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Indian Asset markets – mid year 2015 review and Outlook FY16

Right Horizons PMS

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Agenda / Table of contents

A mid year 2015 review of the Indian asset markets1

There is a pause in the current bull market…2

The opinion is divided on the market direction3

Get ready to be overwhelmed!

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The opinion is divided on the market direction3

The market valuation and targets for FY164

Pay heed – the investment cycle is sacrosanct!5

Right Horizons PMS – Keeping the head down!6

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2015 has been a washout so far...� Equities has barely scratched the return

graph

- Runaway rally in 2014 calendar and absence of on-

ground action in the corporate sectors have taken a toll

- Global events have always had impact and past 6

months had negative global news – FED rate hike,

Grexit, China slowdown, Euro worries et el

- TTM valuations have remained at mid-high range and

this has put a lid to higher index levels

A mid year 2015 review of the Indian asset markets1

-1.00%

1.00%

3.00%

5.00%

Asset return in 2015#

in India

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this has put a lid to higher index levels

� Bonds / Debt securities have returned lack

luster returns despite moderate rate-cut on

the belief that rate cuts have been slower

than warranted.

� Gold continues to perform badly and comes

as no surprise. This is due to lack of

contagion type of worries in the near future

� Real estate projects continued to remain

stalled, deliveries slowed considerably and

prices are showing signs of softnessPage � 3

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-3.00%

Equities -Nifty

Equities - CNX Mid

Cap

Bond - Short Term

Bond -Long Term (GILT)

Gold - ETF

Real Estate -

Tier I# YTD ending June 25th 2015`

There is a pause in the current bull market…2

Phases of stagnancy in a bull market should be used to increase exposure

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2015 so far is an excellent period of stagnancy and so should be used to increase exposure to Indian equities

2015 so far is an excellent period of stagnancy and so should be used to increase exposure to Indian equities

The macro situation opinion appears divided, or is it?3

White Black

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The Big Question – Grexit. So what ?3

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Facts on Greece:GDP: USD 297Bn rel. est, (51st Position)Population: 1 Crore; Debt to GDP – 160%.

Greece is too insignificant on the world or EU stage to cause a major economic damage, except raise a global contagion fear like 2008. However, on a standalone basis larger EU members can take a write-down and move on. It can, at best become a local European headache in the next 3 years.

The Sensex valuation and market outlook for FY164

� S&P BSE SENSEX Basic EPS for FY14 & FY15 were largely stagnant.

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� S&P BSE SENSEX Basic EPS for FY14 & FY15 were largely stagnant.

� We believe good monsoon and expected industrial recovery in certain sectors

could improve overall earnings in FY16, an estimated growth of 16%-18%

� BSE IT index could underperform against the market due to EUR decline

against INR; however, the impact would not be significant. Auto, Engg & Cap

Goods and Banking would get the direct benefit of economic recovery

� At the moderate P/E band of 15-22x, we believe that the upside for SENSEX

could be 34100, while the downside is protected at 23300.

Valuation range offers comfort.4

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PAY Heed - the investment cycle is sacrosanct!5

Higher Interest rates

Higher Savings

Low Money Supply

Higher Corporate profits

Rising Inflation

Loss of purchasing power

Asset Market

BUY Real Estate

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Lower investments

Fall in consumption

Lower Investments

Fall in Inflation

Fall in Interest rates

Investments pick up

Higher Money Supply

Increase in Consumption

Market Cycle

BUY Fixed Income

BUY Equities

Right Horizons PMS portfolios – wealth creation vehicles6

Portfolio Strategy

Nifty Plus FlexicapCapital Protection

Super Value

Fixed Income

ObjectiveLong term Wealth

creation

Long term weath

creation

Lower Capital

Volatility

Provide for high

capital

appreciation

Provide for

Inflation beating

returns

Predominantly invests in

Equities

• Nifty Index stocks

• BSE 200 stocks

Equities

•BSE 500 stocks

Fixed Income securities

• Listed securities

(80%)

• Equity Indices

Equities

• Mid-cap

Equities

Fixed Income Securities

• 100%

listed/Unlisted

Fixed income

securities

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• Equity Indices securities

Recommended Holding Horizon

> 18 months > 30 months 24 months >36 months 12 months

Portfolio StrategyBUY & Hold; Weight

Management

BUY & Hold;

Thesis Driven

BUY & Hold;

Trading Driven

Active

Strategy;

Bottom Up

BUY & Hold;

Risk Level Medium Medium Low High Low to Medium

Minimum Strategy Size1 INR 1million INR 1million INR 1million INR 1million INR 1million

1 Each PMS account shall be a minimum of INR25,00,000 set up value

Right Horizons PMS portfolios – performance6

1 Year 2 YearsSince

Inception

RH NiftyPlus Portfolio 13.1% 29.5% 23.1%

CNX Nifty Index 11.9% 22.5% 18.2%

RH Flexicap Portfolio 18.2% 28.9% 18.3%

CNX 500 Index 13.4% 25.9% 17.0%

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All time frames based on June 27 2015 data; Inception dates vary with respect to the

different benchmarks adopted by the portfolios

CNX 500 Index 13.4% 25.9% 17.0%

RH Super Value (Mid & Small Cap) Portfolio

24.6% 42.0% 26.1%

CNX Midcap Index 20.8% 35.8% 22.2%

RH Capital Protection Portfolio

10.0% 13.0% 13.0%

G-SEC Index 6.6% 5.0% 6.0%

DisclaimerThe information contained herein has been obtained from reports secured from third parties, publicly available sources and

Right Horizons, its affiliates, subsidiaries and/or Group companies take no responsibilities – express or implied for

inaccuracies contained herein.

This document is meant for the use of the intended recipient only. Though dissemination to all intended recipients is

simultaneous, not all intended recipients may receive this document at the same time. This document is neither an offer nor

solicitation for an offer to buy and/or sell any securities mentioned herein and/or official confirmation of any transaction.

This document is provided for assistance only and is not intended to be, and must not be taken as, the sole basis for an

investment decision. The user assumes the entire risk of any use made of this information. Each recipient of this document

should make such investigation as he deems necessary to arrive at an independent evaluation, including the merits and risks

involved, for investment in the securities referred to in this document and should consult his own advisors to determine the

merits and risks of such investment.

The investment discussed or views expressed may not be suitable for all investors. This document has been prepared on the

basis of information obtained from publicly available, accessible resources. Right Horizons has not independently verified all

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basis of information obtained from publicly available, accessible resources. Right Horizons has not independently verified all

the information given in this document. Accordingly, no representation or warranty, express or implied, is made as to

accuracy, completeness or fairness of the information and opinion contained in this document.

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Reach us:contactus@righthorizons.com+91 80 4120 9582+91 22 4100 2018

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