Review timeSome use the end of a calendar year to review their investments, while others,the beginning or end of a financial year. The latter mostly stems from thefinancial year being the year used for taxation purpose.

Review, for most investors means simply knowing whether they have goodor bad funds. While fund review is an essential part of any financial review,the decision, unfortunately is often swayed by near-term performance. “Iinvested in this fund 2 months ago, (with a 5-year time frame) but the fundhas fallen since. Should I exit it?” – is not an unusual request.

To some investors, a review essentially is about booking profit. And thenthere are others, who may not want to exit a poor performer either becauseof tax or they want to see decent returns before they exit.

Nothing wrong with these approaches, but we think there are some keyobjectives behind a review that you need to keep in mind:

- If you had a goal, are you on the right track to achieving it? Are you fallingshort? Is it because of fund performance or do you need to save more?

- If you did not have any objective, then review your earning and savingscapacity now. Did it improve from over a year ago? Then, should you notdivert your surplus into investment avenues?

- Is your fund’s underperformance because of the market or is itunderperforming peers? If it’s the latter, is the underperformancesignificant (say, 5+ percentage points)? Can’t you wait to see if it improves?

- Should tax be a top consideration when the decision is to exit anunderperformer? Does it make sense to sit with an underperformer andlose an opportunity in better funds?

- Is your portfolio overweight on an asset class and should you rebalance it?

- Is there any new investment feature or product on the platform that canhelp you? For example: Can you use value averaging plans in addition toSIPs to average more? Can you do a STP if your emergency fund hasswelled up? Can you do step-up SIPs to up your investing pace periodically?

Other than asking for good funds or bad funds, asking these questions willnot only ensure your investments are in the right path, but will ensure you areup to date in terms of using the right channels to invest optimally.

Vidya BalaHead – Mutual Fund Research

FundsIndia.com

April 2017 � Volume 07 � 04

Ringing in the NewAs we step into thenew financial year, itgives me a chance tolook back at the past

year with some satisfaction.

In the past twelve months, we haverealised many milestones. From abusiness perspective:

1. Our AUM crossed Rs. 2000crores earlier this year, and grewrapidly to cross Rs. 3000 croresbefore the end of the year.

2. The number of SIPs weprocess every month crossedthe 1 lakh milestone mid-yearand has been growing rapidly.

3. The number of investors thatjoin us per month has morethan doubled compared to ayear ago.

From a platform perspective:

1. We rolled out Money Mitr - ourflagship robo-advisory service.

2. We launched FundsIndiaRatings - becoming the first MFdistributor to rate mutual funds.

3. We designed and implementedthe first gamified investmentexperience on our platform.

For this year, we have lots ofthings planned to continue makingyour experience pleasant andprofitable. We can’t wait to rollthem out and hear from you!

Happy investing!

Srikanth MeenakshiCo-Founder & COOFundsIndia.com

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This is a sponsored advertisement by ICICI Prudential Mutual Fund

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The markets, on Tuesday, gave a firm thumbs-up to theelection outcome, pushing the Nifty above the crucial9000 mark. This is not the first time that markets havetouched 9000. Leaving out September 2016 (which justwent by and a meaningful comparison is not possible), thelast time the Nifty touched 9000 was 2 years ago, in March2015.

It could not retain the level though. But quite a few thingshave changed since then:

• The banking space was just beginning to wash its dirtylinen in terms of opening its bad loan (NPA) story tothe market in 2015

• It was the beginning of several earnings downgrades asthe post-election rally could not really sustain on theback of poor earnings by companies

• Inflation was much higher than what it is today

• Commodity prices sagged then. While that providedrelief for input users, it caused high debt and losses incore sectors. Commodity prices are firmer now andrelated industries that were in heavy debt and losses areslowly turning around

• And above all, there has since been a steady andmeaningful uptick in the domestic institutional activity(DIIs – typically insurance companies and mutual fundcompanies) in the market since then

Take the last point mentioned above. While FIIs haveremained the largest holders and drivers of stock marketsin India, DIIs could slowly take the lead in settingmarket prices. Evidence to this is appearing in thetrading activity of DIIs compared with FIIs. Look at thefollowing charts.

