NII : New India beats rising market
New India Investment Trust reported a 21.5% total return on its net asset value over the six months ended 30 September 2014, ahead of the MSCI India Index which rose by 18.6%. The fund’s discount has narrowed noticeably as well from 14.6% at the start of the period to something closer to 6% today.
The general mood of euphoria following the elections helped push the stockmarket higher. The managers’ report mentions the added benefits of not holding exposure to the mining and energy sectors (which were hit by a decision to revoke a number of coal mining licences). Having exposure to automotive related stocks, Kansai Nerolac Paints, Bosch and Hero Motocorp, is cited as good news for the portfolio on expectations of a pick-up in car sales. Container Corp of India (Concor) and ABB India were helped by hopes of an upturn in infrastructure spending. Concor also gained on hopes that a dedicated freight corridor between Mumbai and Delhi would significantly boost its business. Gujarat Gas was another good performer (on good results and a planned merger). In the IT sector, CMC did well and Piramal Enterprises benefited from selling its stake in Vodafone back to the group for a more than 50% return.
Generally being underweight the pharmaceutical industry detracted from returns. Lupin, which they do hold, did well after announcing good earnings and new distribution partnerships. In the Financial sector, Jammu & Kashmir Bank revealed, unhelpfully, a sharp jump in non-performing loans.