Equity Market Outlook

February 2010
 Global Risk aversion returning?
• Globally, markets have turned bearish due to
renewed fears about the state of govt. finances
in several countries
CDS spreads for Greece, Spain, Portugal have
• Stretched sovereign balance sheets remains a
big area of concern shot up

• Concerns on fiscal situation of countries like

Greece, Spain, and Portugal have heightened.
High fiscal deficit and public debt levels in
several countries including Ireland, Italy, UK
and Japan attracting increased attention from
investors.

• With most of the global recovery aided by

massive policy stimulus given last year, the
sustainability of growth is yet to be seen with
employment numbers still not recovering
strongly

• With risk aversion started to rise again, USD

continues to firm up against other currencies,
particularly developed world.

• p
We expect a below-trend economic g growth in
developed world for an extended period and
asset prices would ultimately reflect that

• Till beginning of the year, there was some

sense of complacency setting in market
participants which was reflected in lower
volatility
l tilit and
d risk
i k premiums.
i H
However, off late,
l t
investors sentiments have turned a bit
cautious.
 Equity and commodity markets witness sell-off
Weakening
g in Global metal p
prices
Weakening in gold price

China steel, LME Zinc, LME Aluminum, LME Copper

Global equity markets witness correction commodity prices weaken

IBOV (Brazil), RTSI $ (Russia), Hang Seng China, S&P CRB commodity index, Crude oil
500 indices
 Global Indices Performance

1m
CY07 CY08 CY09 Perf*
Chile 13.31 -22.13 50.71 6.35
Russia 19 18
19.18 -67.2
67 2 121 14
121.14 3 61
3.61
Japan -11.13 -42.12 19.04 -3.30
South Africa 16.23 -25.72 28.63 -3.58
USA 3.53 -38.49 23.45 -3.70
UK 3.8 -31.33 22.07 -4.14
Brazil 43.65 -41.22 82.66 -4.65
South Korea 32.25 -40.73 49.65 -4.77
Thailand 26 22
26.22 -47
47.56
56 63 25
63.25 -5
5.17
17
Singapore 18.74 -49.17 64.49 -5.26
Mexico
11.68 -24.23 43.52 -5.38
I di (SENSEX)
India 47.15 -52.45 81.03 -5.68
Taiwan 8.72 -46.03 78.34 -15.85
China 96.66 -65.39 79.98 -19.66
* as on 31st January
January'10
10
 Encouraging global economic data points??
US GDP for the fourth quarter rose by 5.7%
5 7% UK economy exited recession in Q4-09 after
showing the strongest growth in 6 years, contracting for six consecutive quarters
much ahead of consensus expectation at
4.7%. 1

% QonQ ann. Advanced) Q4'09 Q3'09 0.5

0
GDP 5.7 2.2
-0.5

08

09
07

08

08

09

09
8

9
08

09
8

9
0

0
Consumer Spending 2 2.8

r-0

r-0
c-

c-

c-
n-

n-
b-

b-
ct-

ct-
g-

g-
De

De

De
Ju

Ju
Fe

Ap

Fe

Ap
Au

Au
-1

O
Gross Pvt. Domestic Investment 39.3 5
-1.5
Residential 57
5.7 18 9
18.9 -22
Exports 18.1 17.8 -2.5

Imports 10.5 21.3 -3

Government Spending -0.2 2.6 UK GDP (QoQ %)

However majority
H j it off the
th growth
th came from
f However disappointing 0.1% QoQ growth
inventory rebuilding was far below consensus estimate of 0.4%

Is this recovery sustainable????

 3
4
5
6
7
8
9
10
11
12
01-05
05-05
09-05
01-06
05-06
09-06
01-07
05-07
09-07
01-08
05-08
09-08
01-09
05-09
Unemployment rate

09-09
E

01-10
US

05-10
France

09-10
Germany
Eurozone
Unemployment stays high

01-11
05-11
09-11
01-12
 The Liquidity Glut Is Still Increasing
World: Monetary Supply (as a % of nominal GDP)
95% 55%

90% 50%
M2
M1 (R.H.S.)
85% 45%

80% 40%

75% 35%

70% 30%

65% 25%

60% 20%
01-97 01-98 01-99 01-00 01-01 01-02 01-03 01-04 01-05 01-06 01-07 01-08 01-09
The Most Aggressive Quantitative Easing on
Record

Planning Central bank’s exit will be tricky

 From great crisis to great recovery??
• F
From t
temporary d i
drivers off growth
th to
t final
fi l demand
d d led
l d recovery??
??