• By mid-2015 DIIs hit newpeaks in terms ofownership of stocks albeitstill lower than FIIs. Butmore importantly, DIIs’proportion of tradingactivity to their holding iscatching up with FIIs (seefirst chart above)

• To confirm this trend, thevariability of net flows is also on an uptick. Reporteddata by research houses suggests that co-efficient ofvariation of net inflows (which is nothing but the ratioof standard deviation to the mean) of DIIs hassurpassed that of FIIs (second chart above)

• This is an important indicator that there is steadyuptick in money that DIIs are pumping daily into themarket

• And this uptick has been steady because of steadyinflows from local institutional investors such asinsurance companies and mutual funds.

• In fact, from October 2016 till February 2017, FIIswere net sellers in equities every month other thanFebruary. There was a net outflow of Rs 22,000 crore

“Globally, in most countries, there are only three to five large banks which dominate. This is howthe future will be in our country as well.”Uday Kotak, Vice-Chairman, Kotak Mahindra Bank

FundsIndia Views: There’s more to the market than UP elections

Vidya Bala

BJP’s win in the UP elections provided a leg up to the market for couple of reasons: One, itreposed the faith in the policy reforms of the government and brushed aside concerns ofdemonetisation even if it lasts for some time. Two, while too early, it sets the stage for the 2019elections and provides comfort, especially to institutional investors, in terms of long-termpolicies getting implemented at the Central level.

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in equities over this period. And yet, the Nifty stoodfirm, with a positive return of 3.4% over those 5months. This could not have been possible withoutdomestic support, as DIIs brought net inflows in eachof those months with a total of about Rs 41,000 croreover the same period. This goes to show the steadyuptick in DII flow

It is this pumping of money that seems to keep themarket going strong despite major news such asBrexit or US elections or Federal Reserve rate hikes.And it is this strength that appears to be keeping themarkets afloat despite valuations not beingparticularly cheap. That does not mean that valuationswill be ignored. Just that markets may react less toshort-term fears if long-term money finds reason to stayin the markets. And DII money is relatively more longterm than FII money.

It is in this context that local news such as UP elections area big deal in terms of providing comfort to local investors(DIIs).

What to expect?

- As investors, do not give much importance to thecurrent short-term rally. Do not be swayed by theabnormal returns reflected in your portfolios and keepyour expectations reasonable based on your time frame

- At the same time, do not fear a bubble as we think a9000 Nifty will be different this time compared withMarch 2015. So, do not wait for any large correction to

enter the market

- Expect intermediate corrections, be it in from Fed Ratehike or earnings-driven disappointments, GST-relatedhiccups or interest rate signals from the RBI. Use suchcorrections to buy further on dips if the correction isin the range of 3-5% over a month’s time

- Valuations at 23 times trailing Nifty (as of March 10)is not cheap. That means upside from here at least for2017 will not be much.

- At the same time, the market momentum is beingslowly built and being kept afloat by DII inflow surge.This is not short-term money. If this trend continues,expect a long-term uptrend, to be necessarilysupported, of course, by corporate earnings growth aswell as government reforms gathering momentum; aswe take a break from election distractions

The best way to therefore play the market would beto go with the DII flow. That means staying investedand continuing to invest using the SIP/STP route. Staycautious of high return estimates but do not exit, fearingthe market. Keeping away from the market costs morethan staying at highs, as long as you are averaging.

Vidya BalaHead – Mutual Fund Research

FundsIndia.com

“Macroeconomic stability, now combined with political stability, is a very big plus for the countryto embark faster on the growth side. This is our opportunity.”Uday Kotak, Vice-Chairman, Kotak Mahindra Bank

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If at any time in the past ten years, you invested in anequity fund and held it for 1 year, there is a 1-in-4 chancethat you suffered losses. This is regardless of whether youheld a mid-, large-cap, or a diversified fund. The chance ofactually losing your capital remains high for a 1-year,2-year, and 3-year holding. Only after that does the riskof loss close onto zero. The representative indices- theNifty Freefloat Midcap 100, the Nifty 100 and the Nifty500- also show similar trends of delivering losses.

Holding for beyond five years almost eliminates theprobability of losses. The small loss probability figure thatyou see in the large-cap and the mid-cap category is dueto two or three very poor performers that never managedto pick up skewing the overall average. Barring these fewfunds, neither equity funds nor the markets has deliveredlosses beyond a six-year period. So a 7-8 year period is a

good definition of what long-term is, in equity funds.

Further, along with the loss probability diminishing overyears, the ability of funds to generate reasonable returnsstays steady. Large-cap funds delivered at least 12%returns more or less half the time, diversified fundsdelivered 15%-plus returns about 40% of the time, whilemidcap funds generated returns in excess of 20% alsoaround 30% of the time across timeframes.

