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Investing in a bull run

What are the fundamentals underlying the bull run in the equity markets and how do investors position their portfolio to reap returns and minimize downside risks? Find answers to what do investors expect from the future of the equity markets?<br>www.Quantumamc.com

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Investing in a bull run

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  1. Investing in a Bull Run Where To From Here? Speaker: Mr. Nilesh Shetty, Fund Manager – Equities August 20th2021

  2. 2 Vertical Takeoff after the Covid Scare 520 S&P BSE Smallcap Index 500 480 460 S&P BSE Midcap Index 440 420 S&P BSE Sensex Index 400 380 360 340 320 300 280 260 240 220 200 180 160 140 120 100 Rebased in INR 80 Aug-13 Aug-14 Aug-15 Aug-16 Aug-17 Aug-18 Aug-19 Aug-20 Apr-14 Apr-15 Apr-16 Apr-17 Apr-18 Apr-19 Apr-20 Apr-21 Dec-13 Dec-14 Dec-18 Dec-19 Dec-20 Dec-15 Dec-16 Dec-17 Source: Bloomberg Finance L.P., As of July 31, 2021, Past Performance may or may not be sustained in future. *Aug 28, 2013 is the day when the Rupee hit an all-time low and Sensex hit 2013 intra-day low

  3. 3 2020- Flight to Safety; 2021- Play on Recovery YTD 2021 CY 2020 CY 2019 CY 2018 CY 2017 CY 2016 CY 2015 CY 2014 CY 2013 CY 2012 CY 2011 CY 2010 CY 2009 Securities Name BSE-30 INDEX BSE200 INDEX BSE500 INDEX BSETCD INDEX SPBSHLIP INDEX S&P BSE INDIA HEALTHCARE IDX SPBSITIP INDEX S&P BSE India IT IDX BSETECK INDEX S&P BSE India TECK Index SPBSCGIP INDEX S&P BSE India FMCG Index BSEAUTO INDEX S&P BSE India Auto IDX BSEOIL INDEX S&P BSE India Oil&Gas Index BSEPOWR INDEX S&P BSE INDIA POWER INDEX BSETCG INDEX S&P BSE India CapGoods IDX BANKEX INDEX S&P BSE INDIA BANKEX IDX BSEREAL INDEX S&P BSE India Realty Index BSETPSU INDEX S&P BSE INDIA PSU IDX BSEMETL INDEX S&P BSE INDIA METAL INDEX S&P BSE SENSEX 30 INDEX S&P BSE 200 IDX S&P BSE 500 IDX S&P BSE INDIA Cons.Dur IDX 11.0% 17.4% 19.8% 20.0% 21.1% 28.5% 22.5% 8.9% 9.0% 13.3% 28.9% 27.3% 9.5% 28.5% 37.4% -12.8% 83.9% 17.2% 17.9% 18.4% 22.2% 62.6% 60.3% 46.5% 13.2% 14.3% -0.6% 11.4% 12.5% -2.1% 9.2% 15.7% 10.4% 9.0% 21.5% -2.8% 11.8% 11.1% -2.2% -9.9% 10.6% -0.6% -8.8% 21.1% 27.6% -1.1% -10.2% 7.2% 0.8% -1.8% -8.3% -5.4% 27.3% 12.4% 12.1% -21.3% -12.6% -14.3% -0.5% 5.7% -30.7% -18.7% -16.3% 29.6% 35.0% 37.6% 102.9% 1.1% 13.3% 18.8% 33.3% 33.3% 37.8% 22.0% 41.4% 40.0% 107.2% 22.7% 52.8% 3.5% 5.4% 5.2% -5.8% -12.5% -6.1% -7.6% 4.8% 10.4% 30.4% 3.0% -2.3% 8.4% -5.3% 16.9% 43.2% -3.7% -0.2% 0.4% 24.8% 15.9% 6.4% 5.4% 3.6% 0.1% -1.2% -5.3% -7.8% -9.0% -12.8% -14.9% -28.8% 32.0% 37.6% 39.1% 67.3% 48.8% 19.5% 18.2% 20.1% 53.8% 14.1% 25.5% 51.9% 67.1% 9.4% 44.8% 11.1% 10.7% 6.2% 5.0% -23.9% 24.9% 62.3% 49.3% 12.5% 8.9% 5.9% -12.4% -4.0% -8.0% -31.2% -16.5% -7.5% 28.0% 33.2% 33.4% 47.1% 39.8% 0.7% 3.0% 49.5% 42.8% 15.8% 12.8% 36.6% 59.1% 54.4% 18.6% 21.5% -23.6% -26.0% -26.4% -16.2% -12.1% -14.6% -15.5% 11.7% -18.6% -28.3% -39.1% -47.1% -30.7% -51.6% -31.6% -46.5% 19.1% 17.8% 17.9% 69.6% 35.4% 34.1% 25.4% 35.5% 40.3% 2.7% -5.4% 10.0% 35.0% -25.7% 1.2% 2.1% 83.3% 90.9% 92.7% 100.6% 71.2% 135.9% 69.9% 43.3% 208.3% 75.0% 76.1% 106.1% 86.8% 70.0% 82.5% 238.8% 18.4% Source: Bloomberg Finance L.P.; based on daily total returns as of July 31, 2021. Past Performance may or may not be sustained in future.

