Portfolios Monthly Make the MOSt of our expertise Communique’ … · Eicher Motors Ltd. Bajaj Finance Ltd. Cummins India Ltd. 15.99 11.98 8.79 8.76 6.90 6.30 6.10 5.96 Key Portfolio

Asset Management

MOStPortfolios

Make the MOSt of our expertise

Monthly Communique’

Portfolio Management ServicesRegn No. PMS INP 000000670

MOAMC do not take the responsibility for the authenticity of the above data / news/information. It is merely replication of the data /news / information already available in public.

Insid

e... � Value Strategy

� Next Trillion Dollar Opportunity Strategy

� Invest India Strategy

� Focused Series IV - Flexi Cap Strategy

� Focused Series V - A Contra Strategy

� Bulls Eye Strategy

� Optima Strategy

December 2011

Indian markets dropped 9% in November - in line with the region, but significantly worse than the S&P, and in USD terms the fall was even severe, with the benchmark Nifty Index declining nearly 15.5%, erasing twice as much of what it gained in the previous month. The uncertainty in Europe notwithstanding, there were more domestic issues in India holding it back this month – a 7% depreciation in the INR, a poor end to the Q2 results season, disappointing festive season sales and no policy headway yet at the Centre. The benchmark Nifty also breached the previous lows for the year in Nov, but Dec has been historically a strong month for India (6% avg Dec return for last 10 yrs) and hence is key now for 2012. The INR depreciating 7% against the USD was the big talking point this month. This was not a fallout of any kneejerk equity outflow but more a function of India's deteriorating macro – twin deficits on the capital and current account front and rising proportion of short-term debt. The RBI also remained a mute spectator for the most part, intervening only at ~52 levels on the USDINR to curtail the volatility. Lower FX reserves than in 2008 implies limited ammunition this time to counter any threat to the INR.

Macro Corner

• Growth: India's 2QFY12 GDP was in line with expectations at 6.9%, but much slower than the 7.7% growth in Q1 and more worrying was the contraction in Fixed Capital

Formation. We have revised our FY12 GDP estimate from 7.6% to 7.2% and place our initial estimate for FY13 at 6.9%. Sep Industrial Production data too came in lower than expected at 1.9%, with Aug revised down to 3.6%. A contraction in mining and capital goods production continued to weigh on growth.

• Inflation: Headline Inflation did not budge in Oct, inching up to 9.73%, which was a bit higher than expectations. We expect inflation to retain its 9-handle until January or

February, primarily due to the base effect. The RBI maintains its position that price pressure will only start to ease in December. The latest weekly read did show some signs of base effect kicking in, in the food inflation print.

• Policy: There was no monetary policy meet in November – the next one is on Dec 16, where market participants are expecting a pause or even a CRR cut to boost liquidity.

Globally Central Banks – China included, are taking measures to inject liquidity and the RBI could follow suit. This month, the RBI announced that it would commence in the purchasing of government bonds through open market operations (OMO), in an effort aimed at easing pressures on liquidity and interest rates. The OMO also has the potential to alleviate some of the pressure on yields, after 3 failed bond auctions. On Nov 24, the RBI purchased INR 94bn in govt. bonds, slightly lower than their target of INR 100bn.

Political and Policy Corner

• Increase in FII Debt Limits: On Nov 18, SEBI increased the current limit of FII investment in government securities and corporate bonds by $5bn each, raising the total caps to

$15bn and $20bn respectively.

• FDI in Retail: The Union Cabinet has approved FDI in retail – up to 51% in multi brand retail and up to 100% in single brand retail. The issue has generated a political deadlock,

resulting in an all-party meeting called for by FM Mukherjee, which has left the Parliament adjourned with no resolution decided on. As a result, valuable time in the crucial Winter Session of the Parliament (Nov 22-Dec 21) has been lost again.

• FDI in Aviation: Kingfisher Airlines was pushed by its lenders for greater equity infusion, after it experienced operational disruptions in the form of canceled flights, and inability

to complete fuel and salary payments. SBI, ICICI and PNB are some of the bigger lenders to Kingfisher, however the private banks clarified that they have collateral in the form of United Spirits shares.

• Petrol Price Cuts: After instating a 2.7% increase in gasoline prices on Nov 4 that caused protests in India, state-owned refiners reduced petrol prices by 3.2% on Nov 16 and by

1.2% on Nov 30. Oil companies have now decided to revise petrol prices every 2 weeks – depending on the move in global crude prices.

