Jeena Scriptech Indian-Budget-2013-Review

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03 March 2013 Jeena Scriptech Alpha Advisors Pvt Ltd 2

Budget 2013 ~ A Review

GAURAV A PARIKH

at the

Presentation

Thursday February 28, 2013 ~ 6:30 pm - 8:30 pm

on

by

JEENA SCRIPTECH ALPHA ADVISORS PVT LTD

Managing Director

Jointly organised by

K C College Auditorium, Mumbai

All India Vaish Federation Jain International Trade Organisation

BSE Brokers Forum

INDIA ~ A BLESSED ECONOMY


Presentation Sequence

First Part

How The Government Plans to Make Money Union Budget 2013

The Indian & Global Economy Backdrop

Second Part

How We should Plan to Make Money Sensex ~ Sectors

03 March 2013 5 Jeena Scriptech Alpha Advisors Pvt Ltd

Let’s Pray for Post Budget 2013 !

“Dear God… I Pray for a FAT Bank Balance & a THIN Body!

Please Don’t Mix these up as you did last year !... Amen !


Perception v/s Reality


HOW THE GOVERNMENT PLANS TO MAKE MONEY

The Indian & Global Economy Backdrop

Union Budget 2013


FIRST PART

Economists caused the Crisis, failed to spot it and have little or no idea how to fix it

Much of the last 30 years of Macroeconomics was “spectacularly useless at best, and positively harmful at

worst” Paul Krugman, Nobel Prize in Economics 2008

Global Backdrop


HIGH ANXIETY

Investor

Anxieties

Near Term

Omni-

present

Current

& Fiscal

Deficit

Low GDP

Growth High

Inflation Rate

OIL

Valuations

v/s

Price

Long Term

Interest &

Exchange

Rate

Indo-Pak

Tensions/

Terrorism

USA

& PIIGS

Woes


Confirmation of the Crisis !

Bush & Obama Two sides of the same coin


Just Don’t have any Clue what to do !


PIIGS ~ Deficit as % of GDP ~ Pulling Back Up


IT’S EASY TO BE CRITICAL !

Jeena Scriptech Alpha Advisors Pvt Ltd 03 March 2013 14

A Glib Forecast made last Year in 2012

Budget Speech 2012

“Taking a bird’s eye view of the entire economy and keeping in mind the

difficult global environment, I expect India’s GDP growth in 2012-13 to

be 7.6 %, +/- 0.25 %”

Think he meant +/ - 2.5% !


GDP Growth Rates

9.6

9.3

8.1

8.4

9.3

6.2

5

6.7

0

1

2

3

4

5

6

7

8

9

10

11

20

06

-07

20

07

-08

20

08

-09

20

09

-10

20

10

-11

20

11

-12

(RE)

20

12

-13

(AE)

20

13

-20

14

(BE)

GDP Growth Rate %

GDP Growth Rate

*2013-2014 GDP Growth Rate estimated in the range of 6.1% -6.7%




FY 13 ~ % DEFICITS & GDP

GDP Growth Rate % >

Rs 10,028,118 crs

US $ 1.8 Trillion

5 The Lowest in Recent Years ~ High Inflation

and an Economic Slowdown

Current Account Deficit as a % of our GDP >

US $ 83 b

4.6 Oil & Gold Imports are the Culprits for this

record CAD

Fiscal Deficit as a % of our GDP >

Rs 520925 crs

US $ 96 b

5.2 How do we Fund It ? How do we Reduce It?




Oil & Gold Imports

OIL & GOLD DOMINATE OUR IMPORTS

In FY 12 of Total Imports of US $ 489 b

Oil was US $ 155 b > 31.7%

Gold was US $ 56 b > 11.5 %


Exports & Imports Growth


Government Tells us Not to Buy Gold

They say the surging Gold Imports & Slowing of Exports is causing

this High Current Account Deficit


CAD as a % of GDP


Oil & Gold as a % of GDP


Yet Government Itself

Protects Asset Value of the Country by Investing in More Gold !

How do We

Protect Asset Value in Volatility & Uncertainty & Nervousness!?


