- The month saw increase in volatility on the back of global macro factors such as rising oil prices, strong USD, and the trade war, as well as domestic factors such as tightening liquidity and default by a large financial institution.
- The USD strengthened further as the Fed raised its benchmark rate by 25 bps on the back of strong US economic data, the INR has depreciated around 14% vs. the USD and has breached levels of 74/$.
- On the domestic front, we saw disruption in the market due to a large financial institution, defaulting on some of its debt obligations. This led to a repricing of risk, especially for NBFCs. Both the RBI and the government have indicated that adequate liquidity will be provided to NBFCs.
- Amidst macro headwinds, all emerging markets (Ems) have seen a sell-off. Niy has corrected 12% from its peak, the midcap index has corrected 25% while the smallcap index has corrected almost 40%.
- It is expected that the markets will have a so patch for the next six months till the elections. It is recommended that the investors continue to build equity exposure for the long term.
- In terms of sectoral outlook, sectors which will be impacted positively by Rupee depreciation include IT, Pharma, Metals and Mining, and Auto ancillaries. We also believe that for private sector banks, the increase in market share will be a secular trend over the next decade.
Source: ABSLAMC Research, Bloomberg, Financial Express, Mint)
- Aditya Birla Sun Life Balanced Advantage Fund (An open ended Dynamic Asset Allocation fund):
We have reduced Nifty futures exposure to 5% and the remaining is in stock futures (arbitrage) which would remove the chance of Nifty hedge dragging the fund performance going forward. Current portfolio, on equity side is more large cap biased but shall take exposure to selective midcaps at opportunistic levels.
- Aditya Birla Sun Life Small Cap Fund (formerly known as Aditya Birla Sun Life Small & Midcap Fund) (An open ended equity scheme predominantly investing in small cap stocks):
We added exposure to Indian consumer electrical equipment manufacturing company in appliance segment (consumer durables). Increased exposure to an India information technology company to the portfolio in the software sector to benefit from rupee depreciation.
- Aditya Birla Sun Life Equity Fund (An open ended equity scheme investing across large cap, mid cap, small cap stocks):
We booked profits in the automobile space and added an Indian aerospace and defence company to our portfolio. We reduced exposure a private sector bank and a public housing fiancé company and reallocated to other private banks.
The Scheme(s) may or may not have any present or future positions in these sectors
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
All the Data mentioned above is as on 30th September, 2018