Sector-wise Performance

• Banks faced renewed scrutiny on asset quality as SBI and PNB results showed a rise in incremental slippages and a broader stress on the overall economy, not just infrastructure.

The liquidity situation has also worsened and the sharp INR move has added to the pressure on the corporate balance sheets.

• After a strong October, Autos were one of the weaker sectors in Nov, as festive season sales disappointed. M&M's tractor volumes continued to be strong, but the UV sales

moderated. Tata Motors' passenger car business saw more slowdown.

• Telecom was helped this month by passive inflows resulting from Bharti and Idea's inclusion into MSCI indices. The DoT panel's opinion on TRAI recommendations with respect

to spectrum pricing, M&A and license suggest that the negatives for the sector have been accepted while the relative positives rejected. The Telecom Commission will take a final decision.

• IT also outperformed in light of the weak currency, and Pharma & Consumer remained true to their defensive nature.

• Metals and Realty were expectedly the worst performing sectors in November, given the strong risk aversion mood. An erstwhile defensive, Coal India also slipped as buzz grew

of Govt using its cash to do a buyback and thus partly meet its deficit targets. Cross-holdings in other Public sector companies also remained an option.

Capital Flows

Despite the rebound in equity markets, there was no upswing in investor appetite for capital market transactions and deal flows continue to be light. After the brief buying in Oct, FIIs rushed towards the exit gates again – sellers of $900mn this month. As a result, YTD FIIs have now returned into the red - net sellers of $530mn YTD. Domestics especially Insurance houses, continued to be on the other side of the FII trade – buying $1bn this month ($0.8bn of which was from Insurers), taking YTD net buying to a staggering $5.8bn.

Outlook

Market attention will remain equally divided over domestic and global events during December. Key monitorables on the global arena will be the progress on the strengthening of the European Financial Stability Fund and the US deficit reduction measures. At home, the market will likely remain tuned to the final outcome of the proposal on FDI in retail and the political ramifications thereof, other policy actions by the government in the parliament and subsequently on the upcoming central bank meeting on Dec 16 regarding future course of interest rates and liquidity enhancement measures by the RBI. Overall market conditions are expected to remain turbulent in the foreseeable future.

Value Strategy

The Strategy aims to deliver superior

wealth creation by way of long term

compounding effect, with investments

in good businesses run by great

business managers.

Strategy Objective

• Value based stock selection

• Investment Approach: Buy & Hold

• Investments with Long term

perspective

• Maximize post tax return due to Low

Churn

• Capital preservation consciousness

Investment Strategy

: Manish Sonthalia

: Taher Badshah

Strategy Type : Open ended

Date of Inception : 24th March 2003

Benchmark : S&P CNX Nifty Index

Investment Horizon: 3 Years +

Subscription : Daily

Redemption : Daily

Valuation Point : Daily

Details

Top Sectors

Banking & Finance

Auto & Auto Ancillaries

Oil and Gas

FMCG

Telecom

Infotech

Pharmaceuticals

Mining

Cash

21.33

21.03

11.18

11.12

9.51

8.53

6.34

6.31

0.65

Sector Allocation % Allocation*

Top Holdings

Nestle India Ltd.

Bosch Ltd.

Hero Motocorp Limited

HDFC Bank Ltd.

Bharti Airtel Ltd.

Infosys Technologies Ltd.

Cairn India Ltd.

Housing Development Finance Corporation Ltd. GlaxoSmithkline Pharmaceuticals Ltd.

Coal India Limited

Top Holdings % Allocation*

11.12

11.11

9.92

9.74

9.51

8.53

7.51

7.50

6.34

6.31

Key Portfolio Analysis

Standard Deviation (%)

Beta

33.04

1.00

Performance Data NiftyValue Strategy

29.72

0.82

*Above 5% & Cash

The Above strategy returns are of a Model Client. Returns of individual clients may differ depending on factors such as time of entry/exit/ additional inflows in the strategy. The Above returns are calculated on NAV basis and are based on the closing market prices as on 30th November 2011. Past performance may or may not be sustained in future. Returns above 1 year are annualized. Please refer to the disclosure document for further information.