• Still fragile recovery

– Households
H h ld confidence,
fid consumption
ti and
d credit
dit remain
i subdued
bd d
– Deleveraging to weigh on GDP growth in advanced economies.
– Credit conditions still remain tight
– Unemployment continue to rise

• Large excess capacities and low core inflation

• Leverage shifting from private to sovereign’s balance sheet

• From a globally synchronized policy response to divergent policy

responses , policy makers’ exit strategy will be key factor to watch
going forward

• Volatility in economic variables will increase more: asset markets will

exhibit higher volatility as well
 Where we are: Indian markets

• The year began on an optimistic note with Sensex touching a new-22

month high, however, weak cues from global markets and profit booking
at higher levels brought markets down

• Though the sensex was down 6%, there was heightened activity in mid
and small cap stocks

• Corporate earnings growth for 3rd quarter of FY 2009-10 came broadly in

line with market expectations

• Earnings growth for FY11 expected at around 20%

• RBI continued
ti d on its
it exit
it path
th with
ith hiking
hiki CRR by
b 75 bps
b with
ith a view
i t
to
remove excess liquidity from the system and anchoring inflationary
expectations.

• Policy statement reflects positive momentum on growth with GDP growth

target revised upwards however inflation, capital flows and borrowing
programme remain the key challenges to be managed by the Central bank
next year.
 SENSEX Movement
Index Pts
31-Dec-09 29-Jan-10 Chg % Chg

SENSEX Index 17464.81 16357.96 -1106.85 -6.34%

19000 Continuing liquidity Market in a

fl
flows & currency consolidation
lid ti
Significant appreciation phase
Improvement in
liquidity flows on the
back of sustained
16000 domestic growth
Weak global
Market witnessed cues & profit
Congress profit
fi booking
b ki on the
h
electoral win booking
back of fast &
ahead of significant run up over
13000 expectations the past 2 moths
Initial signs of
improvement in
economic activity

10000

7000

4000
31-Jan-09 31-Mar-09 31-May-09 31-Jul-09 30-Sep-09 30-Nov-09 31-Jan-10
India vs Emerging Countries
(1 Month Performance As on 31
31-Jan-09)
Jan 09)

-8.78% China

-6.69%
6.69% Taiw an

-6.34% Mexico

-6.34% India

-5.26% Singapore

-5.17% Thailand

-4.77% South Korea

-4.65% Brazil

-3.58% South Africa

-0.96% Argentina

2.02% Russia

3.46% Turkey

6.35% Chile
 FII flows turn negative

5,000 20000
4,000
15000
3,000
2,000
10000
1,000
0
5000
Jan- Feb- Mar- Apr- May- Jun- Jul-09 Aug- Sep- Oct- Nov- Dec- Jan-
-1,000
09 09 09 09 09 09 09 09 09 09 09 10
-2,000 0

FII( USD mn) MF (USD mn) DII (USD mn) Sensex

•After 10 months of net inflows, January saw net outflows from foreign investors

•However
However domestic flows were strong, with Insurance buying surging to record
levels at US$ 2.9 bn though domestic mutual continued selling for 5th consecutive
month
 Sectoral Performance
Index 1 m Returns
BSE Con Durables Index 0.37
BSE PSU INDEX -0.61
BSESMCAP Index -1.49
BSE FMCG Index -2.37
BSEMDCAP Index -3.10
CNX MIDCAP Index -3.11
BANKEX Index -3
3.76
76
BSE IT Index -4.02
BSE500 Index -4.86
BSE Health Care Index -5.05
BSEOIL Index -5.08
BSE200 Index -5.28
BSE100 Index -5.65
S&P CNX Nifty -6.13
SENSEX Index -6.34
BSEAUTO Index -6.49
BSE Cap Goods Index -7.02
BSEMETL Index
I d -8.26
8 26
The worst performing sectors were metals, auto and capital goods
 India on a strong growth path
With continued recoveryy in industrial p
production &
services sector activity & near zero growth in Industrial growth continue on the upswing
agricultural production, RBI revises GDP growth expected at 8-8.5% for FY10
for 2009-10 upwards to 7.5% from 6% projected
14
earlier
12
12
10
10

7.5% 8
8 6
4
6
2
4 0
-2 Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov-
2 08 08 09 09 09 09 09 09 09 09 09 09 09

0 IIP (% yoy)
M ar - M ar - M ar - M ar - M ar - M ar - M ar - M ar - M ar - M ar - M ar -
00 01 02 03 04 05 06 07 08 09 10E

Trade continues to improve, with exports witnessing positive Strong recovery in auto volumes witnessed
growth for second consecutive month at 9.3% (yoy), though at a since Jan’09
slower pace than Nov’09 (18.2%,
(18 2% yoy).
yoy) Imports growth was also
stronger at 27.7% (yoy) showing positive growth for the first 2-Wheelers (Dom)
time since Dec’08.
100
80
900,000
800,000
60
700 000
700,000
40
600,000
20 500,000
0 400,000
-20 300,000
08

09
7

08

09

9
8

9
08

09
08

09
-0

-0

-0
-0

-0
n-

n-
b-

b-
g-

g-
r-

r-
ec

ec

ec

-40
ct

ct
Ju

Ju
Fe

Ap

Fe

Ap
Au

Au
O

A p r--0 7

A p r--0 8

A p r--0 9
D

J u l- 0 7
O c t- 0 7
J a n -0 8

J u l- 0 8
O c t- 0 8
J a n -0 9

J u l- 0 9
O c t- 0 9
-60
60

Imports (%, yoy) Exports(%,yoy)

