Fund Manager Speaks- December 2013

Market Overview_December, 2013

Uncertainty at Global Level

The world looks full of uncertainty for one or the other reason and such situation is not expected to resolve in near term. Chinese economy is showing all signs of slow down and contraction. Europe is struggling to reach stability level and US recovery cannot be confirmed due to bouts of good and bad data. Japan’s consumer data displays recovery. Other Emerging countries including India are struggling to fight out slowdown and save their currency from further erosion with US tapering adding to their woes. Overall global scenario can be very well predicted to remain uncertain and under stress and we have to learn to live with it.

Rough Weather in India

Here we have to fight on diverse fronts and the solutions are not seen in sight. Things are deteriorating. Remedial measures of whatever nature are not yielding expected results. Fortunately, we have got as in the past, best RBI Governor, who is serious and worried about the problems as far as inflation and the exchange value of rupee are concerned. He is compelled to go against industry by raising some key policy rates number of times in very short span to contain/reduce inflationary pressure and further rupee devaluation. 

Our growth rate has touched 10 years low to 5%. The latest IIP data are more worrisome which shows contraction by 0.6%. The eight core sectors have failed to show much needed progress. The whole industry including big industrial houses with some exceptions, are under very serious financial mess which would not only raise questions about their survival but it has shattered existence of their lenders e.g. Banks and financial institutions. The NPAs are galloping at rocket speed particularly in case of PSBs. They are alive because the depositors believe that government will come to bail out them for which they don’t rush for withdrawals.

Silver Line

The biggest positive is our demographic advantage which provides huge consumer base for companies engaged in satisfying day to day needs. India is one of the largest markets for multinationals which they cannot ignore. Despite all negatives, we believe that there is enough scope and opportunity for growth in selected sectors.

Quarterly Market Performance

The overall analysis of the December quarter results says that the profits have unable to keep pace with the rising sales, witnessing slow down effects. The overall performance of Automobile, Capital Goods, Cement, Power, Oil and Gas, Steel sectors remained subdued. Sectors such as FMCG, IT, Pharma, Textile, Agro based industries, Chemicals etc. managed to outperform or lived up to expectations.

Performance at Care PMS

With all the negatives discussed above, we would want to state that the performance of our investee companies have been very much satisfactory barring couple of companies.  However, the silver lining is that few companies (in IT and food processing sector) gave exceptional performance and has generated great returns for the investors. 


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