Now that you know what long-term is, invest with theright timeframe in mind. Don't expect the same returnsfor all your equity funds. Also remember, fund selection isvery important, because if you happen to invest in a poorperformer, holding it for even 7 years won't help you.

Bhavana AcharyaAnalyst – Mutual Fund Research

FundsIndia.com

1 year 2 years 3 years 4 years 5 years 6 years 7 yearsMid and small-cap funds% times losses were delivered 25.5% 16.2% 9.4% 4.8% 3.2% 2.7% 0.5%% times returns were over 20% 34.4% 35.3% 40.3% 41.7% 36.3% 30.7% 32.3%Nifty Freefloat Midcap 100 32.2% 27.6% 14.4% 3.5% 1.4% 2.2% 0.0%Diversified funds% times losses were delivered 27.4% 16.8% 7.9% 4.1% 2.8% 3.3% 0.0%% times returns were over 15% 39.4% 40.2% 47.5% 40.6% 36.9% 37.0% 41.8%Nifty 500 27.3% 25.1% 11.2% 4.2% 2.5% 1.9% 0.0%Large-cap funds% times losses were delivered 26.4% 16.8% 7.7% 4.6% 2.3% 1.6% 0.7%% times returns were over 12% 47.2% 48.0% 54.9% 48.0% 52.9% 49.6% 53.7%Nifty 100 26.2% 22.8% 6.9% 3.8% 1.6% 0.2% 0.0%

“I think certain amount of volatility ensures that people don't cross the level of risk. So, I wouldactually worry if there is no volatility. I would worry if there are no downs in the market.”Sankaran Naren, Executive Director and Chief Investment Officer, ICICI Prudential Mutual Fund

How long is long-term in equity?

Bhavana Acharya

When you invest in an equity fund, the one sage advice you always get is that the short-term isrisky and you need to hold your fund for the long-term. But how risky is the short-term? Howlong is long-term? To answer that, we ran the returns for different time-periods, took thesereturns every single day from March 2007 to March 2017, and then measured how often fundsdelivered losses on an average. The past ten years has seen several market booms and correctionsand there is enough data across fund categories to make this analysis. Here’s what we found:

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Based on rolling returns, rolled daily, from March 2007 to March 2017 for each timeframe. Categories is as per FundsIndia categorisation.All % are averages for that category in the respective timeframe.

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Q & AQ: Could you please let me know the difference betweenELSS and equity oriented funds? In ELSS, we get taxsavings and the lock-in period is 3 years. Equity-orientedfunds have no tax on long-term capital gains. What aboutELSS?

A: An equity-oriented fund is one that invests the majorityof its portfolio in the stock market. From a taxationdefinition, an equity-oriented fund is one that has at least65% of its portfolio invested in domestic equities. AllELSS funds are equity-oriented funds – all ELSS fundsinvest in the stock market. The reason these funds arecalled ELSS and classified separately is because they havethe Sec 80 C tax benefit and they are locked in for 3 years.All equity funds are not automatically ELSS and do nothave lock-in periods. Because an ELSS fund isequity-oriented, capital gains are taxed like equity funds.So, capital gain on holding period of more than one yearis tax-free. And as you’re locking into an ELSS for 3 years,the gain you would make will be tax-free.

Bhavana AcharyaAnalyst – Mutual Fund Research

FundsIndia.com

GSPLGSPL Ltd traded in a tight band of Rs. 150 and Rs. 168in the past 3 months. Currently, it needs to trade abovethe resistance level of Rs. 168 to trigger a strong upsidemomentum. Major resistance is at Rs. 173. Strong supportis at Rs. 157 and Rs. 150. The latest 50 days SMA is at Rs.160. We recommend investing in GSPL at the currentmarket price for a target of Rs. 187, with stop loss at Rs.149. The stock will turn bearish below Rs. 149.

This column is targeted at investors who are registered customers ofFundsIndia for trading and investing in equity as well as prospectiveinvestors who wish to open an equity account with FundsIndia.

The market had a good run up in March, with the Niftyrising more than 3 percent. The short and long termtrends remain bullish at this juncture and there is strongpossibility of it continuing its rally towards the immediatetarget of 9,500. Nifty has formed higher tops and higherbottoms, a bullish formation on the daily chart. Currentlythe index is trading above the latest 21 days SimpleMoving Average (SMA) level of 9,068. Crucial supportfor Nifty is placed at 9,020 and 8,850, major resistance isat 9,250 and 9,350. The short-term trend will remainpositive as long as the index trades above 9,020 levels.

