Jeena Scriptech Indian-Budget-2013-Review

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Presentation
on

Budget 2013 ~ A Review
Jointly organised by

All India Vaish Federation
Jain International Trade Organisation
BSE Brokers Forum
at the
K C College Auditorium, Mumbai

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

by

GAURAV A PARIKH
Managing Director

JEENA SCRIPTECH ALPHA ADVISORS PVT LTD

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


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


FIRST PART
HOW THE GOVERNMENT PLANS TO MAKE MONEY
The Indian & Global Economy Backdrop
Union Budget 2013


Global Backdrop
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

HIGH ANXIETY
Investor
Anxieties

Omni-
Near Term present Long Term

Current Low GDP USA Valuations Interest & Indo-Pak
& Fiscal Growth High & PIIGS OIL v/s Exchange Tensions/
Inflation Rate Rate
Deficit Woes Price Terrorism


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 !


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
GDP Growth Rate %

11
10 9.3
9 8.4
9.6
8 9.3
7 8.1 6.2
6 6.7
5
4 5
3
2 GDP Growth Rate
1
0

2013-2014(BE)
2012-13(AE)
2006-07

2007-08

2008-09

2009-10

2010-11

2011-12 (RE)
*2013-2014
GDP Growth Rate
estimated in the
range of 6.1% -
6.7%


FY 13 ~ % DEFICITS & GDP

GDP Growth Rate % > 5 The Lowest in Recent
Years ~ High Inflation
Rs 10,028,118 crs and an Economic
Slowdown
US $ 1.8 Trillion

Current Account Deficit as a % of our GDP > 4.6 Oil & Gold Imports are
the Culprits for this
US $ 83 b record CAD

Fiscal Deficit as a % of our GDP > 5.2 How do we Fund It ?
How do we Reduce It?
Rs 520925 crs

US $ 96 b


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
Year End 2012 2011 2010 2009 2008 2007 2006
Dec 31 (Dec 28) (Dec 30) (Dec 31) (Jan 1,’10) (Jan 2,’09) (Dec 28) (Dec 29)

Fx Res 297 297 297 284 255 276 177
(US $ b)
of
which
Gold => 28 27 22.5 18.3 8.5 8.4 6.5
yoy % (0.7) - 4.6 11.4 (7.6) 56 29
%GDP 5.1 exp 6.5 8.4 8.4 6.8 9.3 9.4
Growth FY 13 FY 12 FY 11 FY 10 FY 09 FY 08 FY 07
Sensex 19317 15455 20509 17465 9647 20287 13787

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


FX Reserves


Gold reserves of 20 largest gold holding countries
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
Source - World Gold Council
Belgium 228 40

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


(in crore of Rupees)
Budget at a Glance 2011-2012 2012-2013 2012-2013 2013-2014
Actuals Budget Estimates Revised Estimates 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. InterestPayments 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.

Non-debt Capital
receipts 3 p. Corporation
-tax 21 p.
Non-tax
Revenue 9 p.

Service tax &
other taxes 9 p.
Income –
Tax 12 p.

Customs 9 p.


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

Central Plan
21 p.

Other Non-
Plan
Expenditure
11 p.

Subsidies
12 p.

Defence
10 p.

Revenue Receipts (In crore of Rupees)
2011-2012 2012-2013 2012-2013 2013-2014
Actuals 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

2012-2013 2012-2013 2013-2014
Capital Receipts 2011- 2012
Budget Revised Budget
Actuals
Non-debt Receipts
Recoveries of loans and advances 18850 11650 14073 10654
Miscellaneous Capital 18088 30000 24000 55814
Receipts
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 17968 11445 22995 11400
Government servants, etc.

FF
Debt Receipts (in crore of Rupees)

2012-2013 2013-2014
2011- 2012 2012-2013
Revised Budget
Actuals Budget Estimates
Estimates Estimates

Market Loans
436211 479000 467384 484000
Short term borrowings
126866 9000 45746 19844

External Assistance (Net)
12449 10148 2214 10560

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

Financing of Fiscal
Deficit 515990 513590 520925 542499
Total Capital Receipts
568918 555241 564148 608967

Total Receipts 1304365 1490925 1430825 1665297


NON-PLAN EXPENDITURE
A. Revenue Expenditure 2011-2012 2012-2013 2012-2013 2013-2014
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 (in crore of Rupees)

2011-2012 2012-2013 2012-2013 2013-2014
B. Capital Expenditure

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 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

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 2012-2013 2012-2013 2013-2014
Agriculture and Allied 16194 17692 15971 18781
Activities
Rural Development 47471 50729 43704 56438
Irrigation and Flood 506 1275 428 1200
Control
Energy 121855 154842 148230 158287
Industry and Minerals 36235 57227 39228 48010

Transport 107532 125357 103023 133488
Communications 6586 15411 8257 12380
Science Technology & 11735 16592 12119 17587
Environment
General Economic 19696 24777 21017 31602
Services
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 2012-2013 2012-2013 2013-2014
Budget Revised
Actuals Budget Estimates
Estimates Estimates
Agriculture and 7844 9217 8400 9954
Cooperation
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 104016 129998 112002 136254
State and Union


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 2013-14
Revised Estimates Budget Estimates

