that it is time to buy into pharma, IT, it is time to buy companies which will benefit because of weak rupee. Do you see there is merit in this trade?
Prasun Gajri: Currency is a big beneficiary for sectors like pharma and IT. For pharma it is a bigger positive. For IT it remains to be seen while it is a positive, it clearly allows them a lot of levy, but if you really look at it, the margins of IT companies have actually shrunk over the last 12 to 18 months despite a very significant rupee depreciation.

That tells me that while it is good for their business, a lot of those benefits tend to be spent away either in terms of pricing, or further expansion, or further spending, or further investments in the business and it is not getting reflected in the margins. So while in the short term it is positive, I would be a little bit wary of really putting that into numbers over the longer term. IT companies also depend on how the global macro plays out and how the growth in US really pans out and therefore what is the demand situation for them that is to my mind a much bigger factor and will influence some of these names much more.

ET Now: What is the best way to approach consumers? Again the Street is divided on what exactly it should do when it comes to consumer names?

Prasun Gajri: It is very easy to say get out of consumers but I do not think people would be very happy to get out of consumers because that is a trade which has played over the last two-two and a half years without any problem and it is a fairly easy trade. None of these companies are going to lose you any significant amount of money to be honest. You may get a 5%-10% correction, but there could be a long time correction in these names. So that would be a worry.

If I were to really look at it, two or three things stand out. One is I would be more bullish on the rural sector side of the consumption than urban consumption. So clearly put more money to work on ideas which are more reliant on rural consumption than urban consumption. That is one aspect. Look where the earning growth is still reasonable. So, if the earning growth is still reasonable, if the earning growth is going to be 8% to 10% or 10% to 12% and the valuations are 35-40 times, this clearly does not make sense but if the earning growth is still going to be between 15 and 20%, you might as well play the valuations and stick onto it. So one has to differentiate between the FMCG names, which has not really happened so far.

NEW DELHI: Investors globally pulled out more than $3 billion from equity funds focused on emerging markets including India in a week amid concerns over the US Federal Reserve's plan of curtailing its stimulus drive starting later this year, says a report.

According to funds tracking company EPFR Global, over $3 billion has flown out of emerging markets equity funds during the week ending June 19.

Explaining the outflow, the report said "investors expected the outcome of the US Federal Reserve's latest meeting to be relatively benign".

However, equity funds attracted net inflows to the tune of $4.81 billion during the third week of June.

"While investors are distancing themselves from most of the top tier emerging markets such as China, Brazil, Russia and South Africa, they have retained their appetite for the smaller, riskier, faster growing ones," the report noted.

The US Federal Reserve's decision to curtail its liquidity measures with a goal of ending it in mid-2014 has been weighing on emerging market funds.

The EPFR did not disclose India-specific fund outflow data. But, according to information available with the Securities and Exchange Board of India ( Sebi), the foreign institutional investors (FIIs) pulled out $580 million from the Indian market during the week under review.

Most of emerging market focused equity funds invest in India as FIIs and the capital flows through this route are a key factor in the stock market trends here.

At the country level, Japan equity posted inflows for the straight 21 week, while Germany and Korea also attracted fresh money.

However, equity funds dedicated to China extended their losing run as a report from ratings agency Fitch raised new questions about the country's shadow banking system

MUMBAI: Ahead of the mid-quarter review of monetary policy tomorrow, the State Bank of IndiaBSE 1.31 % (SBI) has said if the apex bank cannot reduce CRR rate, which is a must for lending rate cuts by banks, they should pay interest on cash reserves that banks park with the monetary authority.

Incidentally, most analysts expect the RBI to hold rates during its mid-quarter monetary policy review.

"If a CRR cut cannot be done due to inflation worries, let the RBI pay us interest on CRR. We will then do the transmission for sure. If the RBI pays me Rs 500 crore on interest on my CRR, I promise to transmit the entire Rs 500 crore to borrowers by reducing my base rate," SBIBSE 1.31 % chairman Pratip Chaudhuri told PTI recently.

Last year he had triggered off a heated debate by calling for abolition of CRR. He felt that CRR is "dead money" and it had led to a public spat with K C Chakrabarty, the RBI deputy governor in charge of banking services, who said that if the SBI chairman is not comfortable working under existing regulations, he should look for "some other sector".

Explaining the rationale for SBI's as well as other banks' inability to cut lending rates with minor repo rate cuts that RBI has done by 125 basis points (1.25 per cent) since the middle of the past fiscal, Chaudhuri said, "The relationship between the repurchase rate and the bank lending rate is rather weak. Bank deposits rates are guided by postal deposit rates and not by RBI rates".

Further, he said that a 25 basis points reurchase rate cut will give an additional income of merely Rs 50 crore to the SBI.

"How do I distribute it to my borrowers when my loan book is Rs 7 trillion? Instead, if the RBI reduces CRR by 25 basis points, I get about Rs 3,000 crore. So, if there is a CRR cut, then the transmission is more pronounced," the SBI chairman argued.