Newspaper Summary 220326

 

Six passive equity funds to buy the dip

By Aarati Krishnan

With the Iran conflict stretching on and foreign portfolio investors selling stocks aggressively, the market mood has shifted from cautious optimism to gloom. For retail investors, deciding which specific stocks to buy during such volatility is a daunting task, as different sectors like crude-sensitive airlines or domestic consumption face varying headwinds. Instead of trying to decipher these complexities, an easier route to capitalise on the market fall is to buy passive funds.

Indian fund houses currently offer a roster of 677 index funds and Exchange Traded Funds (ETFs). Based on an analysis of these offerings, there are six types of index funds suitable for different investor profiles, provided they have a minimum time horizon of five years.

For New Equity Investors

Those making their debut in equity funds can consider a Nifty100 index fund or a Nifty LargeMidcap 250 fund.

• 1. Nifty100 Index Fund: This index owns the top 100 stocks by market capitalisation, representing the official large-cap universe. It is often a better choice than its popular sibling, the Nifty 50, because it is more diversified and has a better return record. Over the last 20 years, it has delivered an average return of 12.6 per cent compared to 12.2 per cent for the Nifty 50, with a much lower probability of losses. Its valuation has recently corrected to 20.2 times PE from a 2024 peak of 25.3.
  • Recommended Funds: Bandhan Nifty100 Index Fund (lowest expense ratio at 0.10 per cent) and Axis Nifty 100 Index Fund.
• 2. Nifty LargeMidcap 250 Index Fund: This index offers a neat 50-50 weight split between the top 100 and the next 150 stocks. It has a superior risk-reward profile compared to the Nifty500, delivering an average 14.4 per cent CAGR over five-year periods. While it rarely delivers capital losses over a five-year holding period, it is currently pricier than the Nifty100 with a PE of nearly 24.
  • Recommended Funds: Zerodha Nifty LargeMidcap 250 Fund (0.27 per cent expense ratio), HDFC, or ICICI Pru.

For Aggressive Investors

• 3. Nifty Smallcap 250 Index Fund: For those with a high risk tolerance, this index skims the "creamy layer" of the small-cap universe by focusing on the top 250 names below the mid-cap layer. It is highly volatile, having nosedived 70 per cent in its worst year, but it managed a 40 per cent CAGR in its best five-year spell over the last two decades. The index PE has corrected from over 35 times in 2024 to 24 times currently.
  • Recommended Fund: Motilal Oswal Nifty Smallcap 250 Index Fund (0.33 per cent expense ratio).

For Defensive Investors

Defensive investors looking for a smoother journey during market mayhem have three distinct options:

• 4. Nifty 500 Value 50 Index Fund: This fund selects the 50 best-scoring stocks from the Nifty 500 based on an aggregate of PE, Price-to-Book, Price-to-Sales, and dividend yield ratios. It has trounced the Nifty100 significantly in the last five years with a 29.4 per cent CAGR and restrict losses during downturns. Its portfolio currently features a modest PE of 9.7 times.
  • Recommended Fund: Axis Nifty 500 Value 50 Index Fund (0.17 per cent fee).
• 5. Nifty Dividend Opportunities 50 Index Fund: This index targets companies with high and stable dividend yields, which acts as an anchor for stock prices when growth visibility is low. It offers lower return volatility (14.5 per cent standard deviation) compared to the Value 50 index.
  • Recommended Fund: Nippon India ETF Dividend Opportunities 50.
• 6. Nifty 100 Low Vol 30 Index Fund: This "volatility-killing" index picks 30 large-cap stocks with the lowest standard deviation of daily returns. While it may lag in aggressive bull markets, it outperforms by holding steady during turbulent phases, managing a 12.9 per cent CAGR over the last five years.
• Recommended Fund: Mirae Asset runs a fund tracking this index.