  4. 4 Corporate Profits at an all time High, Expectations of Strong Demand Rebound Corporate profitability hit a record in Q4FY21 driven by strong revenue growth and strict control on costs Demand is expected to rebound post unlock driving sales, but higher input costs and normalizing other costs may see profit growth lag revenue growth Source: CMIE- Economic Outlook. Past Performance may or may not be sustained in future.

  5. 5 Consensus Earnings Upgrades After Many Years of Flat Growth Source: Bloomberg Finance L.P; as of July 31, 2021. Past Performance may or may not be sustained in future.

  6. 6 Demonetization, GST, Covid: Large Companies Getting Larger Listed Company Growth YoY Industry Growth YoY 20% 16% 14% 14% 15% 9% 10% 6% 6% 5% 3% 3% 5% 0% -1% -5% -5% -7% -10% -8% -15% -12% -13% -15% -16% -20% -18% -17% -25% -25% -30% AMC AUM Paints Steel Cement Ceramic tiles CV Gen. Ins. Premium Passenger cars Bank Credit Two-wheelers Source : CMIE, RBI, IRDAI Note : YoY growth in FY21, Volume Growth for manufacturing sectors like paint,steel,auto etc. Credit growth for private sector banks is compared to systemic credit growth. Source: CMIE- Economic Outlook, Data as of March 2021

  7. 7 Economic Activity Gradually recovering Economic activity in some sectors are at similar or higher than pre Covid-19 level. June 2021 as % of Feb 2020 June 2021 as % of Feb 2020 Production Trends Credit and Consumption Trends Cement Production 89.2% Bank Credit 107.1% Steel Production 99.2% Bank credit to Industry 102.7% Fertilizer Production 108.4% 2 Wheeler Sales 87.3% Coal Production 65.5% Passenger Car Sales 93.2% Crude Oil Production 103.5% Tractor Sales 185.5% Natural Gas Production Petroleum Refinery Products Electricity Generation 120.2% Air Cargo 88.5% 87.9% Rail Freight traffic 105.9% 108.6% Port cargo 96.1% Source: Advisor Office of Economic, RBI Bulletin, SIAM, CMIE, Tractor Manufacturer Association, AAI, Indian Railways, Indian Port Association Data as on June 2021.

  8. 8 Risks to the Recovery Low Vaccine coverage increases probability of a third wave. Festive season to start from Sep 2021 Job Losses amongst salaried employees and Rising Inflation may impact consumer discretionary spend Since the pandemic began, there has been a reduction in number of employed by 20 million Inflation in Raw materials and increase in Crude prices may force RBI to raise interest rates

  9. 9 Covid Containment To Accelerate Inflows Change in S&P BSE-30 TRI in that period (% ) ( % USD) +86.5% +20.5% +40.2% +51.6% +67.0% -60.8% +90.3% +24.2% -35.7% +24.1% -1.9% +29.2% -8.1% +0.9% +37.8% -2.0% Net Foreign Activity (USD bn) Net Local Activity (USD bn) Total Activity (USD bn) Period CY 2003 CY 2004 CY 2005 CY 2006 CY 2007 CY 2008 CY 2009 CY 2010 CY 2011 CY 2012 CY 2013 CY 2014 CY 2015 CY 2016 CY 2017 CY 2018 6.6 8.7 10.7 8.1 17.7 -12.0 17.5 29.4 -0.4 24.4 20.1 16.1 3.2 3.2 7.8 -4.4 0.1 -0.3 3.0 3.4 1.7 3.3 -1.2 -6.1 1.3 -3.9 -3.7 3.9 11.1 7.1 18.4 17.6 6.7 8.4 13.7 11.5 19.4 -8.7 16.3 23.3 0.9 20.5 16.4 20.0 14.3 10.3 26.2 13.2 14.4 7.6 22.0 +13.1% CY 2019 23.0 -7.5 15.5 CY 2020 +14.5% +9.0% 6.8 7.4 YTD 2021 0.6 2.6 -1.5 +0.2% 1.1 July 2021 +1218.9% 200.9 56.4 257.3 Cumulative Source: Sebi.gov.in, NDSL, As of July 31, 2021. Past Performance may or may not be sustained in future.

  10. 10 Domestic Institutional Flows Come Back After Second Wave ebbs Source: CLSA and Bloomberg Finance L.P., as of July 31, 2021

  11. 11 Rise & Rise of the Retail Investor

  12. 12 Spiking PER Overstates Valuation Given The Prior Quarter’s Gap Down Source: Bloomberg Finance L.P., as of July 31, 2021. Past Performance may or may not be sustained in future.

