Portfolio

Management
Report III
Fund Managers:
Chinnala Nishith (MBA/0095/57)
Shreyaansh Gupta (MBA/0141/57)
Advika Gupta (MBA/0167/57)
Akshada Shetty (MBA/0170/57)
Karan Dasani (MBA/0183/57)
Tanya (MBA/0229/57)
TABLE OF CONTENTS
Portfolio Performance ..................................... 3
Rebalancing.................................................... 6
Appendix......................................................... 7

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PORTFOLIO PERFORMANCE

Equity
The performance of the equity portfolio was impressive, and the return for the 40-day period
stood at 10.84% (annualized return of 155.77%), comfortably beating the benchmark. The
value of Alpha, i.e., the excess return that the portfolio generated over NIFTY 50, stood at
0.82% (annualized Alpha of 7.74%). Overall, Markets continued their bullish run due to multiple
factors like release of quarterly results, reduction in COVID-19 related uncertainty, the rapid
upswing in vaccination numbers, etc. This bull run is also consistent with almost all the major
equity indices across the globe, which have been trading in the green for the period under
consideration. Let’s break this down further and have a look at the sector-wise return breakup
to gain more insights.
The sector-wise returns were as follows:

Sector-wise Performance
Benchmark Portfolio

20.78%
18.34%
16.72%

10.63%
8.43%
5.64%
4.64%
3.33%
0.45% 0.30%

-1.39%
-2.86%
Financial Pharma IT Auto Consumer Metals
Services Goods

• Financial Services: The Financial Services sector showed solid growth and saw a
more than 5% uptick during the 40-day duration. Since the banking sector is usually
considered a proxy for the entire economy, the steep increase in economic activities
coupled with growing asset quality facilitated the growth in the industry. Even after this
robust growth in the sector, the stocks we picked collectively outperformed the index by
almost 3%. HDFC Bank was the top performer, followed by SBI Cards and Kotak
Bank.

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 • Pharma: Pharma grew at a modest 3% (substantially lower than the broad index)
primarily attributable to factors like delays in new product approvals, increased
competition in the space, higher logistics costs and operating numbers lower than
expectations. While Divi’s Laboratories saw a bull run, Granules fell by almost 7%,
majorly owing to the broad factors mentioned above.

• IT: IT was the top-performing sector in our portfolio as well as when compared to other
industries. The most important factors that facilitated this growth were robust and
growing financials across the industry and the minimal impact of the second wave on
the sector. Even though the industry grew at more than 16% for the period under
consideration, our stocks outperformed the benchmark by more than 4%. Mindtree saw
an uptick of 38.80% during the 40-day period (results posted saw a 61% increase in Net
Profit and strong order book from different verticals) and was the best performing stock
of our portfolio.

• Automobile: The Auto sector remained more or less flat (less than 0.5% growth)
primarily because of the demand slump and the semiconductor chip shortage that has
severely plagued the industry. Since we had just one stock (Ashok Leyland) in this
sector (primarily because of just 5% weightage in the portfolio). There was significant
exposure to unsystematic risk. The primary reason for the slight downfall in the share
price was the stock's lower than expected operating performance.

• Others: The Consumer Goods sector saw an uptick of more than 10% following the
market trend. Hindustan Unilever (chosen stock in the industry) surged more than 18%
during the same period. The benchmark outperformed the portfolio in the Metals sector.
While the Oil and Gas sector saw decent growth, BPCL (chosen stock in the industry)
jumped 8.33% during the period. IRCTC surged almost 25% during the given duration,
the positive sentiment primarily driven by stock split news. RIL too surged more than
16%, the drivers being the positive outlook of investors for the future expansion
prospects, backing by global marquee investors and ease in the COVID situation.

For stock-wise returns, refer to the Appendix.

Debt
The debt portfolio has generated a 0.95% return during the investing window compared to 0.29%
by the 10-year benchmark Government Bond. RBI’s primary focus has been to restrict the 10-
year benchmark bond yields. Under GSAP 2.0, RBI has planned to buy securities worth 1.2L
crore in the September quarter to maintain liquidity and keep the bond yields low. MPC has
placed a high priority on growth despite inflation levels being above RBI’s mandate of 6%.

