September 2012

September 2012 has been the most eventful month in the last 3 years. We saw some strong action by the Government by way of a diesel price hike to contain fiscal deficit followed by a CRR cut of 25 BPS by RBI. The cabinet committee pushed ahead FDI in multi brand retail, single brand retail, aviation and power exchange. The Shome committee was instituted to give a report on GAAR while a reduction in withholding tax to 5% for FII’s who invest in debt market was also announced. De-allocation and reallocation of coal blocks were done to ensure productive use of national resources while restructuring of SEB debt was also announced. All these measures have gone a long way in shoring up confidence amongst FII’s as a result of which we witnessed large flows by them to the tune of 4 billion.

The Sensex moved up by 8% on the back of short covering and fresh buying by various intermediaries. Most of the beaten down sectors moved up and significantly outperformed the benchmark. We have been able to deliver 4-6% return in our PMS portfolios in the month of September. On doing an analysis we discovered that majority of the companies we own will benefit from these policy changes and keeping that in mind we have not changed the positioning in any of the portfolios.. We continue to focus on high quality businesses to sustain growth and deliver above average return to investors. It is our belief that for equity investors exciting times lie ahead.