Gold in our Fx Reserves

03 March 2013

Year End Dec 31

2012 (Dec 28)

2011 (Dec 30)

2010 (Dec 31)

2009 (Jan 1,’10)

2008 (Jan 2,’09)

2007 (Dec 28)

2006 (Dec 29)

Fx Res

(US $ b)

of

which

Gold =>

297

28

297

27

297

22.5

284

18.3

255

8.5

276

8.4

177

6.5

yoy % (0.7) - 4.6 11.4 (7.6) 56 29

%GDP

Growth

5.1 exp

FY 13

6.5

FY 12

8.4

FY 11

8.4

FY 10

6.8

FY 09

9.3

FY 08

9.4

FY 07

Sensex 19317 15455 20509 17465 9647 20287 13787

yoy % 25 (25) 17 81 (52) 47 47

Jeena Scriptech Alpha Advisors Pvt Ltd 26

FX Reserves


Gold reserves of 20 largest gold holding countries

Source - World Gold Council

OFFICIAL GOLD HOLDINGS - December 2012 Top 20 Countries Metric Tonnes % of reserves

United States 8,134 76

Germany 3,391 73

Italy 2,452 73

France 2,435 72

China 1,054 2

Switzerland 1,040 11

Russia 935 10

Japan 765 3

Netherlands 613 60

India 558 10

Taiwan 424 6

Portugal 383 91

Venezuela 364 75

Saudi Arabia 323 3

Turkey 320 15

United Kingdom 310 16

Lebanon 287 30

Spain 282 30

Austria 280 56

Belgium 228 40


Gold Prices


Gold Prices


Gold Import & Gold Price


Gold Price Trend in 2013?

So What Will Happen to Gold in 2013 ?

With Real Interest rates Rising in the US and the Fear factor dropping, Gold is unlikely to show any strong bullishiness in the near term ~ it may in fact go sub US $ 1500 per oz before

moving up later again


Gold & Real Interest Rates ~Inverse corelation


Fear Factor ~ VIX corelated with Gold/Oil


Three Idiots ! ~ Exchange ~ Inflation ~ Interest

The Three Idiots !

Exchange

Inflation

Interest


Exchange Rate

So What will Happen to the Exchange Rate of the Rupee against the US $ ?

You Tell Me !


Rupee Depreciation


High Inflation

And is India Winning the Battle against High Inflation !?

This you can easily relate to !


Inflation Trend


UNION BUDGET 2013 Sensex screams “Kai Po ‘CHI’ !”

…heart flows but head slows !

Intention needs to be backed by Ability & Implementation

An Unconvinced India

Balancing Act

Lower RE Plan Expenditure in FY 13

&

High Disinvestment Target in FY 14


Union Budget 2013 ~ A Few Highlights

Investment Allowance of 15% Introduced Incremental Taxes of Rs 18000 crs with surcharge on the super rich & higher taxes on expensive goods STT marginally reduced GST Roadmap yet not definite though Rs 9000 crs introduced to compensate States Inflation Indexed Bonds to be introduced Simplification for FII Registration Debt Exchange, SME Listing without IPO Lower RE FY 13 of Plan Expenditure Ambitious Disinvestment Target for FY 14 RGESS liberalised


Budget at a Glance

(in crore of Rupees)