  13. 13 PER Elevated – Will Mid Caps Deliver on Market Expectations? Source: Bloomberg Finance L.P., as of July 31, 2021. Past Performance may or may not be sustained in future.

  14. 14 Scenarios To Ponder Corporate Earnings Liquidity Equity Valuations Equity Returns Most Likely Scenario, But Returns may moderate Rising Easy High Positive Rising Tight Moderate Slight Decline Stagnant/Falling Easy Moderate Slight Decline Falling Tight Falling Sharp Correction

  15. 15 Don’t Be Distracted By Global Macro: Economic Activity Led To A 10x Growth In Earnings Source: CLSA and Bloomberg Finance L.P., as of July 31, 2021 CY 21 and CY 22 are estimate numbers. Past Performance may or may not be sustained in future.

  16. 16 Portfolio Reflects Value As % Of S&P BSE-30 Index** QLTEVF S&P BSE-30 Index Number of equity stocks 28 30 Median market capitalization (USD mn) 11,693 39% 30,317 Weighted dividend yield 1.4% 132% 1.1% Weighted PER: March 2023E 13.7x 71% 19.3x Weighted EPS Growth: March 2023E 22.6% 98% 23.0% PEG Ratio (excludes cash) 0.61x 72% 0.84x T12M PE 22.6x 62% 36.6x Weightage of stocks with PER > 20 72% 91% Weightage of stocks with PER > 30 47% 66% Source: Quantum AMC As of July 31, 2021| QLTEVF - cash weight excluded | ** S&P BSE-30 Index weight is based on free-float. % S&P BSE 30 Index column depicts the QLTEVF as a percentage of S&P BSE 30 Index fundamentals. The figures mentioned in WTD PER, WTD EPS and PEG ratio are calculated on the basis of Bloomberg consensus estimates for companies owned by the Composite as well as the companies in the S&P BSE 30 as of the reporting date i.e. July 31, 2021. Past Performance may or may not be sustained in future.

  17. Trying to Time Markets is a Folly Follow a Simple Asset Allocation Strategy to Deal with Market Cycles 6-24 months Expenses • Liquid Fund/ Bank Deposit ₹ Balance Surplus 80%-85% • 4-5 Diversified Mutual Funds Wealth Builder Stress case scenario Diversification 15%-20% • Gold/Gold ETF Keep 6-24 months of expenses in Liquid Fund, Bank Fixed Deposit to be withdrawn in case of emergency Please note that the above is the suggested fund allocation only and is not to be considered as investment advice / recommendation, please seek independent professional advice and arrive at an informed investment decision before making any investments 17

  18. 2021- A Simple Asset Allocation Strategy to Deal with Market Cycles

  19. Solutions to meet Sustainable Development Goals: SGD-17 = “SMILE” + WHAT IS SMILE? THE SMILE STORY OUTCOME SO FAR SMILE was born out of our desire to support credible NGOs and create a steady stream of money flow for them Since 2018, Quantum MF investors have supported 7 NGOs from diverse sectors via the SMILE facility SMILE enables Quantum MF investors to contribute 10% of their investment in eligible schemes to charities vetted by HelpYourNGO

  20. SMILE Process Flow DONATION RECEIPTS DONATE TO NGO’S INVEST IN SMILE FACILITY Q Long Term Equity Value Fund Q Equity Fund of Funds Q Dynamic Bond Fund Q Multi Asset Fund of Funds Q Gold Savings Fund Q Liquid Fund HelpYourNGO sends donation receipts and 80G Donated to NGOs selected by investors and vetted by HelpYourNGO Liaises with NGO grantees Monitors & reviews * Q Stands for Quantum for scheme names Investors receive periodic program reports from HYNGO on the NGOs supported by them Investors receive periodic program reports from HelpYourNGO on the NGOs supported by them

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  25. Disclaimer – Terms of Use The data in this presentation are meant for general reading purpose only and are not meant to serve as a professional guide/investment advice for the readers. This presentation has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been suggested or offered based upon the information provided herein, due care has been taken to endeavor that the facts are accurate and reasonable as on date. Quantum AMC shall make modifications and alterations to the performance and related data from time to time as may be required as per SEBI Mutual Fund Regulations. Readers are advised to seek independent professional advice and arrive at an informed investment decision before making any investment. None of the Sponsors, the Investment Manager, the Trustee, their respective Directors, Employees, Affiliates or Representatives shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profits arising in any way from the data/information/opinions contained in this presentation. The Quantum AMC shall make modifications and alterations to the performance and related data from time to time as may be required. Please visit – www.QuantumMF.com to read scheme specific risk factors. Investors in the Scheme are not being offered a guaranteed or assured rate of return and there can be no assurance that the schemes objective will be achieved and the NAV of the scheme may go up and down depending upon the factors and forces affecting securities market. Investment in mutual fund units involves investment risk such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the sponsor / AMC / Mutual Fund does not indicate the future performance of the Scheme. Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-). Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited. The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956. 20thAugust 2021 Mutual fund investments are subject to market risks, read all scheme related documents carefully.

  26. Thank You 26

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