What moved my market? (Issue #2: Finity Weekly Updates)

Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.

— Warren Buffett

The week had large companies like RIL and Infosys announce their quarterly results. RIL, as well as Infosys, posted a significant increase in their profits.

Other key information realized during the week included an uptick in sales of commercial vehicles at 28% YoY along with a decline in passenger vehicles by 4% for the same period.

This essentially reflects the sustained demand in government infrastructure spending.

Here’s the week at a glance:

October third week analysis

The week ended in red for bellwether Indian indices, but not every portfolio was glum. Many mutual fund categories have been able to unearth profitability while large-cap stocks continued being dragged.

Interestingly, the long-lost hope with small-cap funds displayed a ray of hope. Also, contrary to popular retail opinions, FMCG and Energy as sectoral categories gleamed while the blue-chips entered red territories.

Weekly Average Return for different Equity Mutual Fund categories

With an apparent commitment by RBI to buy bonds to inject liquidity and stabilize the debt market, the 10-year G-sec yield softened to 7.872%.

This is quite a respite to investors holding debt funds. Yields and prices of bonds are inversely correlated and for debt fund investors any dip in yields/rates means higher profitability for the day.

Quite in line, the longer duration debt funds have performed well in the week. Think of duration as the degree of sensitivity to rate changes. For instance, while prices of bonds increase with a decline in the yield, the bond with a longer duration benefits more than the shorter duration bond.

Shares of ITC have gained the most this week by as much as 7% since Monday’s opening. Consumption-oriented mutual funds have emerged as the biggest beneficiaries of this uptick.

Performance of ITC shares and Consumption-oriented MFs

Meanwhile, IFC – a member of the World Bank Group, just raised $100 million (out of its $1 billion target) to invest in India. Last year, IFC’s investment in India touched a record-high and it intends to continue investing in the Bharat story.

This reflects the strong value proposition India holds as an investment destination among global peers.

Top performing mutual funds for the week:

Fund News:

  1. Rahul Singh appointed as the Chief Investment Officer – Equities at Tata Mutual Fund.
  2. Nimesh Chandan appointed as the Chief Investment Officer – Equities at Canara Robeco MF.
  3. ICICI Prudential’s CEO – Nimesh Shah has been elected as the chairman for AMFI. He will be succeeding A. Balasubramanian who is also the CEO for Aditya Birla Sun Life AMC.

NFO In Focus:

L&T Focused Equity Fund (15 Oct’18 – 29 Oct’18): This is an open-ended fund, which invest a maximum of 30 stocks which are sector and market agnostic.

Mr. Soumendra Nath Lahiri is going to manage this fund. As a fund manager, he has been efficiently managing flagships like L&T Midcap Fund, L&T Tax advantage fund, L&T infrastructure fund & L&T Equity fund.

The fund is suitable for investors seeking to diversify a fraction of their portfolio into core, high-conviction stocks picked by a reliable stock-picker.

As always, if you have any questions, please write to us at ask@finity.in or call at +918048039999, we would be happy to answer your query.

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