 Consumption growth: a long term story
Increasingg urbanization will continue to support
pp
Rural population offers a potential huge
market opportunity consumption
% urbanization

Source: Govt. budget documents

Source: MOSPI
Rural penetration is still low across
consumption categories About 20% of world population add expected
to be in India

Population (bn) 2007 2015 2025 2050

India 12
1.2 13
1.3 14
1.4 17
1.7
World 6.7 7.3 8 9.2
India's share of incremental
population 19% 21% 20% 18%

One of 5 future consumers is in India

Source: United Nations data

Source: Census of India
 Infrastructure: massive ramp up expected
Sector-wise
Sector wise projections of investment during XIth plan at 2006
2006-07
07 prices
Sector (Rs bn) 2008 2009 2010 2011 2012 Total Xth Plan %change
Electricity 820 1,016 1,264 1,580 1,986 6,665 2,919 128
Roads & Bridges 518 548 592 684 800 3,142 1,449 117
Railways 342 410 495 604 767 2,618 1,197 119
Irrigation 275 359 472 623 804 2,533 1,115 127
Water & Sanitation 193 228 273 333 411 1,437 648 122
Ports 124 148 174 200 234 880 141 524
Airports 52 55 59 66 77 310 68 356
Storage 38 41 44 48 52 224 48 367
Gas 27 30 33 37 41 168 97 73
Total Investment 2,389 2,835 3,406 4,175 5,172 17,977 7,682 134

Spend on infrastructure as a % of GDP

0-4 Indonesia, Philippines & Latin America
4-7 India(4.6)
>7 China, Thailand & Vietnam

11th plan target investment in infrastructure

f represents 7.53% off GDP vs 5.63% in 10th plan

Source: The Planning Commission, Govt. of India

 Budget: Fiscal Consolidation holds the key
• The fiscal deficit for 2009-10 expected at 6.5% of GDP due to favorable base effect
in GDP growth numbers however the absolute number may be higher than
projected earlier due to shortfall on the 3G auction amount projected earlier as
well as the oil subsidies announced for this year

• Gradual improvement in tax collections witnessed and expected divestment can

help in tiding over the shortfall thus obviating the need for any additional
borrowing than what the market expects

• We expect the government to gradually reverse most of the fiscal stimulus next
year as recovery in
i private
i t consumption
ti and
d investment
i t t picks
i k up

• 2010-11 deficit number expected to be lower at 5.3-5.5% aided by strong revenue

growth, expected roll back of excise duties & reduction in subsidy burden and
receipts from 3G telecom licence and disinvestments.

• Despite a lower deficit as a percentage to GDP, the net issuance of securities

expected at similar levels as FY10 which will be the key challenge to be managed
by RBI as highlighted in its policy statement

• The sheer
Th h size
i off borrowing
b i i a year when
in h credit
dit growthth picks
i k up can cause a
spike in yields in first quarter of next financial year. At the same time, we recognize
that Banking system’s NDTL growth can provide some support to the markets
 3QFY10 Earnings Review
•3QFY10
Q was the first q
quarter of revenue g
growth p
pick-up
p after a flat to negative
g growth during
g g the
last 4 quarter

•Robust top line growth of 29% (Sensex companies) and 8% (broader market). High growth in
sensex companies led by recovery in metal prices & start of gas production & higher refinery
operating rate for RIL

•Operating profit growth of 29% (Sensex companies) and 21% (broader market). Major
contributors to margin improvement: Metals, Pharma, IT & Auto

•Net profit growth at 18% (Sensex companies) and 34% (broader market) with corporates
benefiting from lower interest rates. Interest cost declined 7% (yoy)

•Major positive surprise in results in Ferrous metals, IT, Telecom, Auto, Retail & Pharma sectors
reflecting pickup in domestic consumption growth & improved global environment for IT spending
and metals.

•Negative surprise in Cement, Construction & PSU oil companies. Cement got hit by significant fall in
realizations & rise in operating costs whereas construction mainly suffered due to project delays on
various accounts. This indicates a slow ppick-up
p in domestic investment cycle
y (also reflected in low
(
credit growth for the banking system at 13%), while the consumption cycle has resumed.

•Markets have built-in significant earnings upgrades over the last 2 quarters, and the momentum of
upgrades has started to slowdown in the current quarter. Going forward, it would be very critical to
see pick
pick-up
up in investment cycle, for continued support to the robust growth momentum witnessed
in 3QFY10
 Equity market view
• The benchmark indices have been relatively quiet in last quarter.
quarter However,
However the
market breadth and participation has improved a lot. We’ve seen a lot of stock
specific activity in last one month particularly in mid and small cap space.

• Equity markets likely to consolidate the gains for some time

• There have been mixed signals from policy makers on the withdrawal of stimulus.
Markets would be closely watching the government’s policy or action on withdrawal
of stimulus. The next big event for direction would be Union Budget to be unveiled
on Feb 26.