2011-2012

Actuals

2012-2013

Budget Estimates

2012-2013

Revised Estimates

2013-2014

Budget Estimates

1 Revenue Receipts 751437 935685 871828 1056331

2. Tax Revenue (net to centre) 629765 771071 742115 884078

3. Non-Tax Revenue 121672 164614 129713 172252

4 Capital Receipts (5+6+7) 552928 555241 558998 608967

5. Recoveries of Loans 18850 11650 14073 10654

6. Other Receipts 18088 30000 24000 55814

7. Borrowings and other liabilities* 515990 513590 520925 542499

8 Total Receipts (1+4) 1304365 1490925 1430825 1665297

9. Non-Plan Expenditure 891990 969900 1001638 1109975

10. On Revenue Account of which, 812049 865596 919699 992908

11. Interest Payments 273150 319759 316674 370684

12. On Capital Account 79941 104304 81939 117067

13 Plan Expenditure 412375 521025 429187 555322

14. On Revenue Account 333737 420513 343373 443260

15. On Capital Account 78639 100512 85814 112062

16 Total Expenditure (9+13) 1304365 1490925 1430825 1665297

17. Revenue Expenditure(10+14) 1145785 1286109 1263072 1436169

18. Of Which, Grants for creation of Capital 132582 164672 124275 174656

19. Capital Expenditure (12+15) 158580 204816 167753 229129

20 Revenue Deficit (17-1) 394348 350424 391245 379838

-4.4 -3.4 -3.9 -3.3

21 Effective Revenue 261766 185752 266970 205182

Deficit (20-18) -2.9 -1.8 -2.7 -1.8

22 Fiscal Deficit 515990 513590 520925 542499

{16-(1+5+6)} -5.7 -5.1 -5.2 -4.8

23 Primary Deficit (22-11) 242840 193831 204251 171814

-2.7 -1.9 -2 -1.5


Rupee Comes From

Borrowings & Other liabilities 27 p.

Corporation-tax 21 p.

Non-debt Capital receipts 3 p.

Income – Tax 12 p.

Customs 9 p.

Service tax & other taxes 9 p.

Non-tax Revenue 9 p.


Rupee Goes To Non-Plan Assistance to State & UT Govts.

4 p.

Central Plan 21 p.

Defence 10 p.

Subsidies 12 p.

Other Non-Plan

Expenditure 11 p.


Revenue Receipts

(In crore of Rupees)

2011-2012

Actuals

2012-2013 2012-2013 2013-2014

Budget Revised Budget Estimates Estimates Estimates

REVENUE RECEIPTS

Tax Revenue Gross Tax Revenue 889176 1077612 1038037 1235870

Corporation Tax 322816 373227 358874 419520

Taxes on Income 170343 195786 206095 247639

Wealth Tax 788 1244 866 950

Customs 149328 186694 164853 187308

Union Excise Duties 145608 194350 171996 197554

Service Tax 97509 124000 132697 180141

Taxes on Union

Territories 2785 2310 2656 2758

Less - NCCD transferred

to the National Calamity

Contingency Fund/National

Disaster Response Fund 3998 4620 4375 4800

Less - States’ share 255414 301921 291547 346992

Centre's Net Tax

Revenue 629765 771071 742115 884078

Non-Tax Revenue

Interest receipts 20252 19231 16595 17764

Dividend and Profits 50608 50153 55443 73866

External Grants 2962 2887 2762 1456

Other Non Tax Revenue 46835 91207 53790 78000

Receipts of Union

Territories 1015 1136 1123 1166

Total Non Tax Revenue 121672 164614 129713 172252

Total Revenue Receipts 751437 935685 871828 1056331


Capital Receipts


2011- 2012

Actuals

2012-2013

Budget

Estimates

2012-2013

Revised

Estimates

2013-2014

Budget

Estimates

Non-debt Receipts

Recoveries of loans and advances

18850

11650

14073

10654 Miscellaneous Capital Receipts

18088 30000 24000 55814

Total 36938 41650 38073 66468

Debt Receipts

Market Loans 436211 479000 467384 484000

Short term borrowings 126866 9000 45746 19844

External Assistance (Net) 12449 10148 2214 10560

Securities issued against

Small Savings -10302 1198 8626 5798

State Provident Fund (Net) 10804 12000 10000 10000

Other Receipts (Net) -44048 2245 -7895 12297

Total 531980 513590 526075 542499

Total Capital Receipts 568918 555241 564148 608967

DRAW-DOWN OF CASH BALANCE -15990 ... -5150 ...

Total Receipts

1304365

1490925

1430825

1665297

Financing of Fiscal Deficit 515990 513590 520925 542499

Receipts under MSS (Net) ... 20000 ... 20000

excludes recoveries of short-term loans and advances from States, loans to Government servants, etc.