Value Strategy Nifty

*Above 5%

Asset Management

MOStPortfolios



All Figures in %

Period

% o

f re

turn

s

-5.14 -4.64 -5.63-7.33

25.92

8.79

29.18

-9.86

-3.38

-11.71-17.58

20.55

4.09

19.68

-20.00

-10.00

0.00

10.00

20.00

30.00

40.00

1 Month 3 Months 6 Months 1 Year 3 Year 5 Year Since Inception

Fund Manager

Next Trillion Dollar Opportunity Strategy


returns by investing in focused themes

which are part of the next Trillion Dollar

GDP growth opportunity.

• Stocks with High Growth Story

• Stocks with Reasonable Valuation

• Concentration on Emerging Themes

• Buy & Hold Strategy

Fund Manager : Manish Sonthalia


Date of Inception : 11th Dec. 2007

Benchmark : CNX MIDCAP Index



Redemption : Daily


Strategy Objective

Investment Strategy

Details

Banking & Finance


Textiles

Telecom

Engineering & Electricals

FMCG

Cash

23.01

19.14

15.99

11.98

9.41

6.90

0.09

Sector Allocation

Page Industries Ltd.

Idea Cellular Limited

Bosch Ltd.

Central Bank Of India

GlaxoSmithkline Consumer Healthcare Ltd.

Eicher Motors Ltd.

Bajaj Finance Ltd.

Cummins India Ltd.

15.99

11.98

8.79

8.76

6.90

6.30

6.10

5.96



Beta

37.61

1.00

Performance Data CNX MIDCAPNTDOP

25.98

0.57

Top Sectors


Top Holdings



*Above 5% & Cash

*Above 5%


Asset Management

MOStPortfolios


Next Trillion Dollar Opportunity Strategy CNX MIDCAP

Period

All Figures in %

% o

f re

turn

s

-4.00-4.02

-2.98

-11.18

38.87

3.99

-8.27 -8.96

-16.42-25.44

26.08

-6.50

-30.00

-20.00

-10.00

0.00

10.00

20.00

30.00

40.00

50.00

1 Month 3 Months 6 Months 1 Year 3 Years Since Inception

Invest India Strategy

The Strategy aims to generate long term

capital appreciation by creating a focused

portfolio of high growth stocks having the

potential to grow more than the nominal

GDP for next 5-7 years across market

capitalization and which are available atreasonable market prices.

• Buy Growth Stocks across Market

capitalization which have the

potential to grow at 1.5 times the

nominal GDP for next 5-7 years.

• BUY & HOLD strategy, leading to

low to medium churn thereby

enhancing post-tax returns

Fund Manager : Taher Badshah


Date of Inception : 11th Feb. 2010

Benchmark : BSE 200



Redemption : Daily


Strategy Objective

Investment Strategy

Details


Banking & Finance

FMCG

Textiles

Pharmaceuticals

Mining

Cash

28.59

22.26

15.18

12.49

5.47

5.20

2.53

Sector Allocation

Page Industries Ltd.HDFC Bank Ltd.ITC Ltd.M R F LtdHero Motocorp LimitedState Bank Of IndiaExide Industries Ltd.Maruti Suzuki India Ltd.GlaxoSmithkline Pharmaceuticals Ltd.Coal India LimitedTitan Industries Limited

10.62 10.49 10.02

9.49 7.75 6.88 5.78 5.57 5.47 5.20 5.16



Beta

22.25

1.00

Performance Data BSE 200IIS

19.03

0.74

Top Sectors


Top Holdings



Invest India Strategy BSE 200 All Figures in %

*Above 5% & Cash

*Above 5%


Asset Management

MOStPortfolios


Period

% o

f re

turn

s

-6.20-7.82

-8.73

-19.29

0.06

-9.72

-5.24

-13.80

-20.33

-2.60

-25.00

-20.00

-15.00

-10.00

-5.00

0.00

5.00

1 Month 3 Months 6 Months 1 Year Since Inception

Asset Management

MOStPortfolios


Focused Series IV - Flexi Cap Strategy

The Strategy will aim to generate superior

returns over a medium to long term by

investing in only 8-10 companies across

market capitalization.

• Fundamental Stock Select ion

Approach

• Active Equity Allocation between

Mid caps & Large caps

• Active Asset Allocation calls between

Cash and Equity

• Strategy will follow a policy of profit

booking with predefined price

targets

• When the Client’s AUM appreciates

by 15%, the appreciation amount

will be automatically paid-out.