• Markets expected to witness higher volatility in the very near term due to global
events

• Our equity market has witnessed expansion in valuation multiple this year and
further gains would be driven largely through increase in corporate earnings.
earnings There
are expectations of around 20% growth in earnings in FY 2010-11

• A lot will depend on government’s policy measures and execution as infrastructure

build up is crucial for maintaining the growth momentum.

• While using macro understanding to hedge the tail risk, we retain our focus on
bottom up stock picking which we believe is the key to generate better returns on a
consistent basis
 Equity market: The road ahead
• Domestic factors would be bigger driving forces
– Structural story: Consumption boom and infrastructure build up
– Improved economic data
– Policy reforms
– Earnings growth

• We expect the monetary and fiscal stimulus to be taken back next year as
recovery in private consumption and investment pick up

• Capital flows to remain buoyant: structural shift towards EMs like India

• Domestic
D ti flows
fl t
to b
become stronger,
t reliance
li on foreign
f i fl
flows will
ill
gradually reduce

• Stock picking would be key: Focus shifts from top down to bottom up

• Critical factors to watch:

– Equity issuance
– RBI
RBI’s s response to inflation and capital flows
– Fiscal consolidation
SBI FM Equity Investment
Process and Strategy
 Investment Process
INDIAN EQUITIES LISTED UNIVERSE

SECTOR ALLOCATION

Quantitative Stock vs. sector benchmarking, Free Float Analysis, Ownership Analysis,
Screening Market Capitalization

Fundamental Focus on Business, Management and Valuation.

Analysis
Business – Size of Opportunity, Nature of Business, Competitive Landscape.
Management – Integrity, Intellect and Intensity.
Company
C
Meeting Valuation – Growth, PE, PEG, ROE, RoCE, Asset turns, Coupon.

Investment Right Price – Difference between price and value.

Argument
g

Portfolio Periodic Portfolio Review, Review of sector weights, Review of individual

Construction weights
 Our Funds’ Investment Style
Market Cap Allocation

Fund Name Launch Large Mid/Small Style Or Strategy

MARKE

SBI Blue chip Fund 2006 100% Large Cap growth

Magnum
g Equity
q y Fund 1991 100%
% Concentrated Large
g Capp growth
g
ET CAP

Magnum Multicap Fund 2005 60-100% 40% Diversified Multicap Growth

Magnum Multiplier Plus 1993 70% 30% Concentrated Multicap Growth

Magnum Global Fund 2002 100% Diversified Mid Cap Growth

Magnum Emerging Business Fund 2004 70% Aggressive Mid cap

Magnum Mid Cap Fund 2005 30% 100% Concentrated Mid cap growth

SBI One India Fund 2006 No cap bias India: 4 regions. Regional approach
THEM

Magnum
g Contra Fund 1999 No capp bias Contrarian approach
pp - value style
y
MATIC

Magnum Tax Gain Fund 1993 No cap bias Tax efficient scheme (3y lock-in period)

SBI Infrastructure Fund 2007 No cap bias Sectors related to Infrastructure

Magnum Pharma Fund 1999 No cap bias Sector: Pharma

SE
ECTORAL

Magnum IT Fund 1999 No cap bias Sector: IT

Magnum FMCG Fund 1999 No cap bias Sector: Consumer Goods

Magnum Comma Fund 2005 No cap bias Sectors related to Commodities

Magnum index fund 2002

Passive
E
Equity

SBI Arbitrage Opportunities Fund 2006 Cash/Futures arbitrages (market neutral)

 SBI Magnum Tax Gain Fund
Open Ended Equity Fund Asset Allocation
Fund Strategy
1% 3%
18% 78%
•Like last month, this month also we’ve added few high
conviction names in the portfolio. We’ve also booked some
profit in some stocks where valuations became rich.
rich For the
month outlook is cautious and therefore will act
accordingly. Large Cap M id Cap

Small Cap Other Current A ssets

Sectoral Breakdown Top

op 10
0 Holdings
o d gs

RELIANCE INDUSTRIES LIMITED 4.03%

STATE BANK OF INDIA 3.88%

ICICI BANK 3.31%

BHARAT HEAVY ELECTRICALS LIMITED 3 10%

3.10%

GAIL (INDIA) LTD 3.08%

TEXTILES
TELECOM
PRECIOUS METALS OIL & NATURAL GAS CORPN LTD 3.02%
PHARMA
PAPER LARSEN & TOUBRO LIMITED 3.02%
METALS
MEDIA & ENTERTAINMENT
INDUSTRIAL MANUFACTURING JINDAL STEEL & POWER LIMITED 2.91%
HEALTHCARE SERVICES
FERTILISERS & PESTICIDES
CONSTRUCTION UNITED SPIRITS LTD 2.87%
CHEMICALS
CEMENT & CEMENT PRODUCTS HDFC BANK LIMITED 2.74%
AUTOMOBILE
SOVEREIGN
SERVICES NTPC LIMITED 2.44%
MISCELLANEOUS
IT
FINANCIAL SERVICES CROMPTON GREAVES LIMITED 2.34%
ENGINEERING
ENERGY TATA POWER COMPANY LIMITED 2 19%
2.19%
CONSUMER GOODS