17968 11445 22995 11400


Debt Receipts

FF


2011- 2012

Actuals

2012-2013

Budget Estimates

2012-2013

Revised

Estimates

2013-2014

Budget

Estimates

Market Loans 436211

479000

467384

484000

Short term borrowings 126866 9000 45746 19844



Small Savings -10302 1198 8626 5798



Total 531980 513590 526075 542499

DRAW-DOWN OF CASH BALANCE -15990 ... -5150 ... Financing of Fiscal

Deficit

515990

513590

520925

542499

Total Capital Receipts 568918 555241 564148 608967

Total Receipts

1304365

1490925

1430825

1665297


NON-PLAN EXPENDITURE (in crore of Rupees)

A. Revenue Expenditure 2011-2012

Actuals

2012-2013

Budget Estimates

2012-2013

Revised Estimates

2013-2014

Budget Estimates

1. Interest Payments and Prepayment Premium 273150 319759 316674 370684

2. Defence Services 103011 113829 108925 116931 3. Subsidies 217941 190015 257654 231084 4. Grants to State and

U.T. Governments 51523 64211 57901 76981

5. Pensions 61166 63183 63836 70726 6. Police 33106 35611 37131 40895 7. Assistance to States from

National Calamity Contigency

Fund/National Disaster

Response Fund (NDRF) 2459 4620 4375 4800

8. Other General Services (Organs of State, tax collection,

external affairs etc.) 19225 21382 21095 22903

9. Social Services (Education,

Health, Broadcasting etc.) 19444 20784 21304 23114

10. Economic Services

(Agriculture,Industry, Power,

Transport, Communications,

Science & Technology, etc.) 21751 24105 21965 24334

11. Postal Deficit 5716 5727 5838 6717 12. Expenditure of Union

Territories without Legislature 3853 3875 4147 4395

13. Amount met from National Calamity Contigency Fund/ Contribution to National Disaster Response Fund (NDRF) -2459 -4620 -4375 -4800

14. Grants to Foreign Governments 2163 3114 3229 4144 Total Revenue Non-Plan Expenditure 812049 865596 919699 992908


NON-PLAN EXPENDITURE


B. Capital Expenditure 2011-2012

Actuals

2012-2013

Budget Estimates

2012-2013

Revised Estimates

2013-2014

Budget Estimates

1. Defence Services 67902 79579 69579 86741

2. Other Non-Plan

Capital Outlay 11478 23971 8102 30131

3. Loans to Public Enterprises 479 465 469 417

4. Loans to State and

U.T. Governments 72 85 3407 80

5. Loans to Foreign

Governments 248 550 700 ...

6. Others -238 -346 -318 -302

Total Capital Non-Plan Expenditure 79941 104304 81939 117067

Total Non-Plan Expenditure 891990 969900 1001638 1109975


PLAN EXPENDITURE (in crore of Rupees)

2011-2012 2012-2013 2012-2013 2013-2014

Actuals

Budget Revised Budget

Estimates Estimates Estimates

A. Revenue Expenditure

1. Central Plan 241276 303528 243772 320038

2. Central Assistance

for State & Union

Territory Plans 92460 116985 99601 123222

State Plans 90072 113170 96068 118873

Union Territory Plans 2388 3815 3533 4349

Total Revenue Plan

Expenditure 333737 420513 343373 443260

B. Capital Expenditure

1. Central Plan 67083 87499 73413 99030

2. Central Assistance

for State & Union

Territory Plans 11556 13013 12401 13032

State Plans 10058 11079 11079 11057

Union Territory Plans 1498 1934 1322 1975

Total Capital Plan Expenditure 78639 100512 85814 112062

Total - Plan Expenditure 412375 521025 429187 555322

Total Budget Support

for Central Plan 308359 391027 317185 419068

Total Central Assistance

for State & UT Plans 104016 129998 112002 136254

TOTAL EXPENDITURE* 1304365 1490925 1430825 1665297


DEBT SERVICING (in crore of Rupees)

2011-2012 2012-2013 2012-2013 2013-2014

Actuals Budget Revised Budget

Estimates Estimates Estimates

1. Repayment of debt 111933 124302 116669 167072

2. Total Interest Payments 273150 319759 316674 370684

3. Total Debt Servicing (1+2) 385083 444061 433343 537756

4. Revenue Receipts 751437 935685 871828 1056331

5. Percentage of 2 to 4 36.35% 34.20% 36.32% 35.09%


171814


1. Deficits have been calculated on the basis of the following estimates of GDP. (i) 2012-2013 (RE) ` 10028118 crore. (ii) 2013-2014 (BE) ` 11371886 crore 2. GDP Estimates as per revised series with 2005-06 as base year, have been adopted for working out deficit as percentage of GDP.