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A key driver in the bond market rally is the news of dovish tilt taken by RBI’s rate-setting panel.
Along with this, the onset of the festival season has helped to restrict the 10-yr benchmark bond
yield. RBI heavily purchased 7.61% GS 2030 and other securities through Open market
purchase under GSAP 2.0 in August, resulting in high performance of this security over the
benchmark. This has also led to long-term bonds overperforming the short-term bonds with
TATA CAPHSG (8,1%, 2028), giving a return of 2.9%.
ISIN Issued by Maturity Amount Total Value Return
IN0020160019 GoI, 7.61% 2030 2,500,000 2,527,511.18 1.100%
IN0020120039 GoI, 8.33% 2026 1,000,000 1,006,446.34 0.645%
IN0020110048 GoI, 9.15% 2024 1,000,000 999,543.83 -0.046%
INE033L07GS6 TATA Capital Housing 2028 2,000,000 2,058,554.44 2.928%
Finance Ltd. (8.1%)
INE733E07JP6 NTPC, 8.49% 2025 3,500,000 3,502,521.61 0.072%

Money Market
The performance of the money market instrument was below that of the benchmark. We took
the Crisil Money Market Index as our benchmark. The benchmark return was about 0.53%, and
it was about 0.449% for our portfolio. All the prices, yields, and other data points are taken from
Crisil, RBI, and AMFI India websites. The return of the mutual fund portfolio was better than the
T-Bill portfolio's return. Still, these instruments' primary purpose was to provide the necessary
liquidity to the portfolio and cash convertibility in case of need for our client.
The performance of the money market assets are as follows:

Amount
Security Weights Final Value Return Benchmark
Invested
T-Bill
G-Sec 50% 2,500,000 2,510,343 0.41% 0.55%
IN002020X233
UTI Money
Market Fund 25% 1,250,000 1,256,000 0.48% 0.53%
Direct-Growth
Money
market HDFC Money
Market Fund
25% 1,250,000 1,256,125 0.49% 0.53%
Direct Plan-
Growth
Total 5,000,000 5,022,468 0.449% 0.54%

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REBALANCING

To ensure better performance of the portfolio, the asset allocation to the Auto and Metals sector
could be reduced since both have generated negative returns of -1.39% and -2.86%,
respectively, whereas the benchmark has shown positive returns.

Pharma sector had an allocation of 13% in our portfolio with two company stocks. We would be
continuing with the same allocation to have a diversified portfolio.

There is no stop-loss for our investments because we find our investments to be fundamentally
strong, and we do not intend to change our portfolio because of short-term fluctuations. Hence,
we will continue with our current asset composition unless we find any other convincing
opportunity for our long-term investment objective.

The debt portfolio has outperformed the benchmark, so we would not consider rebalancing the
portfolio in the coming period. It is consistent with our primary objective of generating a healthy
source of income through annual payments.

We would be making no changes in the money market portfolio, enabling us to have sufficient
liquidity in the short-term period.

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APPENDIX

Amount No. of Current

Stock Sector Returns
Invested1 Shares Value2
MINDTREE IT 2,800,000 1031.73 3886303.843 38.80%
IRCTC Others 1,750,000 762.34 2186404.13 24.94%
HINDUNILVR Consumer Goods 2,975,000 1270.06 3520619.877 18.34%
RELIANCE Others 3,500,000 1703.16 4069963.504 16.28%
WIPRO IT 2,450,000 4142.36 2711175.924 10.66%
HDFCBANK Financial Services 3,500,000 2430.98 3832557.736 9.50%
SBICARD Financial Services 1,750,000 1721.76 1909435.262 9.11%
BPCL Oil and Gas 2,975,000 6562.98 3222752.592 8.33%
DIVISLAB Pharma 2,275,000 471.53 2449865.796 7.69%
INFY IT 1,750,000 1092.01 1856962.341 6.11%
KOTAKBANK Financial Services 1,750,000 1030.65 1847757.59 5.59%
AMARAJABAT Automobiles & Ancillary 1,750,000 2436.31 1754141.724 0.24%
ASHOKLEY Automobiles & Ancillary 1,750,000 14297.39 1725694.444 -1.39%
JSWSTEEL Metals 1,750,000 2462.53 1699887.427 -2.86%
GRANULES Pharma 2,275,000 6237.15 2120630.569 -6.79%
Total 35,000,000 38,794,152.76 10.84%
1Amounts were invested on 26th July 2021
2Current prices are for 3rd September 2021