Portfolio Manager : Taher Badshah


Benchmark : BSE 200

Investment Horizon: 12 – 18 Months

Subscription : No

Redemption : Daily


Strategy Objective

Investment Strategy

Details

Banking & Finance


Telecom

Infotech

Containers & Packaging

Diversified

Cash

31.99

31.95

10.37

9.19

7.75

5.02

0.70

Sector Allocation

Bosch Ltd.

HDFC Bank Ltd.


Bharti Airtel Ltd.

Oracle Financial Services Software Ltd.

Time Technoplast Ltd

Power Finance Corporation Limited

Max India Limited

27.63

13.01

11.43

10.37

9.19

7.75

7.55

5.02



Beta

22.96

1.00

Performance Data BSE 200Focused Series - IV

19.83

0.70


Top Sectors


Top Holdings



Focused Series IV BSE 200

*Above 5% & Cash

*Above 5%

Period

% o

f re

turn

s

All Figures in %

-7.33-8.69

-14.94

-27.46

-9.00-9.72

-5.24

-13.80

-20.33

-4.63

-30.00

-25.00

-20.00

-15.00

-10.00

-5.00

0.00

1 Month 3 Month 6 Month 1 Years Since Inception

Focused Series V - A Contra Strategy

The strategy aims to invest in

fundamentally sound companies that can

benefit from changes in a company’s

valuation which reflects a significant

change in the markets view of the

company over a horizon of three years.

The Strategy focuses on investing in

stocks that can benefit from growth in

earnings, re-rating of business or higher

valuation of assets. Objective is to

increase return rather than reduce risk

for Investors.

• Bottom-up stock selection approach

• Buy and hold philosophy – low

portfolio churn

• For Investors who seek for high

returns with high risk

Fund Manager : Manish Sonthalia

Date of Inception : 27th Sept. 2010

Benchmark : BSE 200

Investment Horizon: 2 to 3 Years


Redemption : Daily


Strategy Objective

Investment Strategy

Details

Banking & Finance

Oil and Gas

Chemicals

Textiles

Power - Infrastructure

Engineering


Cash

32.51

25.36

13.02

7.87

7.84

5.74

5.20

0.85

Sector Allocation

Petronet LNG Limited

J&k Bank

Godrej Indus

Ing Vysya Bank Limited


Reliance Industries Ltd.

Vardhman Textiles Limited

Jaiprakash Associates Ltd.

Triveni Turbine Limited

Tata Motors Ltd.

16.97

13.60

12.87

9.28

9.25

8.10

7.77

7.75

5.67

5.14



Beta

24.01

1.00

Performance Data BSE 200Focused Series - V

32.37

1.13

Top Sectors


Top Holdings



Focused Series V BSE 200

*Above 5% & Cash

*Above 5%


Asset Management

MOStPortfolios


All Figures in %

Period

% o

f re

turn

s

-14.21

-5.68

-14.38

-26.86 -27.52

-9.72

-5.24

-13.80

-20.33 -20.09

-30.00

-25.00

-20.00

-15.00

-10.00

-5.00

0.00


Asset Management

MOStPortfolios


Bulls Eye Strategy

The Strategy aims to deliver returns in

the short to medium term by investing

in fundamentally sound stocks coupled

with active profit booking.

Portfolio Manager : Taher Badshah



Benchmark : BSE 200

Investment Horizon: 12 Months +


Redemption : Daily


Strategy Objective

• Active management

• Multi Cap Stategy

• Market Timing

• Regular Profit Booking

Investment Strategy

Details

Banking & Finance


Telecom

Infotech

Pharmaceuticals

Oil and Gas

FMCG

Cash

25.64

23.44

15.58

9.34

6.92

6.79

6.38

5.91

Sector Allocation % Allocation

Eicher Motors Ltd.

Bharti Airtel Ltd.

Bajaj Auto Ltd.


HDFC Bank Ltd.

Wockhardt Lt


ITC Ltd.

Idea Cellular Limited

9.75

9.42

9.34

9.34

8.42

6.92

6.79

6.38

6.16



Beta

34.00

1.00

Performance Data BSE 200Bulls Eye

30.29

0.75


Top Sectors

Sector Allocation

Top Holdings



Bulls Eye Strategy BSE 200

*Above 5%

*Above 5%

Period

% o

f re

turn

s

All Figures in %

-8.55

-2.12-5.42

-21.05

25.17

7.2811.41

-9.72-5.24

-13.80

-20.33

22.46

3.49

13.98

30.00

20.00

10.00

0.00

10.00

20.00

30.00

1 Month 3 Months 6 Months 1 Year 3 Years 5 Years Since Inception

Asset Management

MOStPortfolios


Optima Strategy


returns over a long period by investing in

companies with growth potential & which

are available at reasonable market price.