Central Plan Outlay by Sectors (including IEBR of PEs etc)


2011-2012

Actuals

2012-2013

Budget Estimates

2012-2013

Revised Estimates

2013-2014

Budget Estimates

Agriculture and Allied

Activities

16194 17692 15971 18781

Rural Development 47471 50729 43704 56438

Irrigation and Flood

Control

506 1275 428 1200

Energy 121855 154842 148230 158287

Industry and Minerals 36235 57227 39228 48010

Transport 107532 125357 103023 133488

Communications 6586 15411 8257 12380

Science Technology &

Environment

11735 16592 12119 17587

General Economic

Services

19696 24777 21017 31602

Social Services 135480 178906 158339 193043

General Services 5305 8701 5860 9307

GRAND TOTAL 508596 651509 556176 680123


State and U.T. Plan Outlay by

Ministries/Departments


2011-2012

Actuals

2012-2013

Budget

Estimates

2012-2013

Revised

Estimates

2013-2014

Budget Estimates

Agriculture and

Cooperation

7844 9217 8400 9954

Finance 80076 99543 85543 102957

Panchayati Raj 3917 5050 3734 6500

Statistics and Programme

Implementation 2507 3955 3950 3955

Road Transport and

Highways 2199 2267 2267 2267

Tribal Affairs 2049 2517 1673 2517

DONER 1537 1700 1581 1780

Union Territories 3887 5749 4856 6324

Total Central Assistance

for State and Union

Territory Plans

State and Union

104016 129998 112002 136254




IMMEDIATE INDIAN CHALLENGES

High Inflation… High Food Prices

Cooling off Interest Rates

Eye on Crude Oil Prices

Corruption… Like Freedom, it’s our Birthright and we shall have it !

Real & Sustainable Economic Recovery

Infrastructure… FDI & FII…. Handling Strong Inflows

Political Stability… Changing & Collapsing Coalitions and New Compulsions….


SOME EXPECTATIONS AND TARGETS

Vision Plan……continuing modern economic reforms with financial inclusion

Sustainable GDP Growth for Years ahead

Bring Fiscal Deficit down to below 3% of the GDP from the current 5.2%

Take Manufacturing from the current 16% of GDP to 25% in a few years

Schedule Commitments for Direct Tax Code (DTC) and Goods & Services Tax (GST)

Raise Tax/GDP back from low 4% /5% towards high 11.9% recorded in FY 2008


Mkt Cap & GDP in Absolute & Relative Terms

2012-13

Revised Estimates

2013-14

Budget Estimates

In Rs Crs

10,028,118

11,371,886

BSE Market Capitalisation in Rs Crs

as on Feb 28, 2013 65,38,038

Mkt Cap /GDP 0.65 0.57


GDP growth Rate at Factor Cost


Source – Planning Commission

Trends in Consolidated Fiscal Deficit


Money ! Money ! Money ! ~ But How !

How does Government Make Money !?

Deficit involves Funding it and taking Initiatives to Reduce It

How does the Government Go about this…


Government Modes to Create Funds

Market Borrowings ~ Interest Cost remains high at 43% of Tax

Revenues

Increase Tax Revenues Higher GDP Growth Rate, Widening Base , Increasing Rates

Decrease Plan & Non Plan Expenditure Reduce Fuel Subsidies in Non Plan ~ Also Amazingly RE FY 2-13 shows lower Plan Expenditure of Rs 429000 crs against BE of @ Rs 521000 crs ! ~ to fund higher RE Non Plan Expenditure & restrict Fiscal Deficit to 5.2% of GDP ~ Lower Expenditure => Growth Sacrifice ?

