A quality report by JainMatrix Investments
Investment Outlook – The Budget Opportunity and MidCap Portfolio – Outperforms by 61%
Update: 19th Feb 2015
Outperformed by 61%
We are in a run up to the great Indian Budget 2015, and this report tries to map some of the business and economic outlook. We also present readers with the review and results of our Mid & Small Cap Model Portfolio, where we outperformed the benchmarks by an annualized 61%. We present the Feb 2015 update on this portfolio, several changes and a refresh of key data.
Investment Strategy Note JainMatrix Investments presents a short Investment strategy note.
It’s been a very good year for the stock markets. Like in a marriage, the honeymoon period is now over. It’s time for the delivery on promises. The first budget owned and created by the new central govt. kicks in on 28th Feb. It will be an important event. The Budget is the Opportunity.
We at JainMatrix remain confident that this will be another above average year for investors. The interest rates are starting to trend downwards. Inflation is falling. The commodity prices like oil, fuels, metals, agri-commodities, etc. are trending down. The related industries may suffer a correction, but the wider economy will benefit. It will help consumers, local business and investors with costs reducing and budget surpluses. Also, foreign exchange reserves are up; gold controls are being eased and individual outbound investment limits have been raised.
As per the govt., local defense production will become the heart of the Make in India program. They have increased the foreign investment limit in the domestic defense industry from 26% to 49%. This makes sense as this is the one sector that the govt. has maximum control over, the Defense-
JainMatrix Investments – Mid and Small Cap Model Portfolio 2015
Feb 2015
Industrial complex. India has been foolishly importing the majority of its defense equipment, actually preferring, for some perverted reason, foreign suppliers rather than Indian. This is now being reversed. The opportunity is massive, estimated to be $250 billion over the next 10 years, or an average Rs 1,50,000 crores per year. The expectation is that Indian private sector players with manufacturing capabilities will individually, or in partnership with renowned global defense players, win defense contracts. We will expand on this theme in future notes.
The INR/USD rate is now 62.16, and is now expected to be in the range of 59-63.
Portfolio Objective, Theme and Performance Objective
JainMatrix Investments launched its Mid and Small Cap Model Portfolio (MSCMP) in Feb 2013.
The objective of the MSCMP is to outperform the Mid and Small Cap indices by large margins.
It consists of 7 mid & small cap BUY rated firms that are out-performers from identified 3-5 sectors.
Firms are introduced into the MSCMP with a minimum holding period of 1 year. Investment Theme and Results
The investment theme is now – IT and Auto ancillary exports, and cyclicals like banks, financial services and infra. The investor should continue his wealth building process with Mid-Caps.
We have made some changes to this portfolio, and there are now 7 BUY shares and 1 HOLD.
Our Mid and Small Cap Portfolio continues to perform well. On average the 7 Buy recommendation shares were up by absolute 155% and annualized 92%. But including the two Holds so far, the portfolio gained by absolute 124% and annualized 73%.
The CNX Midcap, S&P BSE Midcap and S&P BSE Smallcap were up by 29.5%, 28.2% & 31% annualized in the period. The JM active Mid/Small Cap portfolio outperformed by 61%.
Investors need to continue to invest in these shares as part of their wealth building process.
Disclaimer This document has been prepared by JainMatrix Investments Bangalore (JM), and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of JM. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, JM has not independently verified the accuracy or completeness of the same. Neither JM nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient’s particular circumstances and, in any case, advice should be sought from an independent Financial Expert/Advisor before investing. Either JM or its affiliates or its directors or its employees or its representatives or its clients or their relatives may have position(s), make market, act as principal or engage in transactions of securities of companies referred to in this report and they may have used the research material prior to publication. Any questions should be directed to the director of JainMatrix Investments at punit.jain@jainmatrix.com
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