The sell-off in Indian markets has seen midcaps under-perform large caps in 2016. ... The fund also includes bottom-up s
EQUITY OUTLOOK MARCH 2016
5.5%
Nifty 50 - Last 5 years
-21.5
%
Nifty 50 - Last 1 year
-7.6
%
Nifty 50 - MTD
Quick take •
Equity market valuation remains reasonable and has gotten better following the sell-off.
•
We remain bullish on equities from a medium to long term perspective.
•
Investors are suggested to have their asset allocation plan based on one’s risk appetite and future goals in life.
Key highlights GLOBAL
DOMESTIC
CORPORATE
After a big sell-off in January, global markets remained under pressure, although there were some signs of stability in February. Commodities (including base metals and crude) recovered from their cyclical lows hit earlier this year. Dollar gave up some of its gains against major currencies. Gold continued its really strong performance in 2016. Indian markets were hit hard and fell sharply. Frontline Indian indices (such as Sensex and Nifty) were down more than 7% for the month of February 2016. The sell-off in Indian markets has seen midcaps under-perform large caps in 2016. It is notable that during 2015 midcaps had continued rallying even when large caps had been under pressure. The global economy and markets are facing a number of challenges simultaneously. These include slowing growth in China, sharp sell-off in commodities, pressure on European banks, weakness in EM currencies and assets. After remaining sheltered over the last year’s sell-off, India equities underperformed other major markets in February. The markets got hit by a number of concerns including a weak earning season, and talk of changes in capital gains tax structure in the Union budget. Economic growth remains uneven. GDP for 3Q FY16 came in at 7.3% even as full year GDP is forecasted at 7.6%. However the disaggregated numbers for industrial production, core sector as well as corporate earnings paint a picture of an economy where growth is significantly weaker than indicated by the headline GDP data. Union budget for the coming fiscal year was presented on 29th Feb. The key highlight of the budget was that the government chose to remain on the path of fiscal consolidation that it had projected in the previous year. This is a strong vote in favour of achieving macro stability for the economy that will make us more resilient to future shocks – crucial given the state of the global economy. The budget was essentially a balancing act, during what is a challenging period for the economy. On the one hand, the government needed to push capex in the infrastructure sectors, but had to fund it without affecting the fiscal consolidation roadmap. They have walked the tightrope reasonably. The government has continued to push for infrastructure investment, but has also added focus on rural and farm infrastructure through areas such as roads and irrigation. The government also continued to push forward its agenda of setting up a social security framework for the general population through measures such as health insurance, crop insurance and pension incentives. Some of the crucial reforms going forward (including GST and bankruptcy law) need to happen outside the budget and will need attention going forward.
AXIS EQUITY FUND • • • • •
Top 10 Stocks (By Holding)
The fund is managed using a risk adjusted approach. The fund manager targets out-performance to the benchmark while delivering risk that is lower than the benchmark. Stocks are selected in the portfolio based on their ability to grow earnings on a sustainable basis from a medium term perspective while maintaining a highly liquid and risk managed portfolio. While the approach of the fund manager is towards have a stable portfolio over the medium term, the fund manager makes adjustments as needed as it looks at the evolving cycle and prospects for corporate earnings. The recent sell-off has again highlighted the importance of quality of portfolio and risk management. Within the overall sector and market cap limits, the fund remains balanced in its allocation between mid-cap and large-cap stocks and should benefit from the expected improvement in the economy over the next 2-3 years.
Top 5 Sectors 28.1% 11.9%
Information Technology
HDFC Bank Limited
8.1
Infosys Limited
7.6
Reliance Industries Limited
5.7
Zee Entertainment Enterprises Ltd.
5.5
HDFC Limited
4.6
Sun Pharmaceuticals Industries Ltd.
4.6
Kotak Mahindra Bank Limited
4.2
Tata Motors Limited
4.1
Bharti Airtel Limited
4.0
ICICI Bank Limited
3.2
9.8% 9.0%
Finance
%
Oil & Gas
Autos & Logistics
8.1%
Healthcare
Current Portfolio Allocation is based on the prevailing market conditions and is subject to changes depending on the fund manager’s view of the equity markets.
AXIS LONG TERM EQUITY FUND (An open-ended Equity Linked Savings Scheme with a 3-year lock-in)
•
The fund is focused on quality companies having strong long term earnings growth prospects. Within that objective, the fund is comfortable looking past shorter term volatility in performance.
•
With a medium to long term view towards capturing growth, the fund is biased towards the stocks which can deliver superior returns. This includes private sector banks, autos, auto ancillary, housing & consumption sector etc.
•
The fund also includes bottom-up stock selection ideas in Pharma, IT and defence sectors. Normally, the fund has avoided highly cyclical stories and highly regulated sectors.
•
The fund looks at opportunities across the market cap and the portfolio remains balanced between its large and mid-cap allocations.
Top 5 Sectors 30.9% 13.1%
Autos & Logistics
%
HDFC Bank Limited
8.1
Kotak Mahindra Bank Limited
7.3
Sun Pharmaceuticals Industries Limited
6.4
Tata Consultancy Services Limited
6.0
HDFC Ltd.