Battle scars

By Nishanth Gopalakrishnan

The past three weeks since the start of the US-Israel-Iran war have been quite painful for global markets. Equities, commodities, bonds and currencies have been invariably volatile. Secularly, equities have declined, and bonds have cracked as yields spiked. Commodities, except for crude and natural gas, have fallen as well. As the dollar strengthened, other major currencies depreciated against it.

The following points provide a visual stock-taking of the market's current state:

• Equity indices slide
• Sovereign yields firm up
• Energy costs more, metals fall
• Dollar gains
• Auto, Oil & Gas – sectors worst hit

Resistance holds

By Akhil Nallamuthu

Weak structure suggests continuation of the decline

Nifty 50 (23,115) and Nifty Bank (53,427) were down 0.2 per cent and 0.6 per cent respectively over the last week. While both indices tried to overturn the trend, the attempt met with a strong resistance resulting in a decline. Here is our analysis of charts and the derivatives data of both indices:

NIFTY 50

Nifty futures (March) (23,141) was down 0.3 per cent last week. During the first half, the contract rallied and made a high of 23,876 on Wednesday. However, on Thursday, it witnessed a considerable fall. Consequently, despite a recovery on Friday, the contract posted a weekly loss.

Although 23,000 is a support ahead, given the strength of the bears, we expect Nifty futures to see a further decline, potentially to 22,700. Support below 22,700 is at 22,500. Only a decisive breakout of 24,000 can turn the outlook positive. Until then, the intermittent rises are likely to be seen as selling opportunities, leading to the arrival of fresh short positions.

While Nifty futures was down 0.3 per cent for the week, the outstanding open interest of the contract saw a decline from 200 lakh contracts to 172 lakh contracts. By definition, this indicates long unwinding. However, from a broader picture, the data shows that some shorts have exited over the last week, reflected in cumulative open interest dropping from 242 lakh contracts to 228 lakh contracts.

Yet, there are shorts in the system and the strong sell-off in the second half of last week indicates that the bears hold the upper hand over the bulls. That said, the Put Call Ratio (PCR) of Nifty March options stood at 1.1 on Friday, showing some positive bias. But considering all factors, the probability of a decline remains high.

• Strategy: Retain the short trade suggested last week at 23,750, but revise the stop-loss from 24,200 to 23,500 to lock in some profits. Exit the trade at 22,700. For fresh positions, one can wait and short Nifty futures if it inches up to 23,300, with a target of 22,700 and a stop-loss of 23,500.

NIFTY BANK

Nifty Bank futures (March) (53,554) saw an uptick during the first half of last week, but the rally did not sustain. While the contract made a high of 55,660 on Wednesday, what followed was a sharp decline, leading to a weekly loss of 0.7 per cent.

The contract is now trading near a support at 53,500. This base helped Nifty Bank futures rebound last week, but we expect it to give up this time, eventually leading to a decline in upcoming sessions. A breakdown below 53,500 can open the door for a fall to 51,850; the next support is at 50,500. If the contract bounces off 53,500 again instead of breaching it, we might see a rise to 54,500 or 55,000. For the trend to turn bullish, Nifty Bank futures should break out of 55,500.

As March futures dropped last week, the outstanding open interest decreased from 22.6 lakh contracts to 19.4 lakh contracts, indicating unwinding of long positions. However, unlike in Nifty futures, cumulative open interest marginally increased from 32.2 lakh to 32.4 lakh contracts, hinting that bears are calling the shots at a broader level. Supporting the bearish inclination, the PCR of March options stood at 0.80. Overall, Nifty Bank futures appears weaker than Nifty futures.

• Strategy: Retain the short position recommended last week at 55,400. Revise the stop-loss from 56,750 to 54,800. Exit at 51,850. For fresh trades, wait for a rise to 54,200 and then short the contract with a target of 51,850 and a stop-loss of 54,800.

Broad Trend Summary

• Long unwinding seen in March index futures.
• Rallies fail near key levels.
• Sell-on-rise strategy preferred.