In Rs Crs 10,028,118 11,371,886

BSE Market
Capitalisation in Rs Crs 65,38,038
as on Feb 28, 2013

Mkt Cap /GDP 0.65 0.57


GDP growth Rate at Factor Cost


Trends in Consolidated Fiscal Deficit

Source – Planning Commission

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 2012-2013 2012-2013 2013-2014
Actuals Budget Revised Estimates Budget
Estimates Estimates

Debt Receipts
Market Loans 436211 479000 467384 484000
Short term borrowings 126866 9000 45746 19844
External Assistance (Net) 12449 10148 2214 10560

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

Financing of Fiscal 515990 513590 520925 542499
Deficit
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


Composition of Subsidies
Trends & Composition of Subsidies


FDI v/s FII


Disinvestment

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

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

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

Total 49 Total 64

SECOND PART
HOW WE SHOULD PLAN TO MAKE MONEY
Sensex ~ Sectors


Market Dynamics

Liquidity ~ Courtesy FIIs

Momentum ~ Global Cues

Sentiment ~ Global Cues

Valuation ~ Sensex EPS


FIIs Equity Inflows & Outflows
Sensex %
Year Net Investment US($)
Movement in the
million
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 %

High Low Current
Opening
Year 21207 7697 18862
Sensex
Jan 10, 2008 Oct 27, 2008 Feb 28,2013

17 years 18 Years 22 Years
1991 1027
1965 /19.5 649 /12 1737 /14.2

7 Years 8 Years 12 Years
2001 3990
432 /27 93 /8.5 373 /13.8

4 Years 5 Years 9 Years
2004 5872
261/38 31 /5.5 221 /13.9


Market Dynamics : Sensex Returns since Inception

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


VALUATION PARADOX
1992-2004 Historical Evidence to support Macro Valuations
Date SENSEX PE G-Sec Yield
Jan-92 2302.54 37.36 11.00 7000
Sensex and PE Ratio, Bubble or. . . 80.00
Mar-92 4285 69.53 11.00
Apr-93 2122.3 20.58 12.75 6000 SENSEX 70.00
Dec-93 3346.06 32.45 12.75
60.00
Jan-94 3994.86 38.74 12.75 5000
Apr-94 3746.1 22.53 12.50 50.00
Aug-94 4588.16 27.59 12.35 4000
40.00
Jan-95 3618.54 21.76 12.35 3000
Nov-95 2994.29 13.47 14.00 30.00
Apr-96 3826.72 18.93 14.00
Nov-96 2890.5 28.08 13.85
2000
PER 20.00
Jan-97 3382.47 32.86 13.85 1000 10.00
Jul-97 4305.76 38.71 13.05
0 0.00
Apr-98 4006.81 36.15 12.15

Jan-94

Jan-96

Jan-97

Jan-98

Jan-00

Jan-04
Jan-92

Jan-93

Jan-95

Jan-99

Jan-01

Jan-02

Jan-03
Nov-98 2810.66 25.36 12.25
Jan-99 3315.57 21.39 12.25
Dec-99 5005.82 28.70 11.36
Feb-00 5446.98 31.23 10.42 Sensex PE Ratio and Interest Rates
Oct-00 3711.02 16.86 11.69 Inverse Correlation or Convergence?
Jan-01 4326.72 19.66 10.70
Sep-01 2811.6 10.50 9.10
Feb-02 3562.31 13.30 7.4 80.00 16.00
Oct-02 2949.32 10.29 7.12 70.00
INTEREST RATES 14.00
Apr-03 2959.79 9.84 5.89
Dec-03 5838.96 15.79 5.1 60.00 12.00
Jan-04 5695.67 15.00 5.1 50.00 10.00
Feb-04 5667.51 16.20 5.3
Mar-04 5590.6 15.54 5.1 40.00 8.00
Apr-04 5655.09 13.59 5.12 30.00 6.00
May-04 4759.62 11.11 5.1
Jun-04 4795.46 11.19 5.2 20.00 4.00
Jul-04 5170.20 12.07 5.8 PER
10.00 2.00
Aug-04 5192.08 11.95 5.9
Sep-04 5583.61 12.85 6.4 0.00 0.00
Oct-04 5672.27 13.05 6.9
Jan-95

Jan-03
Jan-92

Jan-93

Jan-94

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-04
Nov-04 6234.29 14.35 7.2


Sensex EPS Growth Trend

Sensex EPS Growth Trend

FY13-15E : 16% CAGR
FY01-12 : 16% CAGR
1586

1375

1182
1124
1024

833 820 834
718

523
450
348
272
216 236

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


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


Sensex going forward : Likely to Aggressively
Optimistic

SENSEX at end 2013 ?
Sensex at 18862 on Feb 28, 2013
SENSEX VALUE = SENSEX EPS X SENSEX PE
Outlook
Sensex Levels Likely Optimistic Aggressive
1375 1425
EPS FY 2014>>>> 1300
10 13000 13750 14250
PER

15 19500 20625 21375
20 26000 27500 28500
25 32500 34375 35625
EPS FY 2014 projected from Base Sensex EPS of 1182 in FY 2013 with
10% Growth in FY 14

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


www.gauravblog.com


Thank You

Gaurav A Parikh
www.jsalphaa.com

www.gauravblog.com

gaurav@jsalphaa.com

+91 9820162597


Contact in Mumbai

Jeena Scriptech Alpha Advisors Pvt Ltd ~ Fort HO

Tel: +91 22 42304138/50/54

Email: care@jsalphaa.com

Website: www.jsalphaa.com


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