Monthly Market Update (India) - January2020 |iFAST Research - Fundsupermart India
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Monthly Market Update (India) – January2020 |iFAST Research
MARKETS ACROSS THE GLOBE
2019 2019 2018
MTD 1Y (%) Return (%)
Asia ex Japan (MSCI Asia ex Japan) 6.42% 15.37% -16.40%
Emerging Markets (MSCI EM) 7.17% 15.42% -16.60%
Europe (Stoxx 600) 2.06% 23.16% -13.20%
Japan (Nikkei 225) 1.56% 18.20% -12.10%
USA (S&P 500) 2.86% 28.88% -6.20%
Brazil (IBOV) 6.85% 31.58% 15.00%
China (HS Mainland 100) 8.34% 12.12% -15.30%
Hong Kong (HSI) 7.00% 9.07% -13.60%
India (SENSEX) 1.13% 14.38% 5.90%
Indonesia (JCI) 4.79% 1.70% -2.50%
Malaysia (KLCI) 1.73% -6.02% -5.90%
Russia (RTSI$) 3.76% 28.55% -7.40%
Singapore (STI) 0.91% 5.02% -9.80%
South Korea (KOSPI) 5.25% 7.67% -17.30%
Taiwan (Taiwan Weighted) 4.42% 23.33% -8.60%
Thailand (SET Index) -0.68% 1.02% -10.80%
*Returns are as at 31 December 2019. Source: Bloomberg Finance L.P., iFAST Compilations All returns are in respective local
currency terms and MSCI Index returns are in USD
Monthly Market Update (India) – January2020 |iFAST ResearchECONOMIC INDICATORS
Trade (November’19) Markets & Valuations Inflation (November’19)
India’s exports during November 2019 were valued at USD (As on December 31, 2019) India’s CPI came up at 5.54% year-on-year during the
25.98 billion registering a negative growth of -0.34% in month of November 2019 as against the prior of 4.62%
The benchmark Index (Sensex) was at 41,253.74
dollar terms as compared to USD 26.07 billion during the year-on-year in October 2019. Food and Beverages which
Estimated PE & earnings growth for BSE Sensex
month of November 2018. Imports during November 2019 have a weightage of 54.18% in the CPI basket reported
were valued at USD 38.11 billion which was 12.71% lower year-on-year rise in prices by 8.66% in November 19.
2018-19 2019-20 2020-21
in dollar terms as compared to imports which were valued Within the food and beverages segment, vegetable prices
Price/Earnings 27.42 23.11 18.71 increased by 35.99% year-on-year and pulses & products
at USD 43.66 billion in November 2018.
Earnings Growth -2.69% 18.67% 23.49% prices increased 13.94% year-on-year. The other main
For exports, the major commodity groups showing categories like Housing and Fuel & light prices grew year-
positive growth over the corresponding month of last year on-year by 4.49% and -1.93% respectively.
are Engineering Goods (6.32%), Marine Products (9.03%),
Electronic Goods (46.13%) and Drugs & Pharmaceuticals
(20.60%).
For imports, major commodity groups showing high
changes in November 2019 over the corresponding month
of last year are Transport Equipment (-48.53%), Electronic
Goods (-3.98%) and Petroleum, Crude & Products (-
18.17%). The trade deficit for the month of November
2019 stood at USD 12.12 billion vis-à-vis a deficit of USD
17.58 billion during November 2018.
Industrial Production (October‘19)
IIP was down 3.8% y-o-y in October 19 as compared to
4.3% y-o-y in September 19. The major sectors like Mining,
Manufacturing and Electricity registered y-o-y contraction
rates of -8.0%, -2.1% and -12.2% respectively. As per Use-
based classification, the growth rates in October 2019
over October 2018 are (-) 6.0 % in Primary goods, (-) 21.9
% in Capital goods, 22.2 % in Intermediate goods and (-)
9.2 % in Infrastructure/ Construction Goods. The
Consumer durables and Consumer non-durables have
recorded growth of (-) 18.0 % and (-) 1.1 % respectively.