• Growth At Reasonable Price (GARP)

• Investment Horizon of 2 years +

• Active Portfolio Rebalancing

• Market Timing

• Situation based Flexi Cap approach

Portfolio Manager :


Date of Inception : 30th Dec 2008

Benchmark : BSE 200



Redemption : Daily


Taher Badshah

Strategy Objective

Investment Strategy

Details

Banking & Finance


Telecom

Cash

Infotech

Oil and Gas

31.34

19.24

14.30

12.97

8.41

5.39

Sector Allocation

Bharti Airtel Ltd.


HDFC Bank Ltd.

Bajaj Finserv Ltd.

Axis Bank Ltd.

Punjab National Bank


Bosch Ltd.

Eicher Motors Ltd.

10.81

8.41

7.98

7.64

6.02

5.44

5.39

5.30

5.20



Beta

30.52

1.00

Performance Data BSE 200Optima

21.10

0.57


Top Sectors


Top Holdings


*Above 5%

*Above 5%


Optima Strategy BSE 200

Period

% o

f re

turn

s

All Figures in %

-8.82-5.77

-9.23

-15.74

24.48

-9.72

-5.24

-13.80

-20.33

20.30

-25.00

-20.00

-15.00

-10.00

-5.00

0.00

5.00

10.00

15.00

20.00

25.00

30.00



Disclaimer : Investments in Securities are subject to market and other risks and there is no assurance or guarantee that the objectives of any of the strategies of the Portfolio Management Services (PMS) will be achieved. Investors in the PMS Product are not being offered any guaranteed/assured returns. Past performance of the portfolio manager does not indicate the future performance for any of the strategies. The names of the portfolios do not in any manner indicate their prospects or return. The investments may not be suited to all categories of investors. Neither Motilal Oswal Asset Management Company Ltd. (MOAMC), nor any person connected with it, accepts any liability arising from the use of this material. The recipient of this material should rely on their investigations and take their own professional advice. Neither MOAMC, nor any person connected with it, accepts any liability arising from the use of this material. The recipient of this material should rely on their investigations and take their own professional advice. Opinions, if any, expressed are our opinions as of the date of appearing on this material only. While we endeavor to update on a reasonable basis the information discussed in this material, there may be regulatory, compliance, or other reasons that prevent us from doing so. The portfolio manager is not responsible for any loss or shortfall resulting from the operation of the strategy. Recipient shall understand that the aforementioned statements/presentation cannot disclose all the risks and characteristics. The recipient is requested to take into consideration all the risk factors including their financial condition, suitability to risk return profile, and the like and take professional advice before investing. As with any investment in securities, the Value of the portfolio under management may go up or down depending on the various factors and forces affecting the capital market. Disclosure Document shall be obtained and read carefully before executing the PMS agreement and any time thereafter. Prospective investors and others are cautioned that any forward - looking statements are not predictions and may be subject to change without notice. For tax consequences, each investor is advised to consult his / her own professional tax advisor. This document is not for public distribution and has been furnished solely for information and must not be reproduced or redistributed to any other person. Persons into whose possession this document may come are required to observe these restrictions. No part of this material may be duplicated in any form and/or redistributed without MOAMC’s prior written consent. Distribution Restrictions - This material should not be circulated in countries where restrictions exist on soliciting business from potential clients residing in such countries. Recipients of this material should inform themselves about and observe any such restrictions. Recipients shall be solely liable for any liability incurred by them in this regard and will indemnify MOAMC for any liability it may incur in this respect. The PMS business has been transferred from MOSL to MOAMC and the certificate of registration has been endorsed by SEBI to MOAMC w.e.f. October 21, 2010’

Registered Office: Motilal Oswal Asset Management Company Ltd. 81/82 Bajaj Bhawan, Nariman Point, Mumbai - 400 021.

SEBI Certificate of Registration as Portfolio Manager INP 000000670

Documents

Portfolios Monthly Make the MOSt of our expertise Communique’ … · Eicher Motors Ltd. Bajaj Finance Ltd. Cummins India Ltd. 15.99 11.98 8.79 8.76 6.90 6.30 6.10 5.96 Key Portfolio