Attract FDI Prioritize over FIIs ~ Infrastructure Spending of a Trillion Dollars planned in the 12th Plan with 47% Private Participation

Sell Assets Disinvestment ~ Target is an ambitious Rs 55814 crs for FY 2014 !

Print Money ~ Inflationary ~ Government had little Option


Financing the Fiscal Deficit

So How Does the Government Finance the Fiscal Deficit ?

89% through Market Loans !


FINANCING THE FISCAL DEFICIT… Rs Crs

2011- 2012

Actuals

2012-2013

Budget

Estimates

2012-2013

Revised Estimates

2013-2014

Budget

Estimates

Debt Receipts

Market Loans

436211

479000

467384

484000 Short term borrowings

126866

9000

45746

19844



Small Savings -10302 1198 8626 5798



Total 531980 513590 526075 542499

DRAW-DOWN OF CASH BALANCE -15990 ... -5150 ... Financing of Fiscal

Deficit

515990

513590

520925

542499

Total Capital Receipts 568918 555241 564148 608967 Total Receipts

1304365

1490925

1430825

1665297


High Level of Borrowing to Fund the Fiscal Deficit

Government Borrowings - Rs. Cr



Tax Revenue Receipts


Total Expenditure ~ Where has he spend what he said he will in Plan Expenditure !

The FM has sharply reduced Plan Expenditure in the RE FY 13 from Rs 521025 crs to Rs 429187 crs ! ~ And claims he has jumped it over 33% for the BE FY 14 to Rs 555322 crs !

This is to fund the RE of Non Plan Expenditure for FY 13 which is now Rs 1001638 crs up from Rs 969900 crs and to also keep the Fiscal Deficit down to 5.2% of GDP from the earlier targeted 4.6% !


Composition of Expenditure – Rs. Cr


03 March 2013 74 Jeena Scriptech Alpha Advisors Pvt Ltd

Composition of Subsidies

Trends & Composition of Subsidies


03 March 2013

FDI v/s FII



Disinvestment

03 March 2013

Mere Paas Maa Hai ! ~ Tere Paas kya hai !?

Mere Paas LIC Hai !

FY 2012-13 Target was Rs 33000 crs but achieved is Rs 21000 crs

FY 13-14 Target is Rs 55814 Crs !

& Rs 14000 crs is to be infused in PSU Banks !


Disinvestment

03 March 2013

Total Disinvestment (Cumulative Till date) -1,31,511


M3 – Money Supply (Annual)


M3 – Money Supply


Face of the Current Lok Sabha….Alliances

Lok Sabha - Party Positions

Parties Providing Support to UPA govt. Main Opposition Parties

Party Name Member Party Name Member

Indian National Congress (INC) 204 Bharatiya Janata Party(BJP) 115

Janata Dal (United) (JD(U)) 20

Dravida Munnetra Kazhagam(AIADMK) 18 Shiv Sena(SS) 11

Nationalist Congress Party(NCP) 9 Rashtriya Lok Dal(RLD) 5

Jammu and Kashmir National Conference(J&KNC) 3 Shiromani Akali Dal(SAD) 4

Others 36 Telangana Rashtra Samithi(TRS) 2

Asom Gana Parishad(AGP) 1

Total Support for UPA Govt. 270 Total NDA 158

Parties Providing Outside Support to UPA govt. Other Parties

All India Trinamool Congress(AITC) 19

Samajwadi Party(SP) 22 Communist Party of India (Marxist)(CPI(M)) 16

Bahujan Samaj Party(BSP) 21 Biju Janata Dal (BJD) 14

Rashtriya Janata Dal (RJD) 3 All India Anna Dravida Munnetra Kazhagam(AIADMK) 9

Janata Dal (Secular)(JD(S)) 3 Telugu Desam Party(TDP) 6

Total 49 Total 64


HOW WE SHOULD PLAN TO MAKE MONEY

Sensex ~ Sectors


SECOND PART

Market Dynamics

Liquidity ~ Courtesy FIIs

Momentum ~ Global Cues

Sentiment ~ Global Cues

Valuation ~ Sensex EPS


FIIs Equity Inflows & Outflows

Year

Net Investment US($) million

Sensex % Movement in the

Year

2005 10707 42

2006 8106 47

2007 17655 47

2008 (11974) Outflow (52)