Monthly Market Update (India) – January2020 |iFAST ResearchEQUITY MARKET
BSE Sensex - Top & bottom performers in December 2019. Broader Indices (Performance % in December
Top Performers MTD Bottom Performers MTD 2019)*
BSE Sensex 1.13
Hindustan Unilever
BSE SMALL CAP 1.02
Tata Steel Ltd 10% Ltd -5.5%
Nifty Index 0.93
Tata Consultancy UltraTech Cement
BSE MID CAP-0.78
Services Ltd 5% Ltd -4.9%
Sun Pharmaceutical -1 0 1 2
ICICI Bank Ltd 5% Industries Ltd -3.8%
Earnings growth estimates of top weighted stocks:
Sectoral Indices (Performance % in December
Stock FY-19 FY-20 FY-21
2019)*
HDFC Bank Ltd. -3.45% 21.55% 21.41% BSE METAL 6.64
BSE Realty 5.26
Reliance Industries Ltd. -3.93% 20.92% 30.66%
BSE IT 4.04
BSE TECK 3.44
Equity View BSE AUTO 2.13
In December 2019 we saw the BSE S&P Sensex give returns of 1.13%, declining BSE Bankex 1.33
BSE CD 0.56
from last month’s returns of 1.66%. Sentiment was boosted on trade optimism
BSE Power 0.08
based on reports that U.S. and China have reached an in-principle phase one
BSE-HC -1.28
deal. A clear victory in U.K. elections also boosted markets. Investors took hope BSE CG -2.53
from the Reserve Bank of India (RBI) governor’s comments that there is scope for BSE FMCG -2.71
reducing interest rates further after taking into consideration growth and BSE Oil & Gas -2.71
inflation data. Markets fell, however, when on Dec 5, 2019, RBI kept interest
-4 -2 0 2 4 6 8 10 12 14
rates unchanged, defying expectations of 25 bps cut. Concerns over weakening
domestic growth and rising inflationary risks further weakened the markets, and
surge in crude oil prices added to the woes. The U.S. President imposing tariffs
Source: Bloomberg, iFAST Compilations. All returns are in respective local currency terms
on foreign steel and threatening tariffs on allies like the European Union spooked
markets across the globe.
We advise our investors to stay invested and enter the market via the STP or the
SIP route depending on their risk profile and time horizon.
Monthly Market Update (India) – January2020 |iFAST ResearchDEBT MARKET OUTLOOK
10 Year G-sec Yield Curve
Fixed Income View 7.40
During December 2019, the 10-year G-Sec yield increased from 6.49% at the
7.20
beginning of the month to 6.56% by the end of the month. Bond yields surged 7.00
after the Monetary Policy Committee decided to maintain status quo on the key 6.80
policy rate amid higher inflation, worries over fiscal slippage and the 6.60
government’s plan for additional borrowing. The country’s GDP was reported at 6.40
4.5% for the Jul-Sep quarter against median forecast of 4.7%, dampening market 6.20
sentiments. Bond yields fell after RBI announced a second round of special open 6.00
market operations (OMO) via Operation Twist. RBI bought the federal
1-Nov-19
3-Nov-19
5-Nov-19
7-Nov-19
9-Nov-19
15-Nov-19
11-Nov-19
13-Nov-19
17-Nov-19
19-Nov-19
21-Nov-19
23-Nov-19
25-Nov-19
27-Nov-19
29-Nov-19
government’s 10-year benchmark bond and sold one-year notes worth up to Rs.
100 billion through a special open market operation on Dec 30.
We continue to remain positive on ultra short term funds, low duration funds,
short term funds with AAA papers and corporate bond funds.
