Markets are Compressed, what are you waiting for?

As we enter 2016, the Indian markets are beaten down and investors are concerned for the money already parked while the crowd is hesitant to make fresh investments. Current news and euphoria suggest that bear market is ahead but our outlook on stock market is not so bearish as we assume this correction is into its last stages. However it will be too soon to conclude this scenario but one thing is sure once this market finds a bottom and starts a rally it will be sharp and scary for the one who is short.

The trigger which this market needs is the shift in gears in the collective psychology of the crowd may it be with or without news. Once this happens we might enter the next Bull Run and to participate in the upcoming trend we have an investment option which carries moderate risk and healthy rewards are attached to it.

SBI Blue Chip Fund- Growth Weekly Chart

sbi blue chip 20160119
















SBI Blue Chip Fund is classified as Large Cap Fund Ranked 1 by Crisil. This fund has 84.88% exposure to Equity followed by some exposure to Money market Instruments.

Portfolio Analysis: The fund is well diversified in terms of stocks as well as at Sector level with flexibility of investing up to 20 per cent in mid-cap stocks. The fund is benchmarked to BSE 100 index. The Top holdings and Sector allocation for the stocks are shown below.


Sector Allocation:

 sector allocation 20160119




















The fund has also outperformed its benchmark across market phases, but due to its maximum exposure to Equity instruments this fund is considered as Moderately risky.



Relative Comparative Chart: The chart below the fund is the ratio analysis of SBI Blue Chip Fund divided by CNX Nifty. The ratio analysis study shows that till the mid of 2013 this fund has moved in lines with CNX Nifty and post that the rally which started on upside in the form of wave [V] this fund has outperformed the index and provided us with comparatively better returns due to its diversified structure at sector and stock levels. Hence currently post consolidation this fund can act aggressive and will provide with better returns due to its maximum exposure to Large Cap stocks.


Investment Rationale:  SBI Blue Chip Fund has maximum exposure to Equity and as per analysis we are suggesting that Equity market is going to underperform for some time, hence until the correction in Equity market is not completed investors should park their money in Debt fund which will provide them the benefit of downside interest rate cycle and once the correction is over they can systematically move towards Equity funds which can provide alpha returns.


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