Perumal RajaTechnical Analyst - Equity Research Desk

FundsIndia.com

Dabur IndiaDabur India has declined sharply from Rs. 302 to Rs. 260in the past 6 months. It has formed a strong base aroundRs. 260. Major support is at Rs. 271 and Rs. 260, whileresistance is at Rs. 285 and Rs. 301. The upward trend willcontinue as long as the stock trades above Rs. 260. Thestock can be accumulated on declines. We recommendinvesting in Dabur for a medium-term target of Rs. 312,with a stop loss at Rs 259.

Technical View Nifty

Disclaimer: Mutual fund investments are subject to market risks. Please read the scheme information and other related documents beforeinvesting. Past performance is not indicative of future returns. Please consider your specific investment requirements before choosing a fund,or designing a portfolio that suits your needs. Wealth India Financial Services Pvt. Ltd. (ARN code 69583) makes no warranties orrepresentations, express or implied, on products offered through the platform. It accepts no liability for any damages or losses, howevercaused, in connection with the use of, or reliance on its products or related services. The terms and conditions of the website are applicable.Think FundsIndia, a monthly publication of Wealth India Financial Services Pvt. Ltd., is for information purposes only. Think FundsIndiais not, and should not, be construed as a prospectus, scheme information document, offer document or recommendation. Information inthis document has been obtained from sources that are credible and reliable in the opinion of the Editor.Publisher:Wealth India Financial Services Private Ltd. Editor: Srikanth Meenakshi

About us: FundsIndia is India’s friendliest online-only investment platform. Built on robust technology, FundsIndiagives users access to mutual funds from leading fund houses in India, stocks from the BSE, corporate fixed depositsand various other investment products, all in one convenient online location. In short, FundsIndia is your one stopshop to build wealth.

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FundsIndia Select FundsEquity funds - Moderate risk

These are funds that will seek to generate inflation-beating returns and limit downside risks. These funds require aholding period of at least five years.

Birla SL Frontline Equity Fund (Growth) Invesco India Growth Fund (Growth)

BNP Paribas Equity Fund (Growth) Kotak Select Focus Fund (Growth)

DSPBR Opportunities Fund (Growth) Mirae Asset India Opportunities Fund (Growth)

Franklin India Bluechip Fund (Growth) SBI BlueChip Fund (Growth)

Franklin India Prima Plus Fund (Growth) SBI Magnum Equity Fund (Growth)

ICICI Pru Focused Bluechip Equity Fund (Growth) UTI Equity Fund (Growth)

Invesco India Dynamic Equity Fund (Growth)

What is FundsIndia Select Funds: This is a listing of mutual funds that we think are most investment worthy fora regular investor. We review this list on a quarterly basis. Do note, however, that past performance is not a guaranteeof future results. Please consider your specific investment requirements before designing a portfolio that suits yourneeds.

Please click here for a complete listing of our preferred funds.

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1. Who has recently taken charge as new DeputyGovernor of the Reserve Bank of India (RBI)?

2. Which country has officially recognized Bitcoin anddigital currencies as legal money?

3. Which Indian bank has launched a unique credit card“Unnati” to spread credit inclusion?

4. Truecaller has partnered with which bank to launch itsUPI-based mobile payment service “Truecaller Pay”?

5. Which bank has been adjudged the “Best Small Bank”award for 2016?

Please click here to submit your answers.

Answers for February 2017 Investment Quiz:

1. Rs. 10,000 2. Ajay Tyagi 3. Oriental Bank ofCommerce (OBC) 4. 6.25% 5. 25%

The winner of the March 2017 Investment Quiz is RajeevDulani.

@FundsIndia

March was a very happening month at FundsIndia,during this month we:

1. Reviewed and updated our Select Funds list ofresearch recommended mutual fund schemes, aswell as the FundsIndia Rating of all mutual fundschemes

2. Added the regular plans for Quantum MutualFund to our platform - due to a change in thefund house’s policies, we will now only beoffering regualr plans on our platform. We senta detailed email announcement regarding thesame late last month.

3. Included the 5-day margin trading facility forequity on our Android app

Let us know what you think of these features atsupport@fundsindia.com

Investment Quiz