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Money Today model fund portfolios fare well on Sept quarter earnings

Money Today model fund portfolios fare well on Sept quarter earnings

All the top sectors where the four Money Today model fund portfolios have their money fared well, thanks to the September quarter results of companies giving some direction to the market.

The festive season couldn't lift the market spirit this year. The Sensex tumbled approximately 2 per cent during the Diwali week (between 12 November and 16 November).

Blame it on macroeconomic cues. Trade deficit was at an all-time high of $21 billion on October 2012. This is putting pressure on the value of the rupee as well. Although the foreign institutional investors (FII) flows are strong (around $2.2bn in October), the rupee depreciated sharply and was back to around Rs 55 to a dollar levels on 15 November.

The slowdown in industrial output was also a negative surprise. The Index of Industrial Production declined 0.4 per cent, below the market estimate of 2.8 per cent. Analysts consider this to be a reminder of further downgrade of gross domestic production (GDP) figures for 2012-13.

Inflation, on the other hand, has eased a bit. For October 2012, it stood at 7.45 per cent as compared to 7.81 per cent seen in the previous month. This could result in a rate cut by the Reserve Bank of India.

Among all these highs and lows, the September quarter results of companies poured in, giving some direction to the market. The good news is that all the top sectors where the four portfolios have their money fared well.

The second-quarter profits for the financial sector, where our highest equity holdings are, were up 15 per cent compared with the profits of the corresponding quarter last year. Similarly, the fast moving consumer goods (FMCG) sector's profits in the September quarter jumped 16 per cent from the year-ago period. Our equity-oriented Wealth Maximiser and the conservative Stable Growth portfolios have second-highest equity holdings in this sector.

Energy is another important sector for our portfolios. Thanks to companies such as Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) the sector's profits in the September quarter were up by a massive 970 per cent compared to the year-ago period. IOC's profit was Rs 9,611.35 crore, against a loss of Rs 7,485.55 crore in the corresponding quarter last year. BPCL posted Rs 5,034.79 crore profit in this year's September quarter, while HPCL posted a profit of Rs 2,327 crore. Last year, in the same quarter, the two companies had shown a loss of Rs 3,229.27 crore and Rs 3,364.48 crore, respectively. This has given a boost to the performance of our portfolios. However, the winter session of Parliament holds the key to future direction.