0% 5% 10% 15% 20% 25% INFOSYS TECHNOLOGIES LIMITED 2.02%

TATA STEEL LTD 1.98%

 SBI Magnum Balanced Fund
Open Ended Hybrid Fund Asset Allocation
Fund Strategy
Have maintained a well balanced portfolio amongst Asset class 26%
– Equity (75%) an Debt (25%). During the month have 49%
increased exposure to Mid cap stocks and Power / power
ancilla stocks.
ancillary stocks 5%
20%
Large Cap M id Cap

Sectoral Breakdown Small Cap Other Current A ssets

Top
op 10
0 Holdings
o d gs

RELIANCE INDUSTRIES LIMITED 4.34%

ICICI BANK 3.45%

BHARAT HEAVY ELECTRICALS LIMITED 3.45%

INFOSYS TECHNOLOGIES LIMITED 3.29%

%

STATE BANK OF INDIA 3.21%

TEXTILES
TELECOM
SOVEREIGN BHARTI AIRTEL LTD 3.08%
SERVICES
PRECIOUS METALS
PHARMA ITC LIMITED 2.58%
PAPER
MISCELLANEOUS SINTEX INDUSTRIES LIMITED 2.04%
METALS
MEDIA & ENTERTAINMENT
IT SOBHA DEVELOPERS LTD 2.03%
INDUSTRIAL MANUFACTURING
HEALTHCARE SERVICES
FINANCIAL SERVICES CIPLA LIMITED 1.93%
FERTILISERS & PESTICIDES
ENGINEERING
ENERGY BAHARAT ELECTRONICS LTD 1.81%
CONSUMER GOODS
CONSTRUCTION
CHEMICALS SADBHAV ENGINEERING 1.78%
CEMENT & CEMENT PRODUCTS
AUTOMOBILE HOUSING DEVELOPMENT FINANCE CORPORATION
1 45%
1.45%
0% 2% 4% 6% 8% 10% 12% 14% LIMITED

INDIAN HOTELS COMPANY LIMITED 1.41%

OIL & NATURAL GAS CORPN LTD 1.34%

 SBI Magnum Contra Fund
Open Ended Equity Fund A
Asset
t All
Allocation
ti
Fund Strategy
4%
1%
•The fund is overweight in utilities, telecom, cement and
fertilizers sector. We have increased the weight age of low 27%

beta & defensive names in our pportfolio

68%

Large Cap M id Cap

Sectoral Breakdown Small Cap Other Current A ssets

T 10 H
Top Holdings
ldi
RELIANCE INDUSTRIES LIMITED 8.69%

ICICI BANK 4.33%

BHARTI AIRTEL LTD 3.69%

ITC LIMITED 3.22%

TEXTILES
TELECOM
PRECIOUS METALS CROMPTON GREAVES LIMITED 3.19%
PHARMA
PAPER OIL & NATURAL GAS CORPN LTD 3.01%
METALS
MEDIA & ENTERTAINMENT
INDUSTRIAL MANUFACTURING STATE BANK OF INDIA 2.98%
HEALTHCARE SERVICES
FERTILISERS & PESTICIDES
CONSTRUCTION TATA CONSULTANCY SERVICES LTD. 2.56%
CHEMICALS
CEMENT & CEMENT PRODUCTS HDFC BANK LIMITED 2.49%
AUTOMOBILE
SOVEREIGN
SERVICES HINDUSTAN ZINC 2.34%
MISCELLANEOUS
IT
FINANCIAL SERVICES BHARAT HEAVY ELECTRICALS LIMITED 2.21%
ENGINEERING
ENERGY SHREE CEMENT LIMITED 2.05%
CONSUMER GOODS
INDIAN HOTELS COMPANY LIMITED 1 99%
1.99%
0% 5% 10% 15% 20% 25% 30%
NTPC LIMITED 1.93%

NHPC LIMITED 1.89%

Source: MFI
 SBI Magnum Equity Fund
Open Ended Equity Fund Asset Allocation
Fund Strategy
2% 10%
78%
• Have churned within the mid-cap space to introduce 10%
new stocks while reducing the overall mid-cap exposure.
Large
g cap p exposure
p incrementally
y low-beta g given a
negative bias on the market