Monthly Market Update (India) – January2020 |iFAST ResearchGLOBAL MARKET UPDATE – GROUP 7 COUNTRIES
Europe
Economic softness has likely bottomed but major economies remain weak, unlikely for severe
G7 Countries - Performance in December 2019* deterioration nor strong rebound in growth. Uncertainty in the region should clear up after Brexit as
we progress beyond 2Q 2020.Economic momentum is turning positive and we expect growth for
USA (S&P 500) 2.86% Europe to recover marginally in 2020. Earnings have declined across past quarters and remain prone
UK (FTSE 100) 2.67% to further downgrades. Equity market has priced in (i) economic recovery, and (ii) trade deal, while
fundamentals weakened. This sets up for a possible correction should equity reprice if the economic
Japan (Nikkei 225) 1.56%
recovery is weaker than expected and the trade deal suffers hiccups after confirmation. Valuation
France (CAC-40) 1.23% modestly overpriced with earnings growth muted. At the current juncture, we are maintaining a 2.5
Italy (FTSE MIB) 1.06% Stars “Neutral” rating for Europe.
Canada (S&P/TSX) 0.30%
Japan
Germany (DAX) 0.10%
Tailwinds from positive catalysts for growth Asian export recovery, improved electronics demand,
0% 2% 4% trade deal, expansive budget stimulus. Headwinds from consumption tax and pressure on exports
showed no signs of abating and likely persist into 2020. Current economic growth remains fragile due
*Source: Bloomberg, iFAST Compilations. All returns are in respective local currency terms to Japan’s exposure to trade but we remain biased that it will hold in 2020 as the region recovers.
Favour Japanese equities due to improving corporate fundamentals (margins near cycle high, debt
Our View levels sunk, ROE improved and closed the gap with other DMs).Japanese companies have become
more profitable and use capital more effectively (after Abe stepped into office). Valuations remained
USA cheap and Japan remains attractive.We maintain our star ratings of the Japanese market at an
Weakness in trade sectors and businesses still remain but US consumers coupled with “Attractive” rating of 3.5 stars.
policy support should insulate the slowing economy. Being an election year means that
the likelihood of support from the US government might be elevated to avoid a severe
slowdown. US economic growth will slow entering 2020, but growth is unlikely to fall
off the cliff. Corporate fundamentals deteriorated in 2019 as margins declined while
earnings estimates were cut .With growth outlook unimpressive, support for earnings
fell. Without robust fundamentals, current expensive valuation remains unsupported
entering 2020 .US equities may rise further due to momentum but upside potential is
limited over the longer term. Risk reward has skewed notably and US remains
unattractive. We maintain our rating of 2.0 Stars “Unattractive” for the US equity
market.
Monthly Market Update (India) – January2020 |iFAST ResearchGLOBAL MARKET UPDATE – ASIA PACIFIC (Ex-JAPAN)
Asia Pacific (Ex Japan) - Performance in December 2019*
Hong Kong (HSI) 7.00%
South Korea (KOSPI) 5.25%
Indonesia (JCI) 4.79%
Taiwan (Taiwan Weighted) 4.42%
Malaysia (KLCI) 1.73%
Singapore (STI) 0.91%
Thailand (SET Index) -0.68%
Australia (S&P/ASX 200) -2.37%
-4% -2% 0% 2% 4% 6% 8%
*Source: Bloomberg, iFAST Compilations. All returns are in respective local currency terms
Our View
Asia ex Japan
A rebound in Asian exports is due to 2 catalysts: 1.Cyclical upswing in global
semiconductor industry. 2. Re direction of new orders into existing production capacity
in other Asian economies. Rebound in exports and improvements in trade sectors will
spillover to other cyclical sectors, leading to an economic rebound and driving
corporate earnings higher. Profit outlook for Asian companies are expected to improve.
Sales and earnings estimates in 2020 and 2021 have reversed from their downtrend and
are revised upwards. Valuation remains cheap while supported by strong double digit
earnings growth. Other catalyst for equities include the ‘Phase 1’ trade and swing to
positive investor sentiments. We maintain a 4.5 Stars “Very Attractive” rating.
Monthly Market Update (India) – January2020 |iFAST ResearchGLOBAL MARKET UPDATE – BRIC (Ex-India)
Improved earnings prospect supports the cheap valuations. We maintain for China A-‘4.0
stars’, China H-‘4.5 stars’ “Very Attractive”.
