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February 2014

SBI Mutual Fund has started the New Year, 2014 on a very high note. I am very glad to inform you that in a first of its kind initiative in the Indian Mutual Fund industry, SBI Mutual Fund announced the opening of a record number of 51 branches at one go, in the Beyond Top 15 cities spread across 23 states and one Union Territory in the country. With this, the total number of branches of SBI Mutual Fund has increased to 161 with a network now spreading across 27 states and 4 Union Territories. 

About Indian markets, the Indian equity indices fell sharply in January 2014, with key benchmark indices CNX Nifty and S&P BSE Sensex falling 3.40% and 3.10%, respectively. The indices fell due to weak domestic and international cues. 

At home, the unexpected hike in repo rate (by 25 bps to 8%) by the Reserve Bank of India (RBI), during its third quarter policy review, led to much disappointment. Stock-specific selling on account of release of October-December earnings also led to the decline. Globally, the US Fed’s decision to further scale back its stimulus measures pulled down the indices. The US Fed announced a $10 bn cut in its monthly bond buying, thus reducing its monthly bond buying to $65 bn per month starting in February. 

Sentiments were also dented due to worries in the emerging markets following slower growth in China and political problems in Turkey, Argentina and Ukraine.  Foreign institutional investors (FIIs) were the sellers of Indian equities for the first time in five months. However, FIIs sold a marginal Rs 141 cr in January 2014 compared to buying of Rs 15,615 cr in December 2013. 

Losses were, however, capped due to positive domestic economic data on trade deficit and inflation (wholesale and retail). Robust growth rate in the US for the fourth quarter of 2013 also augured well for the market. Gains in shares of technology companies on strong quarterly earnings and positive outlook for the sector helped markets erase some of its earlier losses. 

Barring S&P BSE IT and S&P BSE Healthcare indices, all other S&P BSE sectoral indices ended lower in January. Interest rate sensitive sectors such as realty and banking were the worst affected due to interest rate hike by the RBI and after the central bank Governor Raghuram Rajan suggested that interest rates may remain high. S&P BSE Realty index was the top loser, falling 15.47%, while S&P BSE BANKEX index fell 9.92%. 

S&P BSE Oil & Gas declined 4.32% on concerns that raising the cap on the number of subsidized cooking gas cylinders would put further stress on the financials of oil & gas companies. The S&P BSE IT index was the top gainer, rising 4.35% as IT stocks benefited from the strong October-December quarter performance and upbeat outlook for the sector. The S&P BSE Healthcare index gained 1.44% on defensive buying. 

Many of our equity schemes and hybrid scheme have shown good performance viz. SBI Magnum Global Fund, SBI Magnum MidCap Fund, SBI Magnum Balanced Fund to name a few. Investors should always maintain the discipline of asset allocation and invest in equity funds through systematic planning and should look at it as a long term investments. 

The New Fund Offer, SBI Tax Advantage Fund - Series III is a 10-year close-ended, Equity Linked Savings scheme for investors to get the tax benefit along with potential to create wealth. The investment objective of the scheme is to generate capital appreciation over a period of ten years by investing predominantly in equity and equity-related instruments of companies along with income tax benefit. 

We are absolutely committed to providing unparalleled service to our investors and to cater to your information, investment and servicing needs. Please feel free to call at our dedicated customer care numbers 1-800-425-5425 (MTNL/BSNL users only) and 080-26599420 from Monday to Saturday (8am to 10pm) or write to us at with your queries. Alternatively you can also visit your nearest Investor Service Centre / Investor Service Desk for any assistance.

Dinesh Kumar Khara