2009 17458 81

2010 29362 17

2011 @(500) Outflow (25)

2012 24372 26

As on Feb 26,2013 and in the First Two Months 2013 FIIs Inflows have reached @ US $ 8.5 Billion with 1756 Registered FIIs and 6347 Sub Accounts yet Sensex has slipped sub 19000 post budget from closing level of 19426 in 2012 after teasing once going over 20000


SENSEX - 2000 to date February 28, 2013… Timing & Tactical Strategies

Year Open High Low Close P/E P/BV DY

2000 5,209.54 6,150.69 3,491.55 3,972.12 24.48 3.81 1.14

2001 3,990.65 4,462.11 2,594.87 3,262.33 17.60 2.51 1.83

2002 3,262.01 3,758.27 2,828.48 3,377.28 15.22 2.30 2.14

2003 3,383.85 5,920.76 2,904.44 5,838.96 15.02 2.49 2.14

2004 5,872.48 6,617.15 4,227.50 6,602.69 17.26 3.28 2.01

2005 6,626.49 9,442.98 6,069.33 9,397.93 16.21 3.94 1.58

2006 9,422.49 14,035.30 8,799.01 13,786.91 20.18 4.75 1.35

2007 13,827.7 20,498.11 12,316.10 20,286.99 22.25 5.32 1.10

2008 20,325.2 21,206.77 7,697.39 9,647.31 18.22 4.2 1.29

2009 9,720.55 17,530.94 8,047.17 17,464.81 18.08 3.42 1.43

2010 17,473.45 21,108.64 15,651.99 20,509.09 21.71 3.67 1.12

2011 20,621.61 20,664.80 17,295.62 18,141.40 20.53 3.52 1.11

2012 15,534.67 19,612.18 15,358.02 19,426.71 17.14 3.08 1.63

2013 19,513.45 20,203.66 18,793.97 18,861.54 17.67 3.03 1.53


Good Positive Sensex % Returns In The Long Term

From ABSOLUTE%/CAGR %

Year Opening

Sensex

High

21207

Jan 10, 2008

Low

7697

Oct 27, 2008

Current

18862

Feb 28,2013

1991 1027 17 years

1965 /19.5

18 Years

649 /12

22 Years

1737 /14.2

2001 3990 7 Years

432 /27

8 Years

93 /8.5

12 Years

373 /13.8

2004 5872 4 Years

261/38

5 Years

31 /5.5

9 Years

221 /13.9


BSE SENSEX

Currently 18862 as on Feb 28,2013

16.2 % CAGR In 35 Years

since Inception in 1986 with the base of 100 set for 1978/9

Market Dynamics : Sensex Returns since Inception


VALUATION PARADOX

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

Jan-92

Jan-93

Jan-94

Jan-95

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

0

1000

2000

3000

4000

5000

6000

7000

Jan-92

Jan-93

Jan-94

Jan-95

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00 Sensex and PE Ratio, Bubble or. . .

Sensex PE Ratio and Interest Rates

Inverse Correlation or Convergence?

SENSEX

PER

INTEREST RATES

PER

Date SENSEX PE G-Sec Yield 2302.54 37.36 11.00

4285 69.53 11.00 2122.3 20.58 12.75

3346.06 32.45 12.75 3994.86 38.74 12.75 3746.1 22.53 12.50

4588.16 27.59 12.35 3618.54 21.76 12.35 2994.29 13.47 14.00 3826.72 18.93 14.00 2890.5 28.08 13.85

3382.47 32.86 13.85 4305.76 38.71 13.05 4006.81 36.15 12.15 2810.66 25.36 12.25 3315.57 21.39 12.25 5005.82 28.70 11.36 5446.98 31.23 10.42 3711.02 16.86 11.69 4326.72 19.66 10.70 2811.6 10.50 9.10