Sectoral Breakdown Large Cap M id Cap

Small Cap Other Current A ssets

Top 10 Holdings
RELIANCE INDUSTRIES LIMITED 5.12%

ITC LIMITED 4.51%

INFOSYS TECHNOLOGIES LIMITED 4.47%

BHARAT HEAVY ELECTRICALS LIMITED 4 34%

4.34%
TEXTILES
TELECOM
SOVEREIGN ASIAN PAINTS LIMITED 4.30%
SERVICES
PRECIOUS METALS ICICI BANK 4.26%
PHARMA
PAPER
MISCELLANEOUS HERO HONDA MOTORS LIMITED 3.98%
METALS
MEDIA & ENTERTAINMENT STATE BANK OF INDIA 3.45%
IT
INDUSTRIAL MANUFACTURING
HEALTHCARE SERVICES JINDAL STEEL & POWER LIMITED 3.43%
FINANCIAL SERVICES
FERTILISERS & PESTICIDES
ENGINEERING BAJAJ HOLDINGS & INVESTMENT LTD. 3.34%
ENERGY
CONSUMER GOODS LARSEN & TOUBRO LIMITED 3.30%
CONSTRUCTION
CHEMICALS
CEMENT & CEMENT PRODUCTS HDFC BANK LIMITED 3.24%
AUTOMOBILE
MAHINDRA & MAHINDRA LIMITED 3 07%
3.07%
0% 5% 10% 15% 20% 25% 30%
CRISIL LTD 2.91%

POWER FINANCE CORPORATION LTD 2.75%

Source: MFI
 SBI Magnum Emerging Business Fund
Open Ended Equity Fund Asset Allocation
Fund Strategy 4% 2%
45%
49%
• High risk high return strategy with a focus on growth
businesses. Investment philosophy is entirely bottom up with
little benchmark bias. Churn has been and is expected
p to
remain high. Have incrementally added to our top ideas

Large Cap M id Cap

Sectoral Breakdown Small Cap Other Current A ssets

T 10 H
Top Holdings
ldi
JK TYRE AND INDUSTRIES LTD 6.63%

GAMMON INFRASTRUCTURE PROJECTS LTD. 4.70%

PTC INDIA LIMITED 4.66%

SUNIL HIGHTECH ENGINEERS LTD 4.35%

EMCO LTD 4.20%

TEXTILES
TELECOM REDINGTON (INDIA) LTD. 4.15%
SOVEREIGN
SERVICES
PRECIOUS METALS
PHARMA BAJAJ HOLDINGS & INVESTMENT LTD. 4.03%
PAPER
MISCELLANEOUS
METALS S PVR LIMITED 4.01%
MEDIA & ENTERTAINMENT
IT
INDUSTRIAL MANUFACTURING McNALLY BHARAT ENGINEERING CO. LTD 3.96%
HEALTHCARE SERVICES
FINANCIAL SERVICES BLUE DART EXPRESS LIMITED 3.93%
FERTILISERS & PESTICIDES
ENGINEERING
ENERGY JAIN IRRIGATION SYSTEMS LIMITED 3.64%
CONSUMER GOODS
CONSTRUCTION
CHEMICALS PAGE INDUSTRIES LIMITED 3.16%
CEMENT & CEMENT PRODUCTS
AUTOMOBILE
O O INFOTECH ENTERPRISES LIMITED 3.15%
0% 5% 10% 15% 20% ORIENT PAPER & INDUSTRIES LTD. 3.14%

USHA MARTIN LIMITED 3.13%

 SBI Magnum Midcap Fund
Open Ended Equity Fund Asset Allocation
Fund Strategy 9%
1% 7%
The fund continues to be overweight on sectors which are
significantly exposed to the changing demography and 83%
increasing domestic consumption such as beverage, media and
select real estate.
estate We have added exposure to couple of PSUs
to play the disinvestment theme. We have added weight to
consumer sector and booked profit in IT services. Consumer
Large Cap M id Cap
and media together account for 30% by weight in the fund
Small Cap Other Current A ssets
which we believe would do well going ahead

T 10 H
Top Holdings
ldi
Sectoral Breakdown
UNITED BREWERIES LIMITED 7.05%

GUJARAT MINERAL DEVLOPMENT CORPORATION 6.40%

MINDTREE LIMITED 5.31%

ENGINEERS INDIA LTD

LTD. 5 08%
5.08%

SOBHA DEVELOPERS LTD 4.76%

CESC LTD. 4.75%

TEXTILES
TELECOM
PRECIOUS METALS ENTERTAINMENT NETWORK INDIA LTD 4.71%
PHARMA
PAPER
METALS UTV SOFTWARE COMMUNICATIONS LTD. 4.55%
MEDIA & ENTERTAINMENT
INDUSTRIAL MANUFACTURING
HEALTHCARE SERVICES BEML LIMITED 4.50%
FERTILISERS & PESTICIDES
CONSTRUCTION
CHEMICALS BOMBAY DYEING & MFG LTD 4.49%
CEMENT & CEMENT PRODUCTS
AUTOMOBILE
SOVEREIGN IBN18 BROADCAST LTD. 4.43%
SERVICES
MISCELLANEOUS
IT ANANT RAJ INDUSTRIES LTD 4.04%
FINANCIAL SERVICES
ENGINEERING TECH MAHINDRA LIMITED 3 85%
3.85%
ENERGY
CONSUMER GOODS
PVR LIMITED 3.75%
0% 5% 10% 15% 20%
ELECON ENGINEERING CO. LTD 3.68%
 SBI Magnum Global Fund
Open Ended Equity Fund Asset Allocation
Fund Strategy 5%
6% 22%
• Bottom up strategy and pre-dominantly mid-cap.
Portfolio bias defensive given the mid-cap dominance and
a negative bias on the market
67%
Large Cap M id Cap
Sectoral Breakdown Small Cap Other Current A ssets

