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March 2015

Domestic equity indices remained in the positive territory in February. The key benchmarks CNX Nifty and S&P BSE Sensex rose 1.06% and 0.61% respectively. The gains were attributed to a series of positive domestic cues including the key economic events (Union Budget and Economic Survey) and positive GDP growth estimate (due to change in methodology for calculating domestic growth). Market rose after the government announced several measures such as increased spending on the country's infrastructure, deferral of the General Anti Avoidance Rule (GAAR) by two years, proposed cut in corporate tax to 25% from 30% over four years and implementation of the Goods and Service Tax (GST) from April 2016. The Budget also proposed to establish a ‘Public Debt Management Agency’ for government borrowings which is expected to facilitate better planning and management of domestic and foreign market borrowings for the Centre.

The Union Budget has a clear thrust on kick-starting investments by:

a)  Aggressive push in capital expenditure
b)  Addressing structural deficiencies in the economy
c)  Increasing savings in the system by incentivizing households to save for their
     Retirements
d)  Attracting investments in corporate sector by giving clear glide path for
     corporate tax
e)  Monetizing Gold held as an investment

Overall, the Finance Minister has balanced a difficult trinity of growth, investments and social equity. The approach is to create a simplified regime when it comes to every business stakeholder – be it citizen, entrepreneur, state government, and investor.  It is even more commendable given the fact that public investments remain critical to kick start growth in the current environment.

Positive signs from India’s Economic Survey including growth rate of 8.1-8.5% in FY16 on new GDP calculation formula and medium-term fiscal deficit target of 3% of GDP also augured well for the markets. Sentiments were boosted further after the methodology for measuring domestic economic growth was revised and the domestic economy is estimated to grow at 7.4% in the current fiscal as against 6.9% in 2013-14. Encouraging international developments also lent support to the local indices. News of ceasefire agreement in Ukraine and optimism about Greece’s debt deal aided market gains. Investors also cheered the dovish tone of the US Federal Reserve Chief Janet Yellen after she said that the US central bank would be patient about raising interest rates.

As part of our concerted efforts to offer investors a varied set of offerings we launched SBI Banking & Financial Services Fund in February. Banking & Financial Services sector are fundamental drivers of economic growth in the country and are a proxy to the economic health of the country. This sector presents a good investment potential with a pro-growth government, low penetration of financial products and introduction of major policy reforms.

As markets continue to soar to new highs I urge investors to not get swayed by market sentiments and stick to their planned investments for the long term. We as a fund house continue to preach the benefits of investing through a Systematic Investment Plan in equity funds for the long term as it helps build wealth step by step over a period of time. Sticking to one’s asset allocation and goals is key in all market scenarios especially now when the equity portion of your portfolio would have shown good gains.

At SBI Mutual Fund, we remain committed to provide you unparalleled service and cater to your investment needs. Please feel free to call on our dedicated customer care numbers 1-800-425-5425 and 044-28881101/044-28881136  from Monday to Saturday (8am to 10pm) or write to us at customer.delight@sbimf.com with your queries. Alternatively, you can also visit your nearest Investor Service Centre/Investor Service Desk for any assistance. Investors can also experience the convenience of online investing by visiting our site www.sbimf.com which allows KYC compliant investors to invest in any of our schemes and NFOs in a few minutes.

Best Regards,
Dinesh Kumar Khara
Managing Director & Chief Executive Officer

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