BRIC (Ex-India) - Performance in December 2019*
China (HS Mainland 100) 8.34%
Russia (RTSI$) 7.68%
Brazil (IBOV) 6.85%
-10% -8% -6% -4% -2% 0% 2% 4% 6% 8% 10%
*Source: Bloomberg, iFAST Compilations. All returns are in respective local currency terms
Our View
China
China’s GDP growth is expected to decelerate gradually, likely falling to below
6% in 2020. Aside from trade pains in 2019 and deleveraging, slowdown also
due to maturing of the economy like DMs. Into 2020, external weakness
caused by trade dispute will alleviate and growth likely cushioned by domestic
demand: 1.China’s rebalancing effort towards consumption driven growth,
2.Burgeoning middle class. Growth should be supported by further
improvement in credit conditions and greater countercyclical efforts. Economic
growth is expected to slow but likely to be gradual and non - threatening to
Asia’s economic recovery. With a macro outlook that is expected to hold and
with trade pains alleviated, earnings of Chinese equities are projected to
improve in 2020. Earnings for China A shares will grow by double digit in 2020
one of the highest in Asia. Key headwind from trade dispute has been reduced
significantly. Valuations remain cheap and very attractive for H shares
Monthly Market Update (India) – January2020 |iFAST ResearchFUND CATEGORY RETURNS
Fund Category Returns (As on December 2019 end)
1 Month 1 Year
Equity: Large Cap 0.71 11.78
Equity: Multi Cap 0.84 9.52
Equity: Mid Cap 0.49 3.30
Equity: Small Cap 0.73 -0.21
Equity: ELSS 0.63 8.17
Equity: Index 0.47 10.14
Hybrid: Aggressive Hybrid Funds 0.58 8.25
Hybrid: Conservative Hybrid Fund 0.17 6.41
Debt: Gilt 0.14 10.78
Debt: Medium to Long Duration Fund 0.12 7.59
Debt: Short Duration Fund 0.10 4.38
Debt: Ultra Short Duration Fund 0.42 7.21
Debt: Liquid 0.43 6.41
Other: FOF Overseas 3.94 25.43
Solution Oriented Fund 0.32 7.58
Source: NAV India, iFAST Compilations
Monthly Market Update (India) – January2020 |iFAST ResearchTOP & BOTTOM EQUITY FUNDS
Top and Bottom Performing Equity Funds on our Platform as on 31st December 2019
Large Cap Funds Multi Cap Funds
Scheme 1 Month 1 Year Scheme 1 Month 1 Year
LIC MF Large Cap Fund (G) 1.91 14.99 BNP Paribas Multi Cap Fund (G) 1.83 13.21
UTI-Mastershare (G) 1.49 10.69 IDFC Multi Cap Fund (G) 1.61 7.58
Mahindra Pragati Bluechip Yojana - Regular (G) -0.32 0.00 HDFC Equity Fund - (G) -0.02 6.83
Franklin India Bluechip Fund - (G) -0.56 5.26 Franklin India Equity Fund - (G) -0.17 3.34
Mid Cap Funds ELSS Funds
Scheme 1 Month 1 Year Scheme 1 Month 1 Year
PGIM India Midcap Opportunities Fund (G) 2.06 3.57 BOI AXA Tax Advantage Fund (G) 1.98 14.61
Invesco India Midcap Fund (G) 1.66 3.80 Nippon India Tax Saver (ELSS) Fund - (G) 1.55 1.49
Franklin India Prima Fund - (G) -0.71 3.53 IDFC Tax Advantage (ELSS) Fund (G) -0.29 1.95
ICICI Pru MidCap Fund (G) -1.02 -0.61 SBI Magnum Tax Gain Scheme (G) -0.45 4.00
Small Cap Funds
Scheme 1 Month 1 Year
DSP Small Cap Fund (G) 2.75 0.74