Top
op 10
0 Holdings
o d gs

ASIAN PAINTS LIMITED 5.42%

REDINGTON (INDIA) LTD. 5.24%

BOSCH LIMITED 4.49%

TEXMACO LTD 4 44%

4.44%
TEXTILES GLAXOSMITHKLINE CONS.HEALTHCARE LTD 3.95%
TELECOM
PRECIOUS METALS
PHARMA BEML LIMITED 3.83%
PAPER
METALS BAJAJ HOLDINGS & INVESTMENT LTD. 3.62%
MEDIA & ENTERTAINMENT
INDUSTRIAL MANUFACTURING
HEALTHCARE SERVICES UTV SOFTWARE COMMUNICATIONS LTD. 3.53%
FERTILISERS & PESTICIDES
CONSTRUCTION DIVIS LABORATORY LIMTIED 3.48%
CHEMICALS
CEMENT & CEMENT PRODUCTS
AUTOMOBILE LUPIN LIMITED 3.12%
SOVEREIGN
SERVICES ORACLE FINANCIAL SERVICES SOFTWARE 3.07%
MISCELLANEOUS
IT
FINANCIAL SERVICES THERMAX LTD 3.00%
ENGINEERING
ENERGY SHREE CEMENT LIMITED 2 76%
2.76%
CONSUMER GOODS
CASTROL INDIA LIMITED 2.68%
0% 5% 10% 15% 20%
INDIA INFOLINE LTD 2.61%

Source: MFI
 SBI Magnum Multicap Fund
Fund Strategy Open Ended Equity Fund Asset Allocation
Scheme has increased its exposure to mid cap stocks and
5%
maintained its overweight stance on Healthcare and consumer 3%
24%
goods. IT and Financials sector have seen volatility during the
month and this opportunity will be utilized to cut underweight
position in Financials.
68%

Large Cap M id Cap

Sectoral Breakdown Small Cap Other Current A ssets

Top 10 Holdings
RELIANCE INDUSTRIES LIMITED 6.07%

ICICI BANK 4.40%

BHARAT HEAVY ELECTRICALS LIMITED 3.53%

INFOSYS TECHNOLOGIES LIMITED 3.40%

STATE BANK OF INDIA 3.38%

TEXTILES
TELECOM BHARTI AIRTEL LTD 3.02%
PRECIOUS METALS
PHARMA ITC LIMITED 2.99%
PAPER
METALS
MEDIA & ENTERTAINMENT LUPIN LIMITED 2.40%
INDUSTRIAL MANUFACTURING
HEALTHCARE
C S
SERVICES
C S
FERTILISERS & PESTICIDES LARSEN & TOUBRO LIMITED 2.36%
CONSTRUCTION
CHEMICALS
CEMENT & CEMENT PRODUCTS CROMPTON GREAVES LIMITED 2.22%
AUTOMOBILE
SOVEREIGN
SERVICES TATA CONSULTANCY SERVICES LTD. 2.20%
MISCELLANEOUS
IT BAHARAT ELECTRONICS LTD 2.15%
FINANCIAL SERVICES
ENGINEERING
ENERGY CIPLA LIMITED 2.13%
CO S
CONSUMER GOODS
GOO S

0% 5% 10% 15% 20% OIL & NATURAL GAS CORPN LTD 2.10%

PANTALOON RETAIL INDIA LIMITED 2.00%

Source: MFI
 SBI Magnum Multiplier Plus
Open Ended Equity Fund Asset Allocation
Fund Strategy
4% 3%
56%
• We have booked profits in several stocks as valuation 37%
became stretched while increasing exposure to some of
high conviction top holdings. For the month outlook is
cautious and therefore will act accordingly.
accordingly

