Short Term Fund

Recommended Funds

1. Axis Short Term Fund – Conservative investors, who want to capitalize from accrual investments without undergoing excess volatility, can look at investing in this Fund.

2. HDFC HIF - S T P – Aggressive investors willing to take MTM exposure looking to create alpha over a 3 to 6 months period should look at this Fund. Higher portfolio accrual and credit contraction in the PSU / Corporate debt space should provide relatively better return.

3. HSBC Income Fund - S T P – Moderate investors willing to capitalize from a mix of duration and accrual product can look at this Fund for an investment horizon of 3 months.

4. Reliance Short Term Fund - Aggressive investors willing to take MTM exposure looking to create alpha over a 3-6 months period should look at this Fund. Higher portfolio accrual and credit contraction in the PSU / Corporate debt space should provide relatively better return.

Mutual Fund Industry Overview

In Jan-Mar quarter, average AUM for the Mutual Fund Industry increased by Rs.25,577 crores i.e. 3.77% from Rs. 6,78,154 crores to Rs.7,03,732 crores. Returns continued to remain comparatively higher in the Liquid and Ultra Short Term category due to higher money market rates as liquidity conditions remained in deficit mode. Gilt and duration funds have also done better during the month as yield softened across the yield curve. Broader equity market ended positive in March where most of sectoral indices gave returns above 7%. Amongst sector indices, Realty was the biggest gainer with ~18% returns during the month.

Change in Jan-Mar Quarterly Average AUM over Oct-Dec quarter

ü  Equity markets ended positive in the month of March as Sensex and BSE 500 were up by 9.1% and 8.57% respectively. However, in the quarter, Sensex was down by 6.58%. The average Equity AUM of the mutual fund industry has decreased further by 8.90% i.e. Rs.18,788 Cr. in absolute terms.

ü  The average Debt AUM has witnessed a fall of 5.62% (excluding liquid and Gilt Funds) i.e. Rs.18,333 crores while Liquid funds has witnessed an increase fall of 61.32% in average AUM i.e. Rs. 62,752 crores.

ü  FMPs have seen inflows during the quarter where the average AUM has risen by 28.14%; i.e. Rs.24,441 crores in absolute terms.

ü  Out of the 41 fund houses; 23 witnessed rise in avg. AUM amounting to Rs.41,000 crores whereas 18 fund houses witnessed a fall in avg. AUM amounting to Rs.15,423 crores.

ü  Of the Net rise in AUM of Rs.25,577 crores in Jan- Mar’11 quarter; top 5 fund houses accounted for Rs.13,532 crores which is 52.90% of Net rise in AUM.

ü  Reliance, HDFC, ICICI Prudential, UTI and Birla continued to retain the top 5 positions in terms of Average AUM. They have witnessed the following changes in average AUM over the Oct-Dec 2010; -0.34%, -1.82%, +11.65%, +2.76% and +10.40%; respectively.

ü  In absolute terms; top 5 rise in AUM is seen in ICICI Prudential, Birla, Kotak, IDFC and Axis Mutual fund to the tune of Rs.7,675 crores, Rs.6,004 crores, Rs.4,611 crores, Rs.3,700 crores and Rs.3,289 crores respectively.

Regulatory and other Key Developments

ü  SEBI puts in place a system to start listing of securitized debt instruments to improve their secondary market liquidity.

ü  SEBI data shows that outflows from debt schemes, mainly liquid funds, dragged down the domestic mutual fund industry's net assets under management by 16.28% on month to Rs.5.92 lakh cr in March.

5th April,2011

The markets opened on a positive note but profit taking led the markets towards the previous close in the morning session. However buying across sectors in the afternoon session led the markets higher and ending the day on a firm note. All the Sectoral indices ended in the green with Capital Goods & IT gaining more than 2% while Realty ended with marginal gains.Among the Sensex stocks M & M (4.75%) ,Jaiprakash Asso (3.25%) and BHEL (2.84%) were the major gainers while Reliance Comm (2.24%), Hindustan Unilever (1.62%) and Cipla (1.51%) were amongst the losers. The Sensex gained 281points or 1.45% to close at 19,702 while Nifty gained 82 points or 1.41% to close at 5,908.

Total traded turnover stood at Rs 1,02,076 cr. In equities FIIs were net buyers (Rs 605 cr) while DIIs were net sellers (Rs 389 cr).On the derivatives side, FIIs were net buyers in Index Futures (Rs 1393 cr) Index options (Rs 475 cr), while they were net sellers in Stock Futures (Rs 511 cr) and Stock Options (Rs 6 cr). The US markets ended mixed due to lack of significant economic data. The Dow Jones gained 23 points or 0.19% to close at 12,400 while NASDAQ lost 0.41 points or 0.01% to close at 2,789.

The Asian markets are shut for the day.

The market breadth was positive throughout with FIIs supporting by buying in the cash segment while DIIs continued to sell. Once again buying was seen in the small cap and mid cap stocks. The markets may open on a flat to positive note tracking mixed global cues. Adopt a stock specific approach.

The trend deciding level for the day is 5885, If NIFTY trades above this level then we may witness a further rally up to 5935‐5968‐6000 levels. However, if NIFTY spot trades below 5885 levels then we may see some profit booking to initiate in market, it may correct up to 5850‐5815‐5780.

Stocks to focus for intraday long: Aban, Jindalswhl, M&M.

Stocks to focus for long term: Orient Paper (+60%), Jubliant Life(+50%), Vascon Engineers (+48%)