AXIS Small Cap Fund (G) 2.23 19.38
HDFC Small Cap Fund (G) -0.64 -9.49
Tata Small Cap Fund - Regular (G) -0.70 2.56
Source: NAV India, iFAST Compilations
Monthly Market Update (India) – January2020 |iFAST ResearchTOP & BOTTOM DEBT and HYBRID FUNDS
Top and Bottom Performing Debt and Hybrid Funds on our Platform as on 31st December 2019
Aggressive Hybrid Funds Conservative Hybrid Funds
Scheme 1 Month 1 Year Scheme 1 Month 1 Year
Motilal Oswal Equity Hybrid Fund - Regular (G) 1.86 15.84 ICICI Pru Regular Savings Fund (G) 0.53 9.57
Kotak Equity Hybrid Fund (G) 1.32 14.14 SBI Debt Hybrid Fund - (G) 0.51 8.14
IDFC Hybrid Equity Fund - Regular (G) -0.43 4.66 HSBC Regular Savings Fund (G) -0.14 8.23
Tata Hybrid Equity Fund - Regular (G) -0.55 6.85 IDFC Regular Savings Fund (G) -0.19 8.12
Medium to Long Duration Funds Gilt
Scheme 1 Month 1 Year Scheme 1 Month 1 Year
SBI Magnum Income Fund - (G) 1.46 11.72 ICICI Pru Gilt Fund (G) 0.97 10.82
Kotak Bond Fund - Regular (G) 0.36 10.31 SBI Magnum Gilt Fund - (G) 0.70 13.15
Aditya Birla SL Income Fund (G) -0.22 9.46 Franklin India G-Sec Fund (G) -0.26 8.00
JM Income Fund - (G) -0.43 -7.36 Tata Gilt Securities Fund - Regular (G) -0.45 9.70
Short Duration Funds
Scheme 1 Month 1 Year
Edelweiss Short Term Fund (G) 0.67 -0.97
Indiabulls Short Term Fund (G) 0.34 5.02
HSBC Short Duration Fund (G) -0.27 -1.02
Franklin India Short Term Income (G) -0.67 4.23
Source: NAV India, iFAST Compilations
Monthly Market Update (India) – January2020 |iFAST ResearchTOP & BOTTOM OTHER & SOLUTION ORIENTED FUNDS
Top and Bottom Performing Other Funds on our Platform as on 31st December 2019
FOF Overseas Funds
Scheme 1 Month 1 Year
Aditya Birla SL Global Emerging Oppt Fund (G) 2.29 21.37
Aditya Birla SL Global Real Estate Fund (G) -0.91 19.57
Principal Global Opportunities Fund (G) 3.64 32.46
Sundaram Global Brand Fund (G) 1.87 17.56
Top and Bottom Performing Solution Oriented Funds on our Platform as on 31st December 2019
Solution Oriented Funds
Scheme 1 Month 1 Year
UTI-CCF Investment Plan - (G) 1.56 6.89
ICICI Pru Child Care Fund-Gift Plan 1.06 8.46
SBI Magnum Children Benefit Fund -0.38 2.64
Aditya Birla SL Retirement-The 30s Plan-Reg (G) -0.41 0.00
Source: NAV India, iFAST Compilations
Monthly Market Update (India) – January2020 |iFAST ResearchDISCLAIMER: THIS REPORT IS NOT TO BE CONSTRUED AS AN OFFER OR SOLICITATION FOR THE SUBSCRIPTION, PURCHASE OR SALE OF ANY MUTUAL FUND. ANY ADVICE HEREIN IS MADE
ON A GENERAL BASIS AND DOES NOT TAKE INTO ACCOUNT THE SPECIFIC INVESTMENT OBJECTIVE OF THE SPECIFIC PERSON OR GROUP OF PERSONS. PAST PERFORMANCE AND ANY
FORECAST IS NOT NECESSARILY INDICATIVE OF THE FUTURE OR LIKE PERFORMANCE OF THE MUTUAL FUND. THE VALUE OF UNITS AND THE INCOME FROM THEM MAY FALL AS WELL AS
RISE. OPINIONS EXPRESSED HEREIN ARE SUBJECT TO CHANGE WITHOUT NOTICE.
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.
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