3562.31 13.30 7.4 2949.32 10.29 7.12 2959.79 9.84 5.89 5838.96 15.79 5.1 5695.67 15.00 5.1 5667.51 16.20 5.3 5590.6 15.54 5.1

5655.09 13.59 5.12 4759.62 11.11 5.1 4795.46 11.19 5.2 5170.20 12.07 5.8 5192.08 11.95 5.9 5583.61 12.85 6.4 5672.27 13.05 6.9

Jan-92 Mar-92 Apr-93 Dec-93 Jan-94 Apr-94 Aug-94 Jan-95 Nov-95 Apr-96 Nov-96 Jan-97 Jul-97 Apr-98 Nov-98 Jan-99 Dec-99 Feb-00 Oct-00 Jan-01 Sep-01 Feb-02 Oct-02 Apr-03 Dec-03 Jan-04 Feb-04 Mar-04 Apr-04

May-04 Jun-04 Jul-04

Aug-04 Sep-04 Oct-04 Nov-04 6234.29 14.35 7.2

1992-2004 Historical Evidence to support Macro Valuations


Sensex EPS Growth Trend

216 236 272

348

450 523

718

833 820 834

1024

1124 1182

1375

1586

FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13E FY14E FY15E

Sensex EPS Growth Trend

FY01-12 : 16% CAGR FY13-15E : 16% CAGR


Growth Rates ~GDP & Sensex EPS ~Bottoming Out ?

FY 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

GDP 5.5 4 8.1 7 9.5 9.6 9.3 6.7 8.4 8.4 6.5 5

Sensex -0.63 -12.5 84.05 15.96 73.36 15.24 22.11 -38.4 79.85 10.8 -10.6 10.9

Sensex

EPS 9.3 15.3 27.9 29.3 16.2 37.3 16 -1.5 1.7 22.8 9.7 5.2


SENSEX at end 2013 ? Sensex at 18862 on Feb 28, 2013

SENSEX VALUE = SENSEX EPS X SENSEX PE

EPS FY 2014 projected from Base Sensex EPS of 1182 in FY 2013 with

10% Growth in FY 14

Sensex going forward : Likely to Aggressively Optimistic

Outlook

PER

Sensex Levels Likely Optimistic Aggressive

EPS FY 2014>>>> 1300 1375 1425

10 13000 13750 14250

15 19500 20625 21375

20 26000 27500 28500

25 32500 34375 35625


Market Credibility & Sanctity continues being Compromised

BSE SME Platform ~ Quantity not Quality

Channel Nine Entertainment ~ Loss Making ~ Preferential Allotment made at Rs 750 & Rs 130 transferred within days to New Owner Promoter at Rs 25 ~ then after another PA at Rs 10 followed by a liberal Bonus of 3:1 ! lowering holding cost to just Rs 2.50 ! Comes an IPO a few days ago in Feb 2013 at Rs 25

IPO Gradings Mislead ~ Poorly Graded Issues become

Wealth Creators while Highly Graded Issues become Wealth Destroyers

Yet 230000 Shareholders are flying KFA ! ~

Remember the Fate of GTB !

Midcap Mayhem ~CEBCO,Arshiya,Core,Tulip, plunging in a free fall

India & Insider Trading are Inseparable !


SECTORS ON OUR HORIZON Clients have Access to Specific Selections

Oil & Gas

IT

FMCG

Power

Banking

Defence

Construction Equipment

Real Estate


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Thank You

Jeena Scriptech Alpha Advisors Pvt Ltd

Gaurav A Parikh

www.jsalphaa.com

www.gauravblog.com

[email protected]

+91 9820162597

03 March 2013 96


http://www.gauravblog.com/

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Contact in Mumbai

Jeena Scriptech Alpha Advisors Pvt Ltd ~ Fort HO

Tel: +91 22 42304138/50/54

Email: [email protected]

Website: www.jsalphaa.com


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Economy & Finance

Jeena Scriptech Indian-Budget-2013-Review