Large Cap M id Cap

Sectoral Breakdown Small Cap Other Current A ssets

Top
op 10
0 Holdings
o d gs

BHARAT HEAVY ELECTRICALS LIMITED 5.81%

LUPIN LIMITED 5.36%

CROMPTON GREAVES LIMITED 5.26%

THERMAX LTD 4.41%

STATE BANK OF INDIA 4.34%

TEXTILES
TELECOM MAHINDRA & MAHINDRA LIMITED 3.91%
PRECIOUS METALS
PHARMA
PAPER NESTLE (I) LIMITED 3.88%
METALS
MEDIA & ENTERTAINMENT
INDUSTRIAL MANUFACTURING GLAXOSMITHKLINE CONS.HEALTHCARE LTD 3.11%
HEALTHCARESERVICES
HEALTHCARE SERVICES
FERTILISERS & PESTICIDES RELIANCE CAPITAL LTD 3.08%
CONSTRUCTION
CHEMICALS
CEMENT & CEMENT PRODUCTS FEDERAL BANK LTD 3.06%
AUTOMOBILE
SOVEREIGN
SERVICES
HINDUSTAN CONSTRUCTION CO. LTD. 3.02%
MISCELLANEOUS
IT ITC LIMITED 2.99%
FINANCIAL SERVICES
ENGINEERING
ENERGY UNITED PHOSPHORUS LIMITED 2 92%
2.92%
CONSUMER GOODS
OIL & NATURAL GAS CORPN LTD 2.89%
0% 5% 10% 15% 20%
UNITED SPIRITS LTD 2.77%

Source: MFI
 SBI Gold Exchange Traded Scheme
Open Ended Exchange Traded Scheme
DXY versus Gold
Fund Strategy
• Gold prices have moved back to levels of <$1100, from
an all-time high of $ 1200 per ounce. The fund has
remained
i d fully
f ll i
invested
t d in
i underlying
d l i gold
ld giving
i i
maximum benefit of the price appreciation of Gold to
our investors.

Current View
• In last communication we had pointed out that the
recent rally in Gold prices had been a function of
Investment demand (ETF’s Globally) rather than actual
consumption and by the logic of investment, profit
b ki
booking would
ld be
b an integral
i l part off the
h same, which
hi h G ld prices
Gold i weakened
k d
we believe is taking place. Prices are expected to be
1250
volatile in the current quarter of the year and likely to 1200
trade in a narrow band and shall follow the DXY 1150
1100
movement. (inverse correlation with DXY – see chart) 1050
1000

• We continue to believe that Gold is an insurance 950

900
against policy makers losing control of fiscal and 850

quantitative monetary policies, and reiterate our 800

recommendation of 4-8% portfolio allocation towards

Gold.
Gold (US$)
 Performance as of 31st Jan’10
Aum(in 1 1 3Year 5Year Since
Fund Name crs) month Year s s Inception
Magnum Balanced 493.9 -2.5 66.1 8.8 21.1 18.3
Crisil Balanced Fund Index -3.8 45.8 8 14.7
Magnum COMMA 623 7
623.7 -3
3.4
4 94 4
94.4 12 2
12.2 — 20 4
20.4
BSE 200 -5.3 86.5 6.9 18.9
Magnum Contra 3258.4 -4.3 87.7 11.2 29.8 27.9
BSE 100 -5.7 81.8 6.8 19.8
Magnum Emerging Businesses 181 4
181.4 -1
1.1
1 131 9
131.9 14
1.4 21 2
21.2 24 5
24.5
BSE 500 -4.9 90.0 6.4 19.0
Magnum Equity 388.1 -5.4 86.2 8.8 23.9 16.4
BSE 100 -5.7 81.8 6.8 19.8
Magnum Global 1228 3
1228.3 -4
4.2
2 131 9
131.9 11
1.1 24 8
24.8 13 9
13.9
BSE 100 -5.7 81.8 6.8 19.8
Magnum Midcap 334.9 -0.4 121.8 -2.6 — 17.3
CNX Midcap -3.1 114.5 10.9 20.3
Magnum MultiCap 669 0
669.0 -4
4.5
5 82 3
82.3 18
1.8 — 12 8
12.8
BSE 100 -5.7 81.8 6.8 19.8
Magnum Multiplier Plus 1067.6 -3.9 88.8 9.3 28.0 15.1
BSE 100 -5.7 81.8 6.8 19.8
Magnum Taxgain 5199.5 -4.8
4.8 84.2 6.1 28.6 19.4
BSE 100 -5.7 81.8 6.8 19.8
Thank You
 Disclaimer

Principle Trustee: State Bank of India; Trustees: SBI Mutual Fund Trustee Company Private Ltd
Asset Management Company: SBI Funds Management Pvt. Ltd. (A joint venture between SBI and
S iété Generale
Société G l Asset
A t Management)
M t) 191 Maker
M k Towers
T 'E' Cuffe
'E', C ff Parade,
P d Mumbai
M b i - 400 005.
005 Tel:
T l
91 22 2218 0221-27. Website: www.sbimf.com Email: [email protected].

Past performance of the schemes of the Sponsor/AMC/Mutual Fund is no guarantee for the future
performance of the scheme.
This presentation is for information purposes only and is not an offer to sell or a solicitation to buy
any mutual fund units/securities. These views alone are not sufficient and should not be used for
the development or implementation of an investment strategy. It should not be construed as
investment advice to any party. All opinions and estimates included here constitute our view as of
this date and are subject to change without notice. Neither SBI Funds Management Private Limited,
nor any person connected with it, accepts any liability arising from the use of this information. The
recipient of this material should rely on their investigations and take their own professional advice

Mutual funds are subject to market risks. Please read the offer
document of the schemes carefully before investing.