5.8
Maruti Suzuki India Limited
4.5
Pidilite Industries Limited
4.0
TTK Prestige Limited
3.5
Motherson Sumi Systems Limited
3.3
PI Industries Limited
3.0
12.0% 11.7%
Finance
Top 10 Stocks (By Holding)
Healthcare
Consumer
10.1%
Information Technology
Current Portfolio Allocation is based on the prevailing market conditions and is subject to changes depending on the fund manager’s view of the equity markets.
AXIS MIDCAP FUND
Top 10 Stocks (By Holding) Procter & Gamble Hygiene and Health Care Limited
5.2
Sanofi India Ltd
5.1
Gruh Finance Limited
4.8
The fund remains true-to-label in its portfolio allocations with a diversified and risk-managed mid-cap portfolio which has a superior liquidity profile.
Tata Chemicals Limited
3.8
This approach has helped the fund navigate the cycle by delivering consistent returns while keeping a tight control on risk.
Torrent Power Limited
3.4
Page Industries Limited
3.4
Gulf Oil Lubricants India Ltd
3.4
CRISIL Limited
3.3
Dish TV India Limited
3.3
V.S.T Tillers Tractors Limited
3.2
•
The fund manager has used the recent sell-off to consolidate the portfolio into higher conviction stocks while retaining the overall bias in favour of high quality bottom-up stocks that provide potential to grow cashflows over the medium term.
•
The portfolio seeks to add businesses with economic moats and distinct competitive advantage.
• •
%
Top 5 Sectors 25.6% 15.5%
13.4% 11.3%
Finance
Consumer
Capital Goods, Eng.
Healthcare
8.0%
Autos & Logistics
Current Portfolio Allocation is based on the prevailing market conditions and is subject to changes depending on the fund manager’s view of the equity markets.
AXIS FOCUSED 25 FUND
Top 10 Stocks (By Holding)
•
The fund manager runs a high conviction portfolio, containing the fund manager’s best ideas and invests in upto 25 stocks.
•
Despite having a compact portfolio, diversification and focus on quality has kept the fund’s risk contained relative to the benchmark.
•
•
The stock selection approach focuses on businesses where earnings can compound at a much higher rate than peers due to the superior quality of their business model. The fund has maintained a broadly stable portfolio over the last few months.
Top 5 Sectors 28.3%
12.8%
Capital Goods, Eng.
HDFC Bank Limited
7.8
Sun Pharmaceuticals Industries Ltd.
7.8
Infosys Limited
6.4
Kotak Mahindra Bank Limited
6.1
Tata Consultancy Services Limited
5.8
Grasim Industries Limited
5.5
Tata Motors Limited
4.8
Gruh Finance Limited
4.5
Bajaj Finance Limited
4.4
Motherson Sumi Systems Limited
4.1
12.6% 12.2%
Finance
%
8.4%
Autos & Logistics Information Technology Consumer
Current Portfolio Allocation is based on the prevailing market conditions and is subject to changes depending on the fund manager’s view of the equity markets.
Riskometer
Axis Equity Fund
M ely Moderate ode rat Hig rate de ow o h ly M L
(an open-ended growth scheme) This product is suitable for investors who are seeking*:
Riskometer
Axis Midcap Fund
Low
Riskometer
y Moderate Mod tel e era w Hig rate d h ly Mo Lo
This product is suitable for investors who are seeking*:
• Capital appreciation over long term
HIGH
Investors understand that their principal will be at moderately high risk
• Investment in in a concentrated portfolio of equity & equity related instruments of up to 25 companies *Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
HIGH
Investors understand that their principal will be at moderately high risk
LOW
High
LOW
LOW
(an open-ended equity scheme)
High
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
Axis Focused 25 Fund
y Moderate Mod tel e era w Hig rate d h ly Mo Lo
(an open-ended equity scheme) This product is suitable for investors who are seeking*:
• Capital appreciation over long term • Investing predominantly in equity & equity related instruments of mid size companies with focus on relatively larger companies within this category
HIGH
Investors understand that their principal will be at moderately high risk
Low
Low
LOW
Low
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
• Capital appreciation & generating income over long term • Investment in a diversified portfolio predominantly consisting of equity and equity related instruments
High
• Investment in a diversified portfolio predominantly consisting of equity and equity related instruments
M ely Moderate ode rat Hig rate de ow o h ly M L
(an open-ended equity linked savings scheme with a 3 year lock-in) This product is suitable for investors who are seeking*:
High
• Capital appreciation over long term
Riskometer
Axis Long Term Equity Fund
HIGH
Investors understand that their principal will be at moderately high risk
Data as on 29th February 2016. Source of data: Bloomberg, ACEMF Disclaimer: Past performance may or may not be sustained in the future. Sector(s) / Stock(s) / Issuer(s) mentioned above are for the purpose of disclosure of the portfolio of the Scheme(s) and should not be construed as recommendation. The fund manager(s) may or may not choose to hold the stock mentioned, from time to time. Investors are requested to consult their financial, tax and other advisors before taking any investment decision(s). This document should not be construed as research report. Statutory Details: Axis Mutual Fund has been established as a Trust under the Indian Trusts Act, 1882, sponsored by Axis Bank Ltd. (liability restricted to ` 1 Lakh). Trustee: Axis Mutual Fund Trustee Ltd. Investment Manager: Axis Asset Management Co. Ltd. (the AMC) Risk Factors: Axis Bank Limited is not liable or responsible for any loss or shortfall resulting from the operation of the scheme. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
