India’s stock markets are down more than 4% today following massive decline in stock market indices in Asia today and the US on Friday. Chinese equities have sparked widespread unrest in global financial markets on concerns of slowdown in economic growth coupled with Yuan devaluation. Yuan devaluation is having repercussions for other emerging market and export led economies.
We have been on top of this market with our up to the minute analysis on various events that have affected the market.
Fundamentally we find that there is no great cause for concern on the Indian economy and we feel that the correction in the current scenario gives an opportunity for you to make purchases in a staggered fashion with a long term perspective. You should not panic in the scenario but add on to existing positions or start building a portfolio to gain in the long term. If markets fall further, you should keep on adding positions to the portfolio but in a staggered manner and avoid buying everything at one go.
The BSE Sensex and the Nifty have declined 3% each year to date. The Dow Jones Industrial Average has declined 6% year to date.
Indian rupee (INR) has remained quite stable despite broad Asian Currency fall as the country’s macros have improved over the last couple of years, which has helped the INR to improve its internal value.
INR on yearly basis has depreciated by 8.14% against the USD and on weekly basis it has depreciated by 1.25%. In current scenario when the outlook for the global economic growth is negative may bring some weakness to the INR as demand for safe heaven asset will rise. The weakness in the currency is expected to be temporary considering India’s improving macros, the weakness in INR will also boost country’s export value as it will make country’s export more competitive in international market. Read our analysis why INR depreciation is not a concern.
Bond markets have not reacted too negatively to the global risk aversion trend. Ten year benchmark government bond yields are trading at levels of 7.84%, up 12bps over the last three weeks but down 6bps from peaks seen in June 2015. RBI is keeping policy accomodative and liquidity is easy in the system leading to bond yields staying stable.
The Twelve Stock Portfolio has consistently beaten the benchmark index BSE Sensex considering a time period since inception, 2 years, 1 year, year to date and month on month till date. We think that India as an economy is on a very strong footing considering the favourable macroeconomic environment of declining inflation, revival of GDP growth and stable Government. The Corporate performance should follow the economy with the next leg of growth in the earnings for companies in the near future.
We had constructed the twelve stock portfolio on 6th December 2012 benchmarked to the BSE Sensex. The portfolio has given 139.68% return since inception and has outperformed the Benchmark Sensex by 99.25%. The one and two year return of the portfolio is 31.31% and 165.88% respectively and the portfolio has outperformed the benchmark by 27.72% and 113.57% respectively.
The portfolio has given 12.19% return year to date and has outperformed the Benchmark Sensex by 12.7%. The BSE Sensex has declined 0.51% from year to date in 2015.
On a monthly basis, the portfolio value gained 2.15% and has outperformed the benchmark by 5.04%.