Free fall

By Gurumurthy K

US MARKET OUTLOOK: US benchmark indices are being beaten down badly

The Dow Jones Industrial Average, S&P 500 and the NASDAQ Composite indices continue to get beaten down. All three indices were down for the fourth consecutive week, dropping about 2 per cent each last week. The Dow Jones, down about 6 per cent, has tumbled the most in the last four weeks.

While the US 10Yr Treasury Yield has surged for the third consecutive week, this surprisingly has not aided the dollar index, which fell about a per cent last week. Here is the analysis of how low benchmark indices could fall and the outlook for the dollar:

DOW JONES (45,577.47)

As expected, the Dow Jones fell, breaking below the support at 46,450, clearing the way for a potential fall to 45,000. The region between 45,000 and 44,900 is a strong support zone where the index has good chances to bounce back toward 46,000–46,500. however, a break below 44,900 could lead to further downside at 44,200–44,000. The preference is to see the Dow sustain above 44,900 on its first test to trigger a bounce.

S&P 500 (6,506.48)

Resistance at 6,750 capped the upside last week, and the index fell below 6,600 as expected. The downside is now open to 6,400–6,380, after which a bounce back toward 6,600 is expected. Intermediate support exists around 6,460–6,450; if this holds, a corrective bounce to 6,550–6,600 may occur before the fall to 6,400–6,380.

NASDAQ COMPOSITE (21,647.61)

The index may see a rise to 21,900–22,000, but thereafter it is likely to fall back again. This leg of the decline could drag the NASDAQ Composite down to 20,300–20,000 in the coming weeks.

DOLLAR OUTLOOK

The dollar index (99.50) failed to achieve a strong follow-through rise last week, oscillating around 100. However, the bias remains positive. Strong support in the 99–98.85 region should limit the downside, and a fresh rise from this zone could take the index to 101 in the short term. In the medium term, the index has the potential to breach 101 and rise to 103–104.

TREASURY YIELD

Support at 4.18 per cent held well, and the US 10Yr Treasury Yield (4.38 per cent) touched a low of 4.17 per cent before surging beyond the expected 4.3 per cent level. The outlook remains bullish with strong momentum, and the yield has the potential to target 4.6 per cent.

Failed attempt

By Gurumurthy K

INDEX OUTLOOK: The benchmark indices have room to fall more from here before finding a bottom

Nifty 50, Sensex, and the Nifty Bank index witnessed a very good bounce in the first half last week. However, a sharp fall in HDFC Bank’s share price on Thursday played spoilsport, and benchmark indices gave away all gains to close the week in the red. On the charts, there is room for further decline before a bottom is found, though important supports are approaching.

Market Data and FPI Activity

• Sector Performance: The BSE Oil & Gas index fell the most last week, down 3.3 per cent, while the BSE Telecom index outperformed with a 2 per cent gain.
• FPI Selling: Foreign Portfolio Investors (FPIs) remain on a selling spree, with a net outflow of about $3.84 billion last week and $9.57 billion so far in March.

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NIFTY 50 (23,114.50)

• Short-term View: The outlook remains weak. Intermediate support is around 22,900; a break below this could drag Nifty to 22,300–22,200, followed by an expected bounce. If it sustains above 22,900, it may trade in a range of 22,900–24,000. Surpassing the crucial 24,000 resistance is necessary to ease downward pressure.
• Medium-term View: Support at 22,200–22,000 is crucial. A bounce from there and a rise past 24,000 could target 26,000–26,400. The rally toward 28,000–30,000 depends on sustaining above 22,000 and breaching 26,400.

NIFTY BANK (53,427.05)

• Short-term View: Poised near a crucial support of 53,300, which it is expected to break, potentially leading to a fall to 52,200–52,000. A bounce from 52,000 could take it back to 54,000–56,000.
• Medium-term View: As long as it stays above 52,200–52,000, the broader bullish view remains intact, with the potential to reach 60,000 in coming weeks and 64,000–65,000 in the medium term.

SENSEX (74,532.96)

• Short-term View: Resistance at 77,000 held well, keeping the downside open toward 73,000–72,800. A bounce after this fall could return the index to 76,000–77,000. Decisively crossing 77,000–77,500 is required for a positive outlook.
• Medium-term View: Levels of 72,800 and 72,250 are critical. A strong bounce and rise past 77,500 could target 85,000–86,000.

NIFTY MIDCAP 150 (20,226.90)

• Short-term View: Resistance at 21,000 is holding, but the outlook is mixed. Below 21,000, it remains vulnerable to breaking support at 19,800, which could drag it to 19,200–19,000. A break above 21,000 is needed to revisit 22,800.
• Extended Fall: If it declines below 19,000, a further drop to 18,300–18,000 is possible.

NIFTY SMALLCAP 250 (14,791.95)

The index failed to rise back above 15,000, keeping a potential fall to 14,000 alive. Support at 14,000 is strong; a bounce from there could start a new uptrend toward 22,500–23,000 in the long term. A break below 14,000 would invalidate the bullish view and could lead to 13,000 or lower.

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Key Supports

• Nifty 50: 22,200, 22,000
• Sensex: 72,800, 72,250
• Nifty Bank: 52,200, 52,000

Telcos engage with Mumbai Metro body for network infra along new line

By Vallari Sanzgiri, Mumbai

The Cellular Operators Association of India (COAI) is currently in talks with Mumbai Metro authorities regarding the establishment of network infrastructure along the newly constructed aqua line. Industry sources have confirmed that discussions are underway between the COAI and the Mumbai Metro Railway Ltd (MMRCL) to manage ACES infrastructure following the termination of its third-party contract.

Exploring Options

The metro authority has the option to offer 'right of way' to telecom service providers (TSPs), allowing them to build joint infrastructure with one TSP acting as the lead operator. Based on the commercial feasibility of the existing infrastructure, MMRCL intends to issue a fresh call for a service provider that offers lower charges for the use of space for telecom equipment. Previously, telecommunications companies had expressed concerns regarding the unviable rates offered by MMRCL's selected partner for the use of its network equipment. Consequently, services from Vodafone Idea (Vi) and BSNL, which were previously provided via ACES, have been switched off on the metro line.

A spokesperson for Vi confirmed that their services on the Mumbai metro line are currently impacted due to the termination of the primary contract with ACES. The company stated it remains committed to working with MMRCL to explore options for reinstating services as soon as possible.

Government Engagement

In response to these developments, ACES has reached out to Chief Minister Devendra Fadnavis and the Union Ministry of Communications to request a meeting on the matter. Additionally, Indus Towers has been seeking a "comfort letter" from all telcos to engage with metro authorities for in-building solutions. ACES has advised Indus to adopt a "wait and watch" approach until their discussions with the government conclude.

Despite the current disruptions, telcos remain optimistic about reaching a favorable resolution. This optimism is rooted in prior government orders that recognize metros as "public spaces," where established TSPs are granted preference for providing services.

Airtel ‘mobile connects’ Navi Mumbai airport

Airtel has become fully functional at Navi Mumbai International Airport Ltd, with Jio Infocomm’s network expected to follow shortly.

In-Building Coverage Confirmed Adani Airport CEO Arun Bansal confirmed the commencement of services on Friday via a LinkedIn post, stating, “Finally, fantastic In-building coverage at Navi Mumbai airport by leading Mobile Operator. Thanks Airtel for giving great consumer experience”.

While Airtel is now functional, sources indicate that Jio is currently addressing a few remaining dark spots within the airport building and is expected to operationalise its services soon. Additionally, both telecom giants are preparing to have their in-building solutions (IBS) ready for the inauguration of the Noida International Airport on March 28.

Resolution of Infrastructure Conflicts These developments mark the conclusion of right-of-way (RoW) conflicts at two of India's major airports. Airport authorities had previously argued that they had already installed mobile network infrastructure themselves after multiple discussions with telecom service providers (TSPs).

However, the Department of Telecommunications (DoT) intervened, recognising airports as a “public entity” and directing authorities to allow telcos to set up their own network infrastructure.

Faisal Kawoosa, Chief Analyst and Founder of Techarc, noted that preventing TSPs from installing their own infrastructure would have led to service degradation. He explained that standard WiFi connectivity is insufficient to support the lakhs of users typically present at airport premises. Following the resolution at these airports, telcos are now looking for a similar settlement regarding infrastructure conflicts on Mumbai’s new metro line.

Trump mulls ‘winding down’ war

RISING TENSIONS. Iranian media: Natanz enrichment facility targeted; Israel steps up airstrikes on Hezbollah Reuters Dubai/Washington

President Donald Trump said the US was considering “winding down” its military operation against Iran, as Iran and Israel traded attacks on Saturday and Iranian media reported that the nuclear enrichment facility in Natanz had been attacked. In a social media post, Trump claimed the US was close to meeting its objectives but insisted that other nations should take the lead in policing the Strait of Hormuz, noting that its near-closure threatens a global energy shock.

Mixed Messaging

The Trump administration has sent conflicting signals regarding its goals in the war, which is now entering its fourth week. Within a 24-hour period, Trump suggested the conflict could wind down as the Iranian threat was being eliminated, even while US marines and heavy landing craft were simultaneously heading to the region on an unclear mission. On Truth Social, Trump stated, “We are getting very close to meeting our objectives as we consider winding down our great military efforts in the Middle East with respect to the terrorist regime of Iran”.

Lashes Out at NATO

Trump also accused NATO allies of “cowardice” for their reluctance to help secure the Strait of Hormuz, noting they had not been consulted about the war.

Recent Strikes

As fighting continued, Iranian media reported that US-Israeli forces attacked the Shahid Ahmadi-Roshan Natanz enrichment complex on Saturday morning. While technical experts found no radioactive leak or risk to nearby residents, Israel claimed it was unaware of any such strike. Additionally, Israel attacked Beirut, stating it was targeting the Iran-backed Lebanese militia. This marked the deadliest spillover since Hezbollah began firing on Israel in support of Tehran on March 2.

Valuation Radar: The Good, The Bad, The Ugly

Sector Valuation and Return Table The following data, disseminated by S&P BSE, highlights the performance and valuation of various sector indices as of the reporting date:

Sector Index	P/E	P/BV		Weekly Return (%)	Monthly Return (%)	Annual Return (%)
Nifty 50	20.2	3.1		-0.2	-9.6	-0.3
Sensex	20.5	4.0		0.0	-10.0	-2.4
Auto	31.7	6.0		1.6	-11.4	12.6
Bankex	14.3	2.1		-0.5	-12.5	4.6
Capital Goods	50.8	13.3		-0.4	-3.3	9.9
Consumer Durables	58.0	15.0		-0.5	-7.5	-1.8
FMCG	32.5	7.2		-1.4	-8.8	-9.7
Healthcare	37.5	6.4		-1.1	-1.8	2.0
IT	21.5	5.9		0.3	-9.1	-21.8
Metal	19.8	3.2		1.2	-4.7	20.4
Oil & Gas	8.6	1.5		-3.3	-10.4	5.8
Power	32.6	4.4		0.0	0.6	6.9
PSU	11.4	2.2		-0.8	-7.1	17.2
Realty	34.1	4.4		-1.9	-15.1	-18.4
Teck	25.2	7.5		1.0	-8.3	-13.4

Market Performance Overview During the past week, the Nifty 50 declined by 0.2 per cent, while the Sensex remained flat. BSE Auto was the top performer with a 1.6 per cent gain, followed by BSE Metal (1.2 per cent) and BSE Teck (1 per cent). The steepest weekly declines were seen in BSE Oil & Gas and BSE Realty, which fell by 3.3 per cent and 1.9 per cent respectively.

Guide to Interpreting the Metrics The listings provided aim to help investors sift through companies based on their fundamentals and monitor financial performance across the S&P BSE 500 index.

• CMP (Current Market Price): The closing price on the BSE as of the last traded day.
• EPS (Earnings per Share): Net profit per outstanding share for the last trailing 12 months.
• PE (Price Earnings Ratio): The ratio of market price to EPS; a primary metric for determining if a stock is cheap or expensive.
• PB (Price to Book Value): Stock price relative to net worth, which is particularly relevant for banks and asset-heavy firms.
• Sales and Profit (Qty): Percentage growth in net sales and profits for the latest reporting quarter compared to the previous year, adjusted for one-off items.
• Sales and Profit (TTM): Similar to "Qty" but covering the trailing twelve-month period.
• Wkly Rtn (Weekly Return): Percentage change in stock price over the last week.
• ROCE (Return on Capital Employed): Indicates the returns generated on the capital used by the business.
• DER (Debt Equity Ratio): Total loans divided by shareholder funds, indicating a company's level of indebtedness.
• Yearly High and Low: The price range the stock has occupied over the past year.

The analysis uses consolidated numbers where available to provide a holistic view of finances for the top 500 listed companies, chosen for their liquidity and management quality.

MF redemptions more certain

POLICY-WISE. SEBI formalises short-term borrowing, keeps related costs away from investors By Kumar Shankar Roy

Mutual funds, primarily liquid and overnight schemes, routinely face a timing mismatch between when they pay investors and when they receive cash from underlying instruments. Simply put, mutual funds sometimes have to pay investors before money from their own investments comes in. Redemption proceeds are typically paid out the next business day morning, while inflows from TREPS (Tri-Party Repo Dealing System) and reverse repo often arrive later the same day. To bridge this gap, mutual funds enter into formal same-day borrowing arrangements with financial institutions such as banks.

A March 13 SEBI circular operationalises this practice under new SEBI (Mutual Funds) Regulations, 2026, effective April 1. It sets clear rules for such borrowing, exempts same-day borrowing from the 20 per cent cap, and clarifies who bears the cost and risk.

Timing Gap

Schemes, especially liquid and overnight ones, need a liquidity buffer to manage these timing differences. To prevent delays in payouts, funds borrow for a few hours until receivables are credited later in the day. While such arrangements already exist, the absence of explicit regulatory detailing leaves room for variation in implementation.

Mutual fund schemes can generally borrow up to 20 per cent of assets for redemptions, investor payouts or certain trade settlements, for up to six months. But this cap will not apply to same-day borrowing, subject to SEBI’s conditions.

Usage Rules

The SEBI circular lays down a clear framework for same-day borrowing:

• Approval and Disclosure: The asset management company (AMC) and the mutual fund’s trustees must approve this borrowing policy, and it must be disclosed on the AMC’s website.
• Restricted Purpose: The use of intraday borrowing is restricted to specific purposes: meeting redemption obligations, paying interest or income distribution cum capital withdrawal (IDCW), and related payouts to unit holders. It cannot be used for broader leverage or investment activities.
• Asset-Backed: The fund can borrow only against money that is assured to come in the same day. Eligible receivables include maturity proceeds from TREPS and reverse repo, proceeds from government securities and treasury bills, interest on such securities, and sale proceeds of these instruments.

Cost Burden

A key clarification in the circular relates to who bears the cost of such borrowing. SEBI states that any cost of intraday borrowing must be borne by the AMC and not charged to the scheme. Further, if there is any delay or shortfall in receiving the expected funds due to unforeseen events or settlement issues, the resulting cost or loss must also be absorbed by the AMC. This effectively ring-fences operational cash mismatches, ensuring investors do not bear these operational costs through the scheme.

ETF Clause

The market regulator also addresses borrowing by equity-oriented index funds and ETFs (exchange-traded funds). Stock exchanges will introduce a closing auction session—a final price-setting window at market close—from August 3, 2026. If these funds are unable to complete all their sale transactions during market hours, they may